The word "undercutting" is spelled with four syllables: /ʌn.dəˈkʌt.ɪŋ/. The first syllable is pronounced with the short /ʌ/ sound, followed by the unstressed syllable /də/. The stress falls on the second syllable, which is pronounced with the dipthong /ʌɪ/. The third syllable is pronounced with a short /ʌ/ sound, followed by the suffix "-ing" which is pronounced with the /ɪŋ/ sound. The word refers to the act of selling goods or services at a lower price than competitors in order to gain an advantage in the market.
Undercutting is a term that is commonly used in business and economics to describe a pricing strategy employed by companies in competitive markets. It refers to the act of offering goods or services at a lower price than the prevailing market rates or those of competitors. This deliberate action is undertaken with the intention of gaining a competitive advantage and attracting more customers.
When a company engages in undercutting, it usually sacrifices profit margin in the short term in order to capture a larger market share or to push competitors out of the market. By offering lower prices, the company aims to appeal to price-sensitive consumers, enticing them to choose their product or service over alternatives.
Undercutting can have significant implications for the industry and market dynamics. It can trigger price wars among companies since competitors may respond by lowering their own prices to remain competitive. This can lead to a downward spiral of prices, ultimately affecting the profitability and sustainability of businesses.
Furthermore, undercutting can be viewed as an anti-competitive practice if it is undertaken with the intention of driving competitors out of the market or creating barriers to entry for new players. Governments and regulatory bodies closely monitor such actions to ensure fair competition and prevent the formation of monopolies.
In summary, undercutting is a pricing strategy where goods or services are offered at lower prices than the prevailing market rates or competitors in an attempt to gain a competitive advantage. It can have implications for industry dynamics, profitability, and market competition.
The word "undercutting" is formed by adding the suffix "-ing" to the verb "undercut".
The verb "undercut" dates back to the early 16th century and is derived from the combination of "under" (meaning beneath or lower in position) and "cut" (meaning to sever or divide with a sharp implement). Initially, "undercut" was used in a literal sense to describe the act of cutting or removing material from underneath a structure to weaken or destabilize it.
Over time, the term began to be used figuratively to describe various actions or strategies that diminish or undermine something, especially in a business or economic context. In this sense, "undercutting" refers to offering goods or services at a lower price than competitors, often resulting in a reduction of prices in the market.