Blog › Use cases

A competitor cuts prices. What should your company do?

The move is the same for the whole market. What changes is what it means for your objectives, your accounts and your open decisions.

By Rut Bei Subirat Domènech, Product Owner at EnGuaita · 3 min read
In this article

Key idea

A competitor cutting prices doesn’t mean you should cut yours. The response depends on your exposure, your objective and the accounts or segments at stake.

A price cut is not an instruction

Imagine a competitor cuts its price from €49 to €39.

The move is objective and visible to the whole market. But that doesn’t mean every company should respond the same way.

The useful question isn’t just “what has the competitor done?”, but “what changes for us?”

Your exposure to that competitor, the segment you compete in, your open accounts and your current objectives can completely change what deserves review.

That is why a competitive signal shouldn’t automatically turn into an action.

If your objective is to protect margin

If you have little direct exposure to the competitor, jumping straight into a price war can destroy margin without solving any real problem.

In that context, it may make more sense to hold your price and first review differentiation, your customers’ price sensitivity and how you are communicating the value of your offering.

The signal matters, but it doesn’t necessarily call for copying it.

If you want to grow in SMB

Now change the objective.

Imagine that competitor is cutting the price of precisely the offering that competes with your entry plan for the SMB segment.

Here the signal may deserve more attention.

But even then, the response doesn’t have to be simply cutting your price.

It may justify reviewing packaging, the entry offering, positioning or what you include at that price.

The objective changes which part of the signal matters and what is worth reviewing.

If you have open opportunities

There is a third scenario.

Several active accounts are comparing your offering with that of the competitor that has just cut prices.

Then the most urgent work may be much closer to sales than to pricing.

It’s worth identifying which opportunities are exposed and preparing talking points, objection handling and comparisons before the next conversations.

The same price cut thus leads to a different response because the open decision is also different.

How EnGuaita interprets it

EnGuaita starts from the signal, but doesn’t stop there.

It connects it with the organization’s configured context and its objectives to assess its relevance, explain why it may matter and point to what is worth reviewing.

From there, the agent can help cross-check information, compare alternatives or prepare arguments and documents.

EnGuaita guides, prepares and proposes. The person or team decides what to execute.

The goal is to reduce the work between detecting a competitor’s move and reaching a decision with enough context.

Give us a real signal from your market and an objective. We'll show you how EnGuaita would interpret it in a tailored demo.

Request a demo

Frequently asked questions

Not necessarily. First it’s worth reviewing how much that move affects you, which objective you are pursuing and which customers, segments or opportunities are really exposed.

EnGuaita can connect that signal with your organization’s context and objectives to assess its relevance, point to what is worth reviewing and help prepare the response. The final decision remains with the person or team.

Keep reading

View all articles ›