an industry can be deemed illegal and broken apart by the government Toronto hydro, OPG, Canada Post, LCBO2)When a market is characterized by oligopolistic competition, only a few firms dominate. Firms typically change their prices in reaction to competition to avoid upsetting an otherwise stable competitive environment. banking industry, retail gasoline industry, and commercial airline travel. oReactions to prices here can result in a price war: when two or more firms compete primarily by lowering their prices. New entrants want to gain market share, old companies want to preserve their market share, or want to avoid being insensitive to consumers so they lower pricesoIn many cases, companies do not need to respond to price cuts with price cuts of their 6 | N a t a s h a P a r k
B352 MarketingTues. Oct. 22. 2013.ownbecause consumers do not buy solely on the basis of price. 3)Monopolistic competition: (most common) there are many firms competing for customers in a given market but their products are differentiated. When so many firms compete, product differentiation rather than a strict pricing competition tends to appeal to consumers. 4)With pure competition, consumers perceive many sellers of standardized products/commodities as substitutable (grains, spices, minerals). In such markets, price usually is set according to the laws of supply and demand. (ex: wheat is wheat, so it does not matter to a bakery whose wheat it buys.) oThe secret to pricing success here is not necessarily to offer the lowest price (doing so might create a price war and erode profits.) Instead, some firms decommoditized their products. (ex: coffee beans were all the same, until Juan Valdez made “100% Colombian Coffee” special). opure competition can open the market to new players who are able to charge higher prices based on the convenience they offeroWhen a commodity can be differentiated somehow, even if simply by a sticker or logo, there is an opportunity for consumers to identify it as distinct firms can at least partially extricate their product from a pure competitive market.FIVE - Channel Members•Channel members—manufacturers, wholesalers, and retailers—can have different perspectives when it comes to pricing strategies. Consider a manufacturer that focuses on increasing the image and reputation of its brand but working with a retailer that is concerned with increasing its sales. The manufacturer may desire to keep prices higher to convey a better image, whereas the retailer wants lower prices and will accept lower profits to move the product. •channel members must communicate their pricing goals & select partners that agree with them•Distribution outside normal channels does occur. •A grey market employs irregular but not illegal methods; it legally circumvents authorized channels of distributionto sell goods at prices lower than those intended by the manufacturer. Many manufacturers require retailers to sign an agreement that demands/prohibits certain activities before they may become authorized dealers. But a
You've reached the end of your free preview.
Want to read all 18 pages?