Race to the bottom
In a race to the bottom, competitors wage a fierce battle for customers through constant price cuts. As a result, margins are marginalized. In an attempt to gain as much market share as possible (or to defend a leading position ), the bottom is sought. This bottom is the minimum price at which a company can still survive.
Once products and services in this race end up being offered below cost, the survival of companies can be jeopardized. When a race to the bottom lasts too long, it comes at the expense of the company's profitability and liquidity position. In addition to increasing market share, a race to the bottom can also aim to eliminate competitors.
If companies choose not to participate in such an unleashed price war, however, it will cost many customers, which will also be to the detriment of business results.
