By offering lower prices, more consumers will switch to their products. As a result, it is increasingly difficult for other companies to attract customers. Then what happen? These companies then 'revenge' by offering even lower prices. On the one hand, price wars may be profitable for us as buyers. However, extreme price drops Iran Phone Number List can have a devastating effect on the industry as a whole. This point aligns with the one mentioned by investopedia . A company that is in the midst of a price war will be at risk of experiencing a reduction in its profit margin . Causes of price wars some of the causes of price wars include the following. Very competitive market. There are many companies offering similar items. Finally, it provoked a price reduction strategy to be able to compete with one another. Many companies see that price wars can be a solution to gain market share and increase revenue. The company wants to expand the market share that has been achieved so far. The company wants to avoid bankruptcy.
They can attract new customers which can help improve the company's liquidity. Also read: 8 effective ways to deal with annoying consumers due to the price war the price war that occurred as a result had several impacts, both good and bad. Here are some examples of the consequences of price wars. Companies involved in price wars must sacrifice profits for long-term gains. Companies must be able to apply the right strategy and networking , as well as a deep understanding of competitors and the market if they want to win in a price war. Big companies that lower their prices can literally alienate competitors. As a result, consumers have fewer and less varied product choices. When companies lower their prices drastically, it will be difficult for them to increase them again. Price war profits three employees seen having a discussion . Consumers get low prices from the explanation above, it is clear that the price war that occurred resulted in cheaper goods on the market.