Book Excerpt: The Price Advantage

If you have ever imagined that aggressively reducing prices to gain share and increase profits might be a sound strategy for your business, think again. The best-run companies go to almost any lengths to avoid price wars, for a host of compelling reasons. Even if you have a dominant cost advantage—by this we mean costs at least 30 percent below the competition—reducing prices can trigger a suicidal price war. Competitors often quickly follow price cuts because no one wants to lose customers, volume, or share.

To continue reading this article you must be a Bloomberg Professional Service Subscriber.