Undercutting

Undercutting is the practice of offering goods or services at a lower price than a competitor. This tactic aims to attract customers and gain a larger market share, often at the expense of the rival's profitability. It can involve reducing prices, lowering wages, or offering promotions to gain a competitive advantage. It often implies a strategy of aggressive price competition.

Undercutting meaning with examples

• The new online retailer began aggressively undercutting established bookstores, offering significantly lower prices on popular titles. This aggressive pricing strategy forced many smaller stores to close, struggling to compete with the unsustainable discounts. The company's success showed that customers were attracted to the best deals.
• During the economic downturn, the construction company resorted to undercutting its competitors' bids to secure projects. By accepting smaller profit margins, they were able to win numerous contracts, though this strategy eventually led to difficulties maintaining the required quality standards as a cost-saving method.
• In the highly competitive tech industry, some companies are known for undercutting their rivals' product prices. This tactic involves releasing cheaper versions of similar products to drive up sales. The market often saw a rapid expansion, with consumers benefitting from more affordable technological advancements.
• The supermarket chain was accused of undercutting local farmers by importing cheaper produce from overseas. The farmers' cooperative argued that this practice threatened their livelihoods and damaged the local agricultural economy, making it difficult for them to survive.