Price wars often begin innocently enough—one business lowers its prices to attract more customers, and competitors quickly follow suit. However, what starts as a strategy to gain market share often spirals into a destructive cycle where everyone loses.
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In this article, we’ll explore how price wars undermine small businesses, why they occur, and how businesses can escape this self-destructive cycle.
The Anatomy of a Price War
Price wars are not just about competition; they’re about desperation. When small businesses lack differentiation, pricing becomes the battleground. Here’s how it usually unfolds:
- The First Shot: One business lowers prices to attract more customers, believing they can absorb the reduced margins.
