4.initiating a price change
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When should a company initiate a price change? Companies often need to cut or raise prices
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Transcript of 4.initiating a price change
When should a company initiate a price change?
Companies often need to cut or raise prices
Initiating Price Cuts
• When plant capacity is excess• To dominate market through lower costs
Possible Traps
• Low quality trap• Fragile-market-share trap• Shallow-pockets trap• Price-war trap
Initiating Price Increases
To increase the profits
To sustain cost inflation
May lead to anticipatory pricing
To tolerate the Overdemand
Making the change look fair is important
Alternatives to Price Hike
• Shrinking the amount of product• Substituting less expensive materials• Reducing features of product• Reducing/removing product services• Creating new economy brands
References and Credits
• Marketing Management – Philip Kotler• http://
www.auditortrainingcentre.com/wp-content/uploads/2015/04/Time-for-change.jpg
• http://sunwiseenergy.com.au/blog/wp-content/uploads/2014/06/electricity-price-rise.jpg
• http://s1.ibtimes.com/sites/www.ibtimes.com/files/styles/v2_article_large/public/2014/09/12/handsinair.jpg?itok=sjIc-I4Y
• https://www.flickr.com/search/?q=price%20war
Disclaimer
Created by Mohith Reddy, IIT Madras
during an internship by Prof. Sameer Mathur, IIM Lucknow.
www.IIMInternship.com
