Price Leader

A competitor or product that offers below industry-standard performance for a very low price. More than 50% of a Price Leader competitor's total unit volume is sold at price points below the Standard Leader product
(abbreviation PRL).
(See also
Next Leader

Performance Leader

, Standard Leader, Predator Product, Stripper Product)

PriceLeader: At the other end of the value scale from Performance Leaders are the Price Leaders. These companies offer customers lower performance in return for a lower price. The major reason for these companies' existence is their very low prices. They provide a basic product, missing some costly benefits included in the Standard Leader products. Their product prices average 25-50% below the industry's Standard Leader price level. The Price Leaders include such companies as Borland in software, Dean Foods in dairy and food manufacturing, Drypers in disposable diapers and Perrigo in drug manufacturing.

The Price Leader group, like the Performance Leader specialists, controls a minority share in the marketplace. The benefits that Price Leaders exclude from their products are of value to the majority of customers in the market. Their principal customer segment is a relatively small, price sensitive niche. As a group, Price Leaders average less than 15% of industry market share. Individual Price Leaders are also a fraction of the size of the leading Standard Leaders.

Example 1:

BMW has introduced two "entry-level" models that will sell around $20,000.
(Year 1990-SIC 3711)

Explanation: BMW is a Performance Leader company. These entry level products are Low-Extender products in its product line.

Example 2:

United is introducing a Shuttle service on the West coast air routes to compete with discount airlines.
(Year 1994-SIC 4512)

Explanation: United is a Standard Leader company introducing a Low-Extender Price Leader product to its west coast routes to compete with low fare airlines.

Example 3:

Snapper's mowers are first-rate and priced that way
($189 to $6,000). But rivals have flooded discounters with private-label brands that cost as little as $89.
(Year 1994-SIC 3590)

Explanation: Snapper mowers are Standard Leader products in the industry. The private label brands produced by its rivals are Predator Price Leader products.

Example 4:

Little Debbie undersells competitors. Its cakes and cookies sell for 50% to 70% less than competitors' products. The company strategy is to sell an extremely sweet product to a mass market at the lowest possible cost.
(Year 1992-SIC 2050)

Explanation: Little Debbie is a Price Leader company selling Stripper Price Leader products in its market place.

Example 5:

At Price Club, Reebok Newport Classic shoes are priced at $32.99 instead of $46.95 suggested retail. Goldstar televisions sell for $399 instead of $500 at a discount store.
(Year 1988-SIC 5331)

Explanation: Price Club is a Price Leader competitor selling a Stripper Price Leader product.