2 pages building and sustaining competitive advantage.docx - Running Head Building and Sustaining a Competitive Advantage Building and Sustaining a

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Running Head: Building and Sustaining a Competitive Advantage 1 Building and Sustaining a Competitive Advantage Name Institution Date
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Building and Sustaining a Competitive Advantage 2 Building and Sustaining a Competitive Advantage What is the key to profitable pricing in the context of a competitive environment? In the context of a competitive environment, it is important that the business sets the right price which can enable it to realize the right volumes of sales and profitability levels. The challenge the business faces in trying to have a good price is the reaction of the competition. To begin with, in a competitive environment, the elasticity of demand tends to be elastic (Nagle, Hogan & Zale, 2011). Therefore, a price differential is likely to displace a huge portion of a firm’s sales either for or against the competition. Thus, if the business prices are higher than the competition, then it runs a risk of losing sales. On the other hand, a lower price guarantees more sales, especially if the competition is unable to respond.
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