Each leader is living in fear of a low-end competitor - a company offering a much lower price for a seemingly similar product. The vast majority of low-end companies fall into one of four types: strippers, predators, reformers, or transformers. Each of them is determined by the functionality of the product and ease of purchase. Mites, for example, tend to enter the market with a bare bones proposal, reduced function and, as a rule, in comfort. Industry leaders have significant advantages against low-level competition, but they often hesitate because they fear that their actions will have a negative impact on their current income. The answer, then, to find an answer that is likely to restore market calm in the least disruptive way. Industry leader may choose to wait out the problems by ignoring, blocking, or the acquisition of a low-end competitor. Or it may decide to strengthen its value proposition by adding new price points, increasing its level of benefits, or a fall in its price. Such tactics can be effective in the short term, but the leader of the industry should also be considered a strategic retreat, especially when certain conditions that future low-end problems are inevitable. "Hide
by Don Potter Source: MIT Sloan Management Review 8 pages. Publication Date: July 1, 2004. Prod. #: SMR147-PDF-ENG
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