W EEKLY EDITION SEPTEMBER 11, 2019
Pri ce W ar s: Don't be Tak en Pri soner Par t I
By Karleen Kos, PSAI Execu tive Director
Portable sanitation is not the only industry where
competing on price to the detriment of all occurs.
Business Insider reported last year that Wal - Mart was
matching Amazon on at least 53% of its online offerings,
Target is matching 37% of Amazon's prices, and Jet.com
is matching 35%. Even so, Amazon is still the cost leader
overall, with prices that are around 10% lower than their
closest competitors overall. If anything, the pricing wars
in retail have only gotten fiercer in 2019. We are not
alone.
What's the po int of a pr ice war? That is, indeed,
the million - dollar question. At the outset, the idea is
usually to create price appeal, to offer a no - f rills alternative, or – sometimes – to temporarily take a
loss by underselling a weaker competitor until that competitor exits the market. Irritating though
such tactics are, they are almost always legal. The problem is that competitive price slashing, ove r
the longer term, de - values the services our industry provides and leads to an overall decline in
industry profits.
In spite of this most company leaders will be involved in a price war at some point in their careers.
Every time a competitor cuts their prices could be the beginning of a price war, especially if you
respond in certain ways. If their pricing decline causes you to automatically make similar cuts or offer
new discounts, things could easily escalate into a major price war rather quickly.
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