competitive pricing strategy example

competitive pricing is the process of selecting strategic price points to best take advantage of a product or service based market relative to competition. this type of pricing strategy is generally used once a price for a product or service has reached a level of equilibrium, which occurs when a product has been on the market for a long time and there are many substitutes for the product. rather than compete on price, the business must compete on quality if it hopes to charge a premium price. a business may set the price below the market and potentially take a loss if the business believes that the customer will purchase additional products from their business once the customer is exposed to the other offerings. lastly, a business can choose to charge the same price as its competitors or take the prevailing market price as given. for a business to charge an amount above that of the competition, the business must differentiate the product from those created by competitors.

this strategy requires not only improving the product or service itself, but making sure customers are aware of the differences that justify the premium pricing, through marketing and branding. a loss leader is a good or service being offered at a notable discount, at times resulting in a loss if the products are sold below cost. once the potential customer enters the store environment, shifting to the role of customer once the decision to purchase the loss leader is made, the hope is to attract them to other store products that generate a profit. at times, loss leader prices cannot be officially published as a minimum advertised price has been set by the manufacturer. this allows the retailer to maintain a competitive price point for those who become aware of the competitor’s offer without having to officially change the price within the retailer’s point of sale system. for example, in november 2014, amazon projected price changes to approximately 80 million items in preparation for the holiday season.

it requires thorough research on what your competitors are doing, what they offer and at what price they offer in order to arrive at your own pricing strategy. after finding out your product fit in the market, you need to now understand competitive pricing and analyze how to price the product. there are three methods as to how you can price your product after doing a thorough analysis of your competitors pricing above the competition: offering products or services priced superior to your competitors. pricing below the competition: pricing below competition shouldn’t be a strategy, if at all, your product is limited in terms of features and functionality. but, before arriving at a final price solely based on the above two models, you can compare yourself with the competition and modulate your pricing a bit in order to be in-par with your competitors.

this is a model attributed to short term goals and you’ll be casketing your profits in the long run if you follow the same because as you scale you need to evolve your pricing strategy based on your product and not based on what someone has to offer. one amongst the herd – since it’s a strategy implemented solely based on your co-market players you will not be seen as different and will be a part of a huge herd offering the same products and services. also, the biggest setback is the fact that you’re pricing is based on your competitors’ pricing method. competition based pricing is a bad case of plagiarism when implemented alone and will help you sustain in the market only for a short while. with competition based pricing you’ll be able to keep up with your competitors in the short term but when it is properly used in conjunction with other pricing models it can be a valuable addition to your pricing strategy.

take the example of an airline company. during high demand periods like holiday season and weekends, prices competitive pricing consists of setting the price at the same level as one’s competitors. for example, a firm needs to price a new coffee maker. the firm’s competitors sell it at $25, and the company considers that the best price for the new coffee maker is $25. it decides to set this very price on their own product. competitive pricing is the process of selecting strategic price points to best take advantage for example, apple employs the strategy of focusing on the creation of high-end products, competition based pricing strategy examples, competition based pricing strategy examples, competition based pricing strategy coca cola, competitive pricing strategy advantages and disadvantages, pricing strategies. a classic example of a competitor-based pricing strategy is between pepsi and coca cola. both brands compete against each other over pricing, quality and features, and their prices remain similar, although pepsi is slightly cheaper than coke on average.

competitor based pricing is commonly used to test product pricing, especially if you’re new to the market. it requires for example, if you sold marketing automation software, and your competitors’ prices ranged from what’s competitive pricing? it’s a strategy where businesses take competitor this is an example of four stores that,

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