Does this sound familiar? 

Your company's revenues are declining due to the recession.  Your sales are down, your orders are cancelled, your invoices don't get paid in a timely manner (or at all).  Your customers are shopping on price, switching to your competition, or going out of business.  Competition is heating up to a greater effort to chase after limited sales.

Your expenses, on the other hand, are largely fixed costs and, therefore, remain stable or are increasing.  Your Cost of Goods Sold (CGS) percentage grows higher and higher each month.  Your building's lease still needs to get paid, your suppliers have raised their prices, your bank is calling in their loan(s), and your employees are chomping at the bit for their paychecks, wondering if they are going to be getting a raise this year.

So, with decreasing revenues and high expenses, your cash flow becomes tighter and tighter.  You need cash to keep the business running.  You cannot get more cash due to stricter lending policies.  You cannot collect on your receivables.  Your company is experiencing "Cash Squeeze."

All of this adds up to a decline in profitability, or negative profitability.  Your stockholders are not happy. 

So in a desperate attempt to reverse this cycle, you spend more money (again increasing your expenses) to discount, promote, incent, entice ... anything to "steal" sales away from your competitors and put money back in your company's pockets.  The classic battle for market share.