FARE WAR Meaning and
Definition
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A fare war refers to a competitive market situation in which two or more businesses, usually within the same industry, engage in aggressive pricing strategies to attract customers and gain a larger market share. Typically occurring in industries such as airlines, hotels, or supermarkets, a fare war involves the lowering of prices by companies to outbid their competitors or to respond to aggressive pricing tactics initiated by others.
The main objective behind a fare war is to offer lower prices than competing firms in order to entice more consumers. In this intense battle, companies may slash prices significantly, introduce promotional offers, or provide additional benefits to stand out in the market. The aim is to attract price-sensitive customers who are constantly seeking the best deal available.
However, fare wars can have negative consequences for both businesses and the industry overall. Companies involved may experience reduced profit margins as they sacrifice revenue to undercut competitors. Additionally, excessive price reductions can lead to a devaluation of the product or service, potentially tarnishing the industry's reputation. Furthermore, smaller or weaker companies may struggle to sustain such pricing strategies, making them vulnerable to bankruptcy or acquisition.
Fare wars can be both intense and dynamic, as competitors continuously adjust their prices and promotions in response to the actions of others. The duration and severity of a fare war can vary, ranging from short-lived battles to prolonged periods of intense competition, depending on factors such as market conditions, demand, and industry dynamics.
Etymology of FARE WAR
The etymology of the term "fare war" can be explained by breaking down the individual parts of the expression:
1. "Fare" refers to the price or cost of transportation, particularly in this context, referring to the price of traveling by air, railways, or other modes of transportation.
2. "War" refers to a conflict or competition between two or more entities, where each tries to gain an advantage over the other.
When combined, "fare war" represents a competitive situation in which two or more transportation companies lower their prices in an attempt to attract more customers to their services and gain a competitive edge over their rivals. This term is frequently used in industries such as aviation or railways, where competing companies engage in aggressive pricing strategies to gain market share.
