What do you do when your competition drops prices to get the market you are holding?

Hi,
Price is not the only thing that matters.  Other factors are: Quality, service, reliability, safety, special features, shape, functions, ease to operate, life time, appearance, colour, strength, beauty, etc. 
Find what deffers your product from the others and consider promotion (several ways).  
Yes there are many case studies and books.  Toyota is not the cheapest car and still doing much better than all other car makers together. 
Best regards,

You can never stop working on your competitive advantage.  As simple as that.

Tell your customers through good marketing why your product is worth what it costs and why it is superior to the other products.  People are willing to pay a little, and sometimes even a lot more for something that works better and has better specs. 

Frankly speaking, you show your market why they should pay that much money for the benefits that your products can give.  You communicate its value.  Yes it is inevitable that you will lose at least some market if you do not lower prices - thats the law of averages and the fact that some people are just cheap.  However, many people will pay if they know they are getting more value from your product.  Therefore, even though you may lose some market, you may not actually be losing against the competition.

hi aviche, you must know your product competitive advantage. if it is a commercial product of unknown brand, then yes you will need to be price competitive. but if it is a well known branded product, then promote your product as original, authentic. you can also bring in a free quality product that you can offer your customers if they buy from you. eg. nike shoes with a new Nike Shoe Bag FREE!

if your package is good, you can even "up" the price !

Muad'Dib, Kal

www.muaddibkal.com

This is a very important question… I do not know your businesses, but   have written here   points that should help you assess your situation. I strongly suggest that you read Michal Porter’s book on competitive advantage. The best solution is to preempt any potential threats by identifying early on any issues that may cause a crisis. You should learn as much as possible about your competitor’s strengths and weaknesses prior to launching any response, and the same applies within context to your own strengths and weaknesses. 

• How differentiated is your product?  
• Does your product provide unique benefits/capabilities (Not just features), and if so, can you convey those benefits in terms of measurable value so that they will be obvious to  your customers?   
• Are there any high switching costs incurred by moving to your competitor’s product?
• Are you dealing with a desperate competitor that is fighting for its last breath?

Is your product unique or more of a commodity? Is there any way you can make your product and/or service stand out in the eyes of a consumer? Can you branch out and provide value to a different segment of consumers that so far has not been familiar with your product ( create and gain market share..)? Are there ways of marketing and advertising that you haven't been using that you can easily access? Which advertising technique has worked for you? What has not? Do more of what works and eliminate what doesn't. Have a branding strategy so customers remember your company/brand. Do all you can to gain your customer's goodwill and loyalty. Are there other ways (even free) that you can provide your customer's value e.g. provide information that is otherwise harder for them to get to; interactive website etc..Can you partner with another company and combine offers so you have a package offering that other companies can't compete with. Constantly re-examine, adapt and analyze what works and doesn't work and modify accordingly.

Step up your personal service, find things that your customer may not be aware of that you offer as a benefit, not a feature, quality of service is also important. You could also expand your customer base by getting a website that actually works, go to http://mtavalah712.weebly.com to find the best all in one get it done webhost, for all your business needs.