Question

Which of the following descriptions of competition is the most harmful form of rivalry?

Question 3 options:

	A. Coke signs a big celebrity to endorse their product causing Pepsi to sign an even bigger celebrity
	B. Southwest loses market share on the Dallas to Atlanta route because Delta offers a lower fare
	C. Kellogg loses market share to Post because Post starts including small toys in their cereal boxes
	D. Yahoo loses market share to Google because Google has a better mobile map application

Answer 1

The competition that is most harmful form of rivalry is -

B. Southwest loses market share on the Dallas to Atlanta route because Delta offers a lower fare

The reason is that increase in price war by offering lower prices to compete with the competitors, will result in loss of profits to the firm though sales revenue increases. Price war to offer least prices is not a healthy rivalry as it is only the customers who gain through it by switching loyalties towards companies that offer lower prices while the firms fight it out to attract customers only to loss of profitability.