How should a company respond to a competitor’s price change

Analyze product’s role

• Importance in company’s portfolio• Competitors intention• Market’s price• Quality sensitivity

Homogenous Product Market

Enhancing the augmented productOr

Slashing the price to meet competitor’s

In nonhomogeneous product markets, the following four questions need to be addressed.

Why did competitor change the price?• To steal the market• To utilize capacity• To meet inflation

Is the change temporary of permanent?

What if company doesn’t respond?

What are others likely responses to every reaction?

Short Response Time

Better to anticipate changesand prepare contingentresponses

Recap-Questions

• Why did the competitor change price?

• Is the change permanent or temporary?

• What happens if company doesn’t respond?

• What are others responses likely to be to each reaction?

References and Credits

• Marketing Management – Philip Kotler• http://

www.wsnewspublishers.com/wp-content/uploads/2015/05/Why.jpg

• https://nbry.files.wordpress.com/2011/09/niche-market.jpg

• http://moms4mom.in/wp-content/uploads/2015/03/others.jpg

• http://www.bigisthenewsmall.com/wp-content/uploads/2014/05/no-response.jpg

• http://blogs.ft.com/nick-butler/files/2014/11/Crude-oil-Brent-price-timeline.png

Disclaimer

Created by Mohith Reddy, IIT Madras

during an internship by Prof. Sameer Mathur, IIM Lucknow.

www.IIMInternship.com