What are the key issues related to initiating and responding to price changes? Discuss the key issues related to initiating and responding to price changes. When a firm considers initiating a price change, it must consider customers’ and competitors’ reactions. If a swift reaction is desirable, the firm should preplan its reactions to different possible price actions by competitors.
What factors need to be considered while initiating and responding to a price change? There are several factors a business needs to consider in setting a price: Competitors – a huge impact on pricing decisions. The relative market shares (or market strength) of competitors influences whether a business can set prices independently, or whether it has to follow the lead shown by competitors.
What are some of the situations that may initialize price changes? One such circumstance is excess capacity, which requires initiating price changes. Another situation is falling demand in the face of strong price competition or a weakening economy. The company may also cut prices in a drive to dominate the market through lower costs.
How would you respond to price changes? The most widely used measure of consumer response to price changes is price elasticity (Schindler, 2012), which is the percentage change in demand for a one-percent change in price. Price elasticity is the numerical representation of consumer’s price sensitivity towards a particular brand (or product).
What are the key issues related to initiating and responding to price changes? – Related Questions
Why should a company initiate for a price change?
Companies are bound to face market situations where they are required to initiate price changes. It means, either they are to cut the prices or increase the present prices to survive, maintain status quo or further growth. Initiating price changes involves two possibilities of price cuts and price increases.
What are the 4 factors that affect price?
Price Determination: 6 Factors Affecting Price Determination of Product
Product Cost: The most important factor affecting the price of a product is its cost.
The Utility and Demand:
Extent of Competition in the Market:
Government and Legal Regulations:
Pricing Objectives:
Marketing Methods Used:
What are the 4 types of pricing?
Apart from the four basic pricing strategies — premium, skimming, economy or value and penetration — there can be several other variations on these. A product is the item offered for sale. A product can be a service or an item.
What situations may lead a firm to consider cutting its prices?
But what situations may lead a firm to consider cutting its prices
How do you respond to a competitor price change?
How to respond to competitor price changes without starting a
1 – Split competitors into different tiers. It is important to take a wide range of competitors into account.
2 – Accept a small pricing gap to avoid a race to the bottom.
3 – Think Of When To Price-up & Work Towards Healthier Margins.
What does price change mean?
What Is a Price Change
What are the competitors reaction to price changes?
Price changes by a company rarely go unanswered by competitors. Reactions may be strong and aggressive (for instance reducing prices further when price cuts have been initiated by a company) if the competitor is the market leader, or an aggressive challenger.
What issues does a company need to consider when a competitor initiates a price change?
When a firm considers initiating a price change, it must consider customers’ and competitors’ reactions.
Why do Firm have to cut the price in certain circumstances?
Circumstances under which prices may be cut are as follows:
When should I use going rate?
Going rate pricing is when a business sets the price of their product or service based on the market price. This pricing strategy is often used to price similar products, like commodities or generic items, that have little variation in design and function.
What are the three factors that influence pricing?
The three major influences on pricing decisions are customers, competitors, and costs. The customers influence pricing through their demand for product and services. Competitors, on the other hand, affect price by providing or not providing alternative product.
What is highest price strategy?
High price strategies
What are the factors affecting the market?
Factors affecting stock market
Supply and demand. There are so many factors that affect the market.
Company related factors.
Investor sentiment.
Interest rates.
Politics.
Current events.
Natural calamities.
Exchange rates.
What are the 5 pricing techniques?
Consider these five common strategies that many new businesses use to attract customers.
Price skimming. Skimming involves setting high prices when a product is introduced and then gradually lowering the price as more competitors enter the market.
Market penetration pricing.
Premium pricing.
Economy pricing.
Bundle pricing.
What is unique pricing?
A price which is the same in all outlets at which the product is sold. Unique prices can usually be collected centrally or by visiting a single outlet.
What are the main goals of pricing?
Pricing Goals
To maximise profit.
To maximise revenue.
To maximise quantity.
To maximise profit margins.
To differentiate from competitors.
To promote social fairness.
To follow external controls.
What are the four main reasons businesses might cut their prices?
There are ONLY four reasons to offer customers a discount:
To move out slow-moving inventory/items or discontinue a service of product.
To make room for new models, products, or services.
To attract price shopper customers.
To reward long-term customers.
