pricing change
TRANSCRIPT
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Presentation on
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CONTENTSoCut off pricing
oResponding to competitors price change.
o Imitating the price.
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INITIATING PRICES (price cutoffs) :
An organization may initiate price changes to deal with new forces arising within the organization or the market. The price change may occur at both directions: increasing price or lowering prices.
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INCREASING PRICE Increasing price of a product is an attractive proposition for every business organization, since a small increase in the price results in huge increase in the revenue and profits.
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LOWERING PRICE:
Several situations lead an organization to reduce the price of its products. Organizations with excess capacity try for extra sales in order to achieve higher capacity utilization rates.
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Lowering price is very risky strategy. It usually invites sharp reactions from competitors and often results into a price war. Care less prices cuts may lead an organization into the following traps:
Low quality trap
Fragile market trap
Shallow pocket trap
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RESPONDING TO COMPETITORS PRICE
CHANGE
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Imitation is an effective way for saving time and attention in decision-making. It is a common product of bounded rationality and effort-saving heuristics. To imitate the answers of the savy and the well-informed is a low-cost strategy, especially when the task of choosing is difficult.
imitatingBoth direction Increase-Decrease
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