HOW TO RESPOND TO A COMPETITOR’S PRICE

CHANGES?

When in case of a high product homogeneity:

If a competitor raises its price in a homogeneous product market, other firms might not match it if the increasing

will not benefit the industry as a whole. Then the leader will need to roll back the increase.

But in Non homogeneous society:

It needs to consider a few issues like….

Why did the competitorchange the price?

Does the competitor plan to make the price change permanent ortemporary?

What will happen to the company’s market share and profits if itdoes not respond?

Are other companies going to respond?

What are the competitor’s and other firms’ responseslikely going to be to each possible reaction?

THERE ARE THREE POSSIBLE RESPONSES TO LOW-COST

COMPETITORS

#1 Further Differentiate the Product or Service

THERE ARE THREE POSSIBLE RESPONSES TO LOW-COST

COMPETITORS

#2 Introduce a low-cost venture

THERE ARE THREE POSSIBLE RESPONSES TO LOW-COST

COMPETITORS

#3 Re-invent a low-cost player.

And that about wraps it up.

THANK YOU

.

Created byKunal Eapen, IIIT AllahabadDuring an internship under

Prof Sameer Mathur, IIM Lucknow

www.iiminternship.com