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Undercutting Meaning: Definition, Examples, and Translations

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undercutting

[หŒสŒndษ™rหˆkสŒtษชล‹ ]

Definitions

Context #1 | Verb

business competition

Undercutting refers to the practice of selling goods or services at a lower price than competitors. This strategy is often used to attract customers away from rivals and can lead to price wars in the market.

Synonyms

bargaining, discounting, slashing prices.

Examples of usage

  • The store is undercutting its rivals to increase market share.
  • She decided to undercut the competition by offering discounts.
  • They faced challenges when retailers began undercutting their prices.
  • Undercutting in the market can lead to significant losses for established businesses.
Context #2 | Noun

economic strategy

Undercutting, as a noun, describes the act of offering lower prices than competitors to gain an advantage. This approach can disrupt traditional pricing strategies and has implications for overall industry pricing.

Synonyms

cheapening, price reduction, underrunning.

Examples of usage

  • The company's undercutting forced others to rethink their pricing strategies.
  • Excessive undercutting can harm the reputation of a brand.
  • They engaged in undercutting to successfully enter the new market.
  • The undercutting in this sector has reduced profit margins significantly.

Translations

To see the translation, please select a language from the options available.

Interesting Facts

Economics

  • Undercutting is often used as a competitive strategy in markets where many similar products exist.
  • While it can increase short-term sales, persistent undercutting can lead to price wars and reduced profits for all competitors.
  • Some industries, like retail and hospitality, rely heavily on undercutting to lure customers, especially during sales seasons.

Business Psychology

  • Consumers often perceive lower prices as a sign of more value, which can lead to increased purchasing behavior.
  • However, too much focus on undercutting can devalue a brand, making quality hard to advocate even if it exists.
  • Psychologically, shoppers may be drawn more to the thrill of a bargain than to the actual product.

Pop Culture

  • In movies and shows, undercutting is often depicted as a shady or aggressive business tactic, highlighting the competitive nature of commerce.
  • Many successful entrepreneurs in popular media have addressed the risks and rewards of undercutting in their stories.
  • Reality TV shows about buying and selling often showcase the impacts of undercutting on relationships and business ethics.

Legal Aspects

  • In some cases, aggressive undercutting can lead to legal scrutiny under anti-competitive laws aimed at preventing monopolies.
  • Some countries have regulations against predatory pricing, which is similar and aimed at protecting market fairness.
  • Businesses often have to navigate the fine line between competitive pricing and unlawful practices to avoid legal repercussions.

Origin of 'undercutting'

Main points about word origin

  • The term 'undercutting' combines 'under', meaning below, and 'cut', referring to a price or quantity decrease.
  • Initially used in the 19th century in trade and economics, it quickly became a standard term in business and marketing.
  • It has roots in the idea of physically cutting beneath something, representing reducing prices beneath competitors.

The term 'undercutting' originates from the combination of the prefix 'under-' meaning 'below' or 'beneath' and the verb 'cut'. Historically, it has been used in various contexts, including trade and economics, to describe the act of cutting prices to compete more effectively. The usage of the term became more prevalent in the context of competitive business practices in the late 19th and early 20th centuries, particularly during economic periods where businesses sought to gain market share through aggressive pricing strategies. Over time, undercutting has become a common term in marketing and business literature, illustrating the ongoing struggle among businesses to attract consumers through price competition.

Word Frequency Rank

At rank #25,035, this word represents specialized academic or technical vocabulary. It's less frequently encountered but may be valuable in specific contexts.