Use your competitors price as the benchmark and undercut it. Many businesses make this the core of their marketing ethos and become famous with slogans such as “If you find a cheaper price, we’ll beat it by 10%!”
This strategy captures price conscious consumers, but can have the obvious negative impact of generating a “a race to the bottom” as competitors try to outdo each other.
Pros: Can become a point of differentiation if you can sustain it. Can also be used to negotiate a lower cost with your suppliers whilst cutting costs and actively promoting your special pricing.
Cons: Lower Prices=Lower Margins, which puts the onus on you to make this up by shifting more stock. This is not a great option for smaller players, and as such is often not a viable strategy for them. Also, depending on the product, customers may not reach for the cheapest product on the shelf.
See the other Pricing Strategies