Thursday, December 20, 2012

How to Respond to Price Attack by Aggressive Competitor?

1. Estimate the sales loss and profit loss that would be suffered by the company if price is reduced to maintain the market share.

2. Find out response alternatives and see if any alternative would lower sales and profit sales.

3. Assess, if you reduce the price, whether competitor will reduce the price further to capture his market share target. (This requires assessment of cost data of competitors and see whether competitors can still reduce price).

4. Think of multiple responses that protect higher price and margin sales.

5. If competitor is attacking in a particular market, assess its effect on the geographies and other product markets.

How to manage an aggressive competitor
George E. Cressman, Jr.
Senior Pricer and Director, Strategic Pricing Group, Inc., Waltham, Massachusetts
Thomas T. Nagle
Chairman, Strategic Pricing Group, Inc., Waltham, Massachusetts

Business Horizons / March-April 2002, Pp.23-30

Business Marketing Management
Michael D. Hutt and Thomas W. Speh

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