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When should a company initiate a price change

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Sameer Mathur
Sameer Mathur

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Marketing
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INITIATING AND RESPONDING TO PRICE CHANGES
COMPANIES OFTEN : 1. CUT PRICES 2. RAISE PRICES
INITIATING PRICE CUTS •EXCESS PLANT CAPACITY •DRIVE TO DOMINATE MARKET THROUGH LOWER COSTS
TRAPS DUE TO PRICE CUTS •LOW-QUALITY TRAP (CONSUMERS ASSUME QUALITY IS LOW) •FRAGILE MARKET SHARE TRAP ( NO MARKET LOYALTY )
• SHALLOW POCKETS TRAP LONGER STAYING POWER DEEPER CASH RESERVES TRAPS DUE TO PRICE CUTS
•PRICE WAR TRAP TRAPS DUE TO PRICE CUTS
INITIATING PRICE INCREASE • COST INFLATION •ANTICIPATORY PRICING •OVER DEMAND
WAYS TO INCREASE PRICE •DELAYED QUOTATION PRICING • ESCALATOR CLAUSES ( TODAYS PRICE+RISE DUE TO INFLATION )
•UNBUNDLING •DISCOUNT REDUCTION WAYS TO INCREASE PRICE
COMPANY SHOUDN’T BE PRICE GOUGERS
ALTERNATES ADOPTED TO AVOID PRICE INCREASE • PRODUCT DOWNSIZING •REDUCING PRODUCT SERVICES , EX-FREE INSTALLATION •USING LESS EXPENSIVE PACKAGING MATERIAL •REDUCING THE NUMBER OF MODELS OFFERED
PRODUCT DOWNSIZING
LESS EXPENSIVE BUT EXCELLENT PACKAGING
REDUCING THE NUMBER OF MODELS
REDUCING PRODUCT SERVICES ( REMOVING FREE INSTALLATION )
SUMMARY PRICE DECREASE IS BROUGHT ABOUT BY- • EXCESS PLANT CAPACITY • DECLINING MARKET SHARE • ECONOMIC RECESSION PRICE INCREASE IS BROUGHT BY- • COST INFLATION • OVERDEMAND N.B.- COMPANIES MUST CAREFULLY MANAGE CUSTOMER PERCEPTIONS.
AKASH RANJAN PRADHAN NIT ROURKELA DURING A MARKETING INTERNSHIP BY PROF.SAMEER MATHUR IIM LUCKNOW WWW.IIMINTERNSHIP.COM CREATED BY

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