An organization may initiate price changes to respond to new forces in the market or within the organization. Prices can be increased or decreased. Lowering prices is a risky strategy that could lead to a price war with competitors. Imitating a competitor's price change is an effective low-cost strategy, especially when making pricing decisions is difficult.

2. oCut off pricing
oResponding to competitors price change.
o Imitating the price.

3. INITIATING PRICES (price cutoffs) :
An organization may initiate price
changes to deal with new forces arising within
the organization or the market. The price
change may occur at both directions: increasing
price or lowering prices.

4. INCREASING PRICE
Increasing price of a product is an attractive
proposition for every business organization, since a small
increase in the price results in huge increase in the
revenue and profits.

5. LOWERING PRICE:
Several situations lead an
organization to reduce the price
of its products. Organizations
with excess capacity try for
extra sales in order to achieve
higher capacity utilization rates.

6. Lowering price is very risky strategy.
It usually invites sharp reactions
from competitors and often results
into a price war. Care less prices cuts
may lead an organization into the
following traps:
 Low quality trap
 Fragile market trap
Shallow pocket trap

8. Imitation is an effective way for saving
time and attention in decision-making. It is
a common product of bounded rationality
and effort-saving heuristics. To imitate the
answers of the savy and the well-informed
is a low-cost strategy, especially when the
task of choosing is difficult.