Managers can localize a price war to a limited theater of operation—and cut down the opportunities for the war to spill into other markets. Employing complex options such as multiple-part pricing, quantity discounts, time-of-use pricing, bundling, and so on lets price warriors selectively cut rates for only those segments of the population that are under competitive threat. One common—and classic—tactic is to change customers’ choices, or reframe the price war in the minds of customers. McDonald’s did it successfully when it faced Taco Bell’s 59-cent taco strategy in the 1980s. By bundling burgers, fries, and drinks into “value meals,” McDonald’s reframed the price war from “tacos versus burgers” to “lunch versus lunch.” Similarly, smart managers use quantity discounts or loyalty programs to insulate themselves from a price war. They avoid across-the board price cuts, and they limit price reductions to areas in which they are vulnerable. In this way, managers can localize a price war to a limited theater of operation— and cut down the opportunities for the war to spill into other markets.
Therefore, another selective-pricing tactic might be to modify only certain prices. On another selective-pricing front, companies may use a fighting brand. The defending company finally dropped the price of its economy-size product with a “buy one, get one free” offer. Since the economy-size product lasts six months, the company took high- volume, price-sensitive users off the market for nearly a year. The resulting low sales of the competitor’s product convinced the rival to cease and desist.