How should a company respond to a competitor's price change
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A firm facing a competitor's price cut must consider several factors in determining their response: the product life cycle stage, their portfolio, the competitor's intentions and resources, market price and quality sensitivity, their own cost structure, alternative opportunities, and whether the market is homogeneous or non-homogeneous. In a homogeneous market, the firm can lower costs, enhance their product, or match the price if beneficial. In a non-homogeneous market, the firm must understand the competitor's intent, whether the price change is temporary, and how it may impact their market share and profits as well as how other companies may respond.
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How should a company respond to a competitor's price change
- 1. RESPONDING TO COMPETITORS’ PRICE CHANGE
- 2. HOW SHOULD A FIRM RESPOND TO A COMPETITORS’ PRICE CUT?
- 3. THE COMPANY MUST CONSIDER: PRODUCT’S STAGE IN THE LIFE CYCLE
- 4. COMPANY’S PORTFOLIO THE COMPANY MUST CONSIDER:
- 5. COMPETITORS’ INTENTION AND RESOURCES THE COMPANY MUST CONSIDER:
- 6. MARKET’S PRICE & QUALITY SENSITIVITY THE COMPANY MUST CONSIDER:
- 7. BEHAVIOUR OF COSTS WITH VOLUME THE COMPANY MUST CONSIDER:
- 8. ALTERNATIVE OPPORTUNITIES THE COMPANY MUST CONSIDER:
- 9. HOMOGENEOUS MARKET COST CUT? ENHANCE ITS AUGMENTED PRODUCT COST RISE? MATCH THE PRICE ONLY IF BENEFICIAL TO INDUSTRY
- 11. ISSUES CONSIDERED IN NON HOMOGENEOUS MARKET WHY DID THE COMPETITOR CHANGE PRICE ?
- 12. DOES HE PLAN TO MAKE THE PRICE CHANGE TEMPORARY OR PERMANENT ? ISSUES CONSIDERED IN NON HOMOGENEOUS MARKET
- 13. WHAT WILL HAPPEN TO COMPANY’S MARKET SHARE & PROFIT ? ISSUES CONSIDERED IN NON HOMOGENEOUS MARKET
- 14. WHAT ABOUT OTHER COMPANIES ? WILL THEY RESPOND ? ISSUES CONSIDERED IN NON HOMOGENEOUS MARKET
- 16. RESPONSE TO LOW COST COMPETITORS FURTHER DIFFERENTIATE THE PRODUCT OR SERVICE
- 17. INTRODUCE A LOW COST VENTURE RESPONSE TO LOW COST COMPETITORS
- 18. REINVENT AS A LOW COST PLAYER RESPONSE TO LOW COST COMPETITORS
- 19. SUMMARY THE FIRM FACING A COMPETITORS’ PRICE CHANGE MUST: • UNDERSTAND COMPETITORS’ INTENT •KNOW ABOUT HOMOGENEOUS AND NON HOMOGENEOUS PRODUCT •TRANSFORM ITSELF OR DIFFERENTIATE ITSELF ACCORDING TO THE COMPETITOR
- 21. AKASH RANJAN PRADHAN NIT ROURKELA DURING A MARKETING INTERNSHIP BY PROF.SAMEER MATHUR IIM LUCKNOW WWW.IIMINTERNSHIP.COM CREATED BY