When it comes to how you differentiate yourself from the competition, seek out a position based on non-price value. Do not compete on price. Price-based competition can work, but only rarely does it drive exceptional performance.
When the recession hit in 2008, Abercrombie & Fitch (one of the exceptional companies) was criticized for not cutting their prices as most other retailers did. And although their profitability suffered significantly in the short-term and full recovery remains an uphill climb, they are not struggling to cure their customers of a "discount addiction." "Those competitors that coped with the recession with price discounts are finding it difficult to increase their prices, having taught their customer that their T-shirts do not have to cost $30 after all."