Most of the firms are reluctant to enter a 'price war' because of the force of demand and supply. There are four Ps in marketing that will create the needed brand for a product. They include price, promotion, place, and development. In the market, only the cost of the product is the one that will be affected by the forces of demand and supply. The remaining three P's are all the strategic responsibility of the organization to ensure they are operations. Thus, entering into a price war will not only be against the competition companies to gain a monopoly. Instead, it will be a war against the demand and supply as they control the commodity price in the market (Hartline & Ferrell, 2014). For instance, if a large organization manages to drive away competitors by cutting down on commodities' prices, the consumers will be left with no option. The company will gain pricing power and, later on, increase the price at their own will, making them lose all the consumers at once.
According to Philip Kotler, one of the alternatives is recognizing the power of the product's consumers. Consumers can determine the flexibility of the process of commodities in the market (Armstrong & Kotler, 2011). For example, an organization can consider the number of consumers they have in their portfolio to set the commodities' price. Also, Kotler suggests the need for healthy competition between the companies. Lowering the costs to keep away from competitors will reduce the revenue being generated. For example, a company can check the price trends in the market to set their own. The main focus is to ensure there is no 'price war' and both organizations can benefit from the competition in the market.
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References
Armstrong, G., & Kotler, P. (2011). Marketing: An Introduction (International Edition). New Jersey: Prentice Hall. Retrieved from http://www.pearsonhighered.com/educator/product/marketing-an-introduction-7E/9780131424104.page . Accessed 2 February 2021.
Hartline, M. & Ferrell, O. (2014). Marketing Strategy . South-Western. Mason, OH. Cengage Learning. Print.
