How should a company respond to a competitor's price change
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Transcript of How should a company respond to a competitor's price change
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RESPONDING TO COMPETITORS’PRICE CHANGE
-KARTIK BHARGAVA
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FACTORS TO CONSIDER
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•Product’s stage in life cycle
•Its importance in company’s portfolio
•The competitor’s intention and resources
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•The market’s price and quality sensitivity
•The behaviour of costs with volume
•The company’s alternative opportunities
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HOMOGENOUS MARKET
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•Find a way to enhance the augmented product or meet the price reductions
•Price increased only if it benefits the industry as a whole
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NON-HOMOGENOUS MARKET
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Why did the competitor change the price ?
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Does the competitor plan to make the price change temporary or permanent?
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What will happen to the company’s market and profits if it does not respond?
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What are the competitors’ and other firms’ responses likely to be to each possible reaction?
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Reaction to low-cost competitors
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•Further differentiate the product or service
•Introduce a low-cost venture
•Reinvent as a low-cost layer