Red Ocean Traps cautions against price wars and commoditization from "summary" of Blue Ocean Strategy with Harvard Business Review Classic Article “Red Ocean Traps” (2 Books) by W. Chan Kim,Renée A. Mauborgne
Red Ocean Traps warns businesses of the dangers of engaging in price wars and falling into the trap of commoditization. Price wars are a common occurrence in crowded markets where companies compete solely on price, leading to lower profit margins and a race to the bottom. This not only erodes profitability but also makes it difficult for companies to differentiate themselves from their competitors. As a result, customers perceive products or services as interchangeable, leading to commoditization. When companies focus solely on cutting prices to attract customers, they neglect other aspects of their business that could provide value to customers. This short-term strategy may lead to an initial increase in sales, but it ultimately undermines the long-term sustainability of the business. By constantly undercutting each other on price, companies fail to invest in innovation, quality, or service improvements that could differentiate their offerings in the market. Commoditization occurs wh...
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