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Evaluate consequences of price war, Retailers, Producers, LOWER PRICES =…
Evaluate consequences of price war
Culture change - away from home delivery to shop bought
Loss of entire industry - Milkmen
Retailers
Negative
Race to the bottom
Worsening relationships with suppliers
Decrease in Profit Margins
Requires faster turnover of stock to remain as profitable
Reliability of suppliers in doubt (finance)
Positive
Attracts Customers
Makes them more competitive
Increase sales volume
Potential profit increase with volume
Producers
Positive
Greater demand
Stimulates innovation
Efficiencies
Negative
Lower profits per unit
Less ability to invest in growth
Less reward for investors
Stagnating wage growth
Loss of jobs
Stakeholder conflict
LOWER PRICES = MORE SALES
DOES IT NEED TO COME FROM LOWER PAYMENTS TO SUPPLIERS?
'Loss Leaders'?