P roduct price changes buye r re a ctions to price

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Unformatted text preview: re a s ing P rice • Alte rna tive s to Incre a s ing P rice R e ducing product s ize , us ing le s s Re e xpe ns ive ma te ria ls , unbundling the product. p roduct. Price Changes • Buye r re a ctions to price cha nge s mus t Buye be cons ide re d. be • C ompe titors a re more like ly to re a ct to Compe p rice cha nge s unde r ce rta in conditions . c onditions Numbe r of firms is s ma ll P roduct is uniform Buye rs a re we ll informe d Price Changes • R e s pond To P rice Cha nge s Only If: Re Ma rke t s ha re / profits will be ne ga tive ly Ma a ffe cte d if nothing is cha nge d. Effe ctive a ction ca n be ta ke n: R e ducing price R ais ing pe rce ive d quality Im proving quality and incre as ing price Im Launching low-price “ fighting brand” Launching Public Policy and Pricing • P ricing within C ha nne l Le ve ls w ithin P rice -fixing C om pe titors can not work with e ach othe r to s e t price s P re da tory pricing Firm s m ay not s e ll be low cos t with the inte ntion of punis hing a com pe titor or gaining h ighe r long-run profits or running a com pe titor out of bus ine s s . o ut Public Policy and Pricing • P ricing acros s C ha nne l Le ve ls a cros P rice dis crimina tion Re ta il price ma inte na nce De ce ptive pricing Bogus re fe re nce / com paris on pricing B ogus S canne r fraud Price confus ion P rice...
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