PRICE COMPETITION: RIVALRY OR WAR?

Author
, professor, Kharkiv, Pushinska, 77

In heading

 Economic theory;

Signed print

 07.09.2023

Issues number

 2023-№3 (54)

Page

 44-58

Type of articles

 Scientific article

Code UDK

 338.516.22:005.21

ISSN print

 2411-5584

Abstract

 Problem setting. Reductions in market prices and even sales of products at prices lower than market prices can occur outside the influence of competition. For example, when the company needs to urgently sell off its products to repay short-term debt or when the market demand falls, but the company wants to maintain its market share. However, pricing can also be an important element of competitive business strategy.
Recent research and publication analysis. The problem of price competition is of interest to many domestic and foreign scientists. Among them: A. Farm; D. E. Griffith and R. T. Rust; A. Ryans, A. Sweeting, D. Jia, Shen Hui, and X. Yao; R. Cardot, D. Boland, and S. M. Liozu; A. R. Rao, M. E. Bergen, and D. Scott; E. Fontinelle, and others.
The purpose of the article is to reveal the nature and consequences of price competition and price war, to offer scientific and methodological approaches to securing business from using price as a tool to influence competitors.
Paper main body. The author of the article analyzes the following problems:
1) essence and mechanism of price competition;
2) the main techniques of price competition: “price maneuvering”, “price breakthrough”, “price containment”, “freebie”, “premium price”, dynamic pricing, “price war”;
3) causes and consequences of price wars;
4) the main types of price wars, namely: “race to the bottom”, “predatory (robbery) pricing”;
5) methods of response of managers to a price war: to ensure compliance of prices; reduce the overall costs of doing business; use competitive pricing; prevent a price war by correctly segmenting your consumers by price; selectively report their pricing strategies; to give up the price war even before it starts, giving up its market share; start and win the consumer value war.
Conclusions. Systematic actions are required to protect business from the consequences of price competition and counter price war. Appropriate:
1. Direct the company’s customer analytics to a comprehensive understanding of consumers (customers), in particular, to single out among them the most price-sensitive ones who, in fact, may switch to another seller (competitor) in response to his low prices.
2. Aim competitive analytics at constant monitoring and assessment of the consequences of competitors’ price actions.
3. Develop your own effective pricing strategy.
In further research, it is advisable to substantiate the mechanisms of price competition in the ecosystem.
Short abstract for an article
Abstract. The author of the article reveals the nature and consequences of price competition and price war, analyzes ways of securing business from using price as a tool to influence competitors. Systematic measures are proposed to secure business from the consequences of price competition and counter price war.

Keywords

 price, price competition, price war, oligopoly, business strategy

Reviewer

External reviewer

Article in PDF

 44-58

Bibliography

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Code DOI

 https://doi.org/10.31359/2411-5584-2023-54-3-44

07.09.2023