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Buying decisions are usualy affected by many factors, such as:
- Price
- Quality
- Service
- Availability of products
- Reachability and presens of sales people, outlets, service points,...
- Guarantee
- Prestige
- Brand awareness
- Advertisement
So when you have a competitor who is using a low price strategy to compete in the market, either you use the same strategy or you can perform a market analysis to find out which other factors may affect the buying decission of the customers. Concentrate on these factors to overrule the attractiveness of the low-price factor
In such a market, rivalry will be fierce. Competitive advantage is short term. Profit margins are low, but volumes are high.
in such market conditions, you must rely on several to ensure sustainability:
1) Customer Service- must be of the highest order to build brand loyalty to the organization. The Quality Model must be developed and enforced relentlessly.
2) Efficiency - Operational efficiencies must be high in the value chain, as logistics, purchasing and warehousing cost must be carefully managed.
3) B2B - Engage Suppliers with high quality and prices, but who are not powerful enough to demand prices increase. This entails good business Accumen as well as proper market research.
4) Big data will provide insightful information with regards to demographics, and marketing strategy.
Via emphasizing, communicating and delivering quality in the products and the services which competitors are lacking. This is one of the most proven technique...
by showing the high quality of your product and the after sale service you provide and the history of your company
It depends on this market, sometimes it does NOT differ with the customer if your goods are high quality or not. Then your defend strategy is a "price war strategy", where you will lower your price, special discounts, special offers, different segments of commissions and discount/bonus... etc.
Next step, either you will kick off this silly competitor out of the market, then you will keep the brand leader again, and raise your price again, or you will change your product specifications with your manufacturer to produce a new "low-cost cheap" product, where you can fight more strongly, you have the option either to keep both the high quality and the low quality (brand cannabilization strategy) or just the low quality (price strategy). This depends on the market dynamics and the market segment of HQ items, if it's potential and benefitial or not.
On the other side, if the market is sensitive to High Quality items, then your problem is so easy to solve. Either you increase the market awareness about your product features/benefites or to develop your product features/benefits to be high tech (product development strategy).
Another defense stratgey in this situation, is to explore for uncovered areas in the market, which your competitor has not visit, this is called "market expansion" strategy.
Best of luck!
there are two cases here
first that both products have the same features and quality
then you should focus on product availability and merchandise by offering more bonus to a wholesaler
the second scenario that your product has better quality
in that case, you should spend focus on branding and advertising to educate the customer about the differentiation between both products
but there is a lot of other buying factors more than above-mentioned like Guarantee , packing , promotions , after sale service .
It is not price issue at all, if sales man has imotional skills he can compete any compititor what ever they are
concerning on the other factors such as the quality and value added and custimer service
Trying to find a way to reduce your costs as much as possiblea and not affect the quality
Sometimes you may produce a second stage product which can compete the low price one to highlight your primary product and move it out of the competition but it is a critical action and has to be well studied
The competitive strategy may invopve three factors for instance; low cost production & low price (price leadership), differenciation and focus tactics. Therefore since we are looking at our competitor having low price, our responsive alternatives will be automatically Low cost production, product differenciation (unique & innovative features), focus on segements & niches, effective & efficient distribution, superior or exeptional customer service.
Thanx for the invitation
How? With patience and professionalism.
Low cost-low price companies will not have a long life because one reason. QUALITY!!!!!!!
Such a company will have low quality products, poor customer service, supply problems which reflect in the maintenance of the products.
Once you face such a competitor you keep your customers close, offer them promotions, special prices and remind them why they chose your product.
And one more thing. Be patient.
