How to deal price war?

Discussion in 'Growing and Managing a Business' started by hney_88, Jun 23, 2014.

  1. hney_88

    hney_88
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    I am buying X product from a manufacturer and selling that X product to my customers at 10 % profit margin. Recently, my competitor has also started buying same X product with same quality from same manufacturer at same price but he is selling at 2% profit margin. He is happily selling X product at 2 % margin despite customers will buy it even at 10% margin.
    He has spoiled the prices of X product in the market and also my customers.

    How to deal with it?
     
  2. Jamie1

    Jamie1
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    At this point, you cannot beat him on price, but are you able to beat him on service? I do not know what type of product you are selling, but perhaps you have the type of website where people are able to get more information about your product, read related articles etc. If you cannot beat him on price, beat him on service.
     
  3. Mark Robinson

    Mark Robinson
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    Yes I agree with him. You should provide your customers best service. You can beat him by providing extra facilities like give them some different price packages base on the quantity etc.
     
  4. hney_88

    hney_88
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    Hie Jamie1

    I dont have any website, its is just a small scale business in local area market. and Its simply a shoe material item (product). We both buy same items from same buyer. But, I sell at with 10% profit margin with purchasing optimal quantity. But my competitor sells at 2% profit.

    Again, he is just spoiling the prices of item in market. I dont know why.
     
    #4 hney_88, Jun 26, 2014
    Last edited by a moderator: Jun 29, 2014
  5. alastairbrian

    alastairbrian
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    Hi
    To cater with your competitors you have to prove yourself more suitable than him..Try to make some difference in you and him like services, customers relations, support etc.
     
  6. nasifabg

    nasifabg
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    You require proving your customers that you are capable of delivering the best products and services and tell them why you and your products are different....Thanks!!
     
  7. MilesWeb

    MilesWeb
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    Basically, you should give people the reasons to buy your product. Unless and until you show the value for money, people will not really think of spending on the products offered by you.
     
  8. afia_kamran

    afia_kamran
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    You can't control his prices. There is always one who spoils the market. What you can beat him at is reliability, service and quality. Your service to customers can make them realize your importance. You should earn their trust so that they always are willing to spend 8% more just for the sake of reliability.
     
  9. SConsultant

    SConsultant
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    Meet the other business owner, join with her/him, agree on price - you'll still have 50% of the market...
     
  10. James Martin

    James Martin
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    Prices are always matter in competitions, but in this situation you cannot beat him in price so you should make your products perfectly, feasible, reliable. As everyone said that you can beat him through good services, support etc.
     
  11. Michael Leng

    Michael Leng
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    Just only two ways you can do are:

    To mark down price as same as your competitor at 2% -> This is called the market for consumers. Customers have multiple choice to select products sources for many places. (Non-monopoly)

    To cooperate with your competitor and make a deal to sell the X products as the same price for both party (you & your competitor). New price should sell at 5% margin. I think this is called "win-win theory".

    You can keep your market share. You regular customers will satisfy at your new price, which is cheaper than before 5%.
    Your business partner (Previous Competitor) would be say yes, because he makes more 3% margin. Am I right?
    Your and his customer will love it to buy product at anywhere with the same price, no need to do price compare...

    In addition, how to increase your sales volume and reduce cost. This is your new home work.

    Keep walking.
    Cheer up!
     
  12. ABM House

    ABM House
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    This is same thing what happened to us, we were ranked number 2 in certain keyword and our competitor was number 1 in the same keyword, we were selling product for $3 approx. and our competitor came and he started to sell at $1, he was new so he was not having much staff to pay and $1 was good for him. After some months when his business grown he due to less margins was failed.

    At that stage you can only wait less margin will make your competitor weak at some time your competitor will increase the margin or will close the business.
     
  13. SConsultant

    SConsultant
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    Dear ABM House
    This strategy is dangerous since one can lost everything while waiting for the other would give up - the competitor will think the same and the war will continue till the last man / dollar...
     
  14. Aleena

    Aleena
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    Hi
    You can still beat him with a powerful strategy. I would like to suggest a few points
    -Improve your quality service make it 100 percent try to seek information about your rival service and add more benefits in your service you can also add some sample products for free when your customers buy that same product from you at 10$.
    -Try to be convincing why people should buy products from you as your service is better and you also offer sample products with that particular product X and for that reason your product price at 10$ is just fine.
     

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