PRICE WAR Meaning and
Definition
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A price war is a term used to define a situation where two or more competitors within a particular industry continuously lower the prices of their products or services in an attempt to gain a larger market share. This tactic is often employed as a competitive strategy to attract more customers and drive rivals out of business.
The primary goal of a price war is to offer the lowest possible price to consumers, sometimes even to the point of sacrificing profitability temporarily. Companies engaging in a price war aim to attract and retain customers by creating a perception that they offer the best value for money. Consequently, the intense competition between rivals leads to a vicious cycle of even lower prices as each participant wants to offer a more attractive deal than its competitors.
Typically, a price war is initiated by a price cut from one company which triggers others to follow suit, causing a rapid downward spiral of prices. In such scenarios, profit margins are significantly reduced, and businesses may even face losses. Price wars can be particularly damaging to smaller firms or those with fewer financial resources, as they may be unable to sustain the lower prices for an extended period.
While price wars can benefit consumers by offering lower prices and increased choices, they can also have negative effects on the overall market. These include decreased profits for businesses, reduced product quality, the possibility of market consolidation, and, in extreme cases, market exit for some participants.
Common Misspellings for PRICE WAR
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Etymology of PRICE WAR
The term "price war" is derived from the combination of the words "price" and "war".
"Price" originated from the Old French word "pris", meaning "value" or "worth". The Old French term itself can be traced back to the Latin word "pretium", which has a similar meaning.
"War" comes from the Old English word "wyrre", which means "conflict" or "battle". It evolved from the Proto-Germanic word "werra".
The phrase "price war" is used to describe a situation where competing businesses engage in a battle to lower prices, often leading to aggressive price reductions and intense competition.
Similar spelling words for PRICE WAR
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