Price War
If price reduction
leads to a compromise in quality, it is better not to reduce the price. Once
quality is compromised, customers who benefited from the price reduction may
reject your products or services entirely. It is wiser to lower the margin when faced with the choice between compromising quality and reducing profit margins. It is better to remain in business, even with smaller profits, than to
shut down due to a poor reputation.
Although this advice
may seem straightforward, a closer examination of companies that have been in
business for the long term reveals that they have consistently prioritized
quality while providing value for money. For example, regional brands like
Nalli Silks have maintained quality and retained loyal customers for decades.
Similarly, LG Electronics, while not necessarily superior to Sony, has managed
to maintain its market share.
In the electronics
market, where many brands from China have emerged, Sony faced a choice: compete
in a price war or innovate and explore new business avenues. Gradually, Sony
shifted away from laptops and mobile phones to focus on post-production and camera
technology for mobile devices. They understood that reducing prices could
eliminate competition, but it would come at the cost of their brand’s
integrity. Therefore, they chose to pivot to new lines of business rather than
jeopardize their brand image.
As an entrepreneur, observe your surroundings and continually study how businesses operate amid price wars. Develop strategies to sustain your position and emerge as a strong player in the market.
M.L. Narendra Kumar
Comments
Post a Comment