Wouter H. Dessein, Remmelt De Jong
Columbia Business School (CU269-PDF-ENG)
September 29, 2011
Case B over CU268 In October 2003, leading Dutch supermarket chain Albert Heijn lowered the prices of more than 1,000 items to just 30 to offset the loss of market share due to consumer perception of high prices. AH continued with the strategy for the next three years, forcing competing supermarkets to comply with discounts or risk losing customers. Game theory supporters and analysts questioned strategy, noting that price wars often jeopardize the profits of individual companies and their industries. In this two-part case, students analyze the risks and benefits of a price-cutting strategy, taking into account profit margins, market share data, and selected financial information for AH and its competitors.
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