Brand Leader Responses to Competitive Price

Changes

• Maintain price
• Maintain price and add value
• Reduce price
• Increase price and improve quality
• Launch a low-price fighter line
 How to fight low cost rivals

• Design cool products

• Continually Innovate
• Offer unique product mix
• Brand a community
• Sell experiences
 3-Keys to determine success of differential
response
• Companies must not use differentiation tactics
in isolation.
• Companies must be able to persuade
consumers to pay for added benefits.
• Companies must first bring cost and benefits
in line.
 ASK
Will this
company take NO
Watch but do not take
away any of
on the new rival.
my
customers?
YES

Don’t launch a price war. Increase the

differentiation of your products by using a
combination of tactics.

ASK ASK
NO Will Low cost NO Switch to selling
Are they Learn to live with
business solutions or
willing to pay smaller company, generate
for the merge or take over transform your
synergies with
benefits? rival company my existing
company into a
business ? low cost player.

YES YES
Intensify differentiation. Over time
Attack your rivals by setting up a low
,restructure your company to reduce
cost business.
price of benefits you offer.
A FRAME WORK FOR RESPONDING TO LOW COST RIVALS.
 SUMMARY
• Customers relate a certain quality and price to
specific Brand names.
• A market leader attacked by lower priced
competitors can seek to better differentiate
itself, introduce its own low cost segment,or
transform itself more completely.