How do you deal with market race to bottom competition?

Navigating a market race to the bottom is like playing a game of limbo – you need to find your unique value proposition and avoid getting stuck in the lowest price pit!

I listened to a YC video that briefly covered this. This race to the bottom doesn't help you or your competitors. In this scenario you've made your unique selling point as the low cost of your product, when it should be about your product, brand, -- whatever makes your product different and better for the customers you are serving. I am no expert, but I suggest to focus on the product and brand more