This document discusses developing pricing strategies and programs in response to competitor price changes. It recommends that in homogeneous product markets, companies should enhance their augmented product or meet the price reduction. In non-homogeneous markets, companies should consider why the competitor changed price and if it is temporary or permanent, and how other firms and the company will be affected. The document also suggests differentiating products/services, introducing low-cost ventures, or reinventing as a low-cost player when facing low-cost competitors. Companies are advised to react decisively to competitor price changes within hours or days.

1. DEVELOPING PRICING
STRATEGIES AND PROGRAMS

2. How should a company respond
to a competitor's
price change?

3. The best response
Depends on the
situation

4. Take care of them

5. In homogeneous product market
Search ways to enhance its augmented product
OR
Meet the price reduction

6. In Non homogeneous product
market
Consider the following issues…

7. Why did the competitor change the price?
Is the change temporary or
permanent?
What effect will this change have on the
company?
How will other firms’ respond?

8. Using price…
AMD has attacked Intel
Schick has attacked Gillette

9. Possible responses to low cost
competitors
Differentiate the product / service
Introduce a low cost venture
Reinvent as a low cost player

10. When competitors change the
price

11. in thinking
React
Decisively
within
hours or
days

12. LET’S RECAP
Reaction of the firm due to competitors’ price
change
 In homogeneous market
 In non homogeneous market

14. Created by :
Tanvi Maheshwari
Lady Shri Ram College for
Women,
during an internship by
Prof. Sameer Mathur,
IIM Lucknow