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Competitive Price

Market Price

Setting the price of a product or service based on what the competition is charging. Competitive pricing is used more often by businesses selling similar products, since services can vary from business to business while the attributes of a product remain similar. This type of pricing strategy is generally used once a price for a product or service has reached a level of equilibrium, which often occurs when a product has been on the market for a long time and there are many substitutes for the product. Businesses have three options when setting the price for a good. They can set it below the competition, at the competition or above the competition. Above the competition pricing requires the business to create an environment that warrants the premium, such as generous payment terms or extra features. A business may set the price below the market - and potentially take a loss - if it thinks that a customer is more likely to buy other products as well. Clearly when setting price it makes sense to look at the price of competitive offerings. For some, competitors price serves as an important reference point from which they set their price. In some industries, particularly those in which there are a few dominant competitors and many small companies, the top companies are in the position of holding price leadership roles where they are often the first in the industry to change price. Smaller companies must then assume a price follower role and react once the big companies adjust their price. Not all selling situations allow the marketer to have advanced knowledge of the prices offered by competitors. While the Internet has made researching competitor pricing a relatively routine exercise, this is not the case in markets where bid pricing occurs. Bid pricing typically requires a marketer to submit a price to a potential buyer that is sealed or unseen by competitors. It is not until all bids are obtained and unsealed that the marketer is informed of the price listed by competitors. Bid pricing occurs in several industries though it is a standard requirement when selling to local, national and international governments. In these situations the marketers pricing strategy depends on the projected winning bid price, which is generally the lowest price. However, price alone is only the deciding factor if the bidder meets certain qualifications. The fact that marketers often operate in the dark in terms of available competitor research, makes this type pricing one of the most challenging of all pricing setting methods. Pricing Strategies are required for product placement,competition, marketing strategy and product promotion. In this competitive world to acquire a dominant place it is necessary that the firms have individual and competitive pricing strategy. Various big companies like Wipro, Unilever, Cadburys, Whirlpool, Godrej, are good examples for following good pricing strategies, which include strategies for market penetration, owning a niche, creating a demand for the product or having a monopoly in the market. Pricing strategies contribute towards better revenues , retain customer, or market revenues, market segments , and allows you to keep a good hold in the market even when the market is showing a steep rise or downfalls. The most important element of an effective market strategy is the ability to maximise and protect the price of the product price is the final measure of customer value and competitive advantage. Strategic pricing clarifies the relation between market segmentation and price , and delivers the tools your organisation needs to stay focussed on value as you determine break-even, define price elasticity, and analyse trade-offs between features and price points. Using strategic pricing tools yields a better positioning approach.