Living in Asia, this mentality seems almost pervasive. Businesses here seem very, very unwilling (afraid, even) to compete by Branding Up. They are far more willing to find ways to “cut costs” and “lower prices” in order to starve out the competition and increase market share.
Personally, I’m not sure that pandering to the mass market is the way to go; relying on bulk has never been appealing to me. Yet, you certainly have to have a certain amount of “traffic” in order to survive as a business.
I suppose I can see what Martin Guitar’s is up against.
[Update: Seth Godin has a really interesting comment regarding Pricing, “Most people don’t really care about price“]