price competition

Offer commoditization is increasingly common market phenomenon. The stronger competition in the market, the more difficult is to differentiate the product/service – as a result, price competition intensifies and price is the key buying criteria. The paper presents the essence of commodity trap and the three-stages process of escaping from the consequences of this phenomenon.

In terms of increasing the number of companies operating on the market, both domestic and foreign companies, right approach to respond to the different types of competitor’ price moves becomes extremely important. The purpose of this article is to present the proper approach to respond to price competition. Adequate reaction to competitor's price reduction may prevent price war, which is absolutely a negative phenomenon.