I would like to share a living situation in a business environment. I suppose the majority of the members are or have experienced this phenomenon called price war. It is so human that we could be trapped in the price war within our business environment. Price war sometimes could be healthy to the market. However as the old one said enough is enough, there are some limitations that should be set in order to allow us to still obtain profit.As I said before, I was working in my own restaurant at the early age. We were the first restaurant in our area. Within five years a first competitor occurred and positioned very close to us. They declared the price war and I have to admit our sales dropped. The young David can only see the sales plummet.
After ten years, I started my own business, Klick ‘N Save. We mainly try to focus on the nursery industry. We started to sell the baby furniture, such as rockers, strollers, cots, and swings. In the market we respect our competitors and try to keep the price stable. We did not destruct the price by selling branded items at a very low price. However, new competitors always come to business. Somehow, they think that the only way to crack the market is through price. They sell the items at a crazily discounted price even though they obtained the items at the same price with us. Honestly, the older David is still confused in facing this situation =)
At the end of the day they always give up in the price war. Usually, they decide to increase the price eventually. This is totally understandable since they surely also need profit to keep up and running the business. However, what about the heavily capitalized competitors? Surely they still have a lot of capital and able to afford selling items at the discounted price for the long period of time. How can we beat this price war?
As the Indonesian said “malu bertanya sesat di jalan” in English “shy of asking for assistance would make us fail”. In this very good opportunity I would like to ask the forum for suggestions in battling against this business phenomenon.
Any opinions, suggestions and questions will be appreciated.
David Herlambang
MarketingFirsthttp://www.marketingfirst.blogspot.com/
