Cost-cutting consequences

"Organizations focused on costs often seem to focus on price-cutting strategies. As a result, they risk training their customers to be concerned about price to the exclusion of value and often incite price wars.
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There is usually only one winner of a price war: the customer. Of the companies involved in the price war, the lowest-cost producer may do the best; but their financial results may or may not be attractive.
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Meanwhile, in such an industry, many customers become price-shoppers instead of value-shoppers. That simply intensifies the pressure to lower prices and accelerates the vicious spiral of price cuts. Price wars not only erode profits, but also train customers to expect the same prices and to assume that all products and services perform the same—even if that is not true."
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Trecho retirado de "Value Above Cost" de Donald Sexton.