Competitive Pricing Strategy

Introduction:

Competitive pricing is a long-term pricing strategy where a business sets its prices at a similar level to those charged by competitors and rivals in the market. Under this strategy, a company competes with others primarily on factors other than price, such as convenience, customer service, or after-sales support.

Key Points

Matching Competitor Prices:

In competitive pricing, a business closely observes the prices set by its competitors and aims to match or align its prices with those in the market. This approach helps the company remain competitive within the industry.

Competing on Non-Price Factors:

Instead of relying solely on lower prices, businesses employing competitive pricing differentiate themselves by offering better features, quality, appearance, convenience, customer service, or post-purchase support. These additional value propositions help attract and retain customers.

Market Price:

When a business sets its price to match that of the market or industry leaders, it is referred to as the market price. This approach is often used when the product's features and quality are comparable to or on par with competitors.

Summary

In summary, competitive pricing involves aligning a business's prices with those of its competitors while focusing on offering additional value to customers beyond just the price. This strategy is especially effective when a company can differentiate itself in terms of product features or customer experience.