by While changing price of any products, many reactions may come from concerned sides. At first reaction may come from consumers. Such reactions may be positive when price is cut down and negative when it is increased. The company should carefully as well as logically answer both reactions. In the same way, competitors’ reactions may also come. The company should give satisfactory answer to them with all reasons such as cost, market study, transport expenses, administrative expenses, etc. The following strategies should be adopted to face reactions of competitors and distributors.
- Maintaining Price
The producers should try their best to maintain price at the same rate. Producers may cut down some percent of profit. The existing market segments can be maintained with such strategy. Along with this, opportunity can be found to enter new market segments. In this way, sale quantity may increase.
- Increasing Price and quality
Producer may increase in existing quality and price. Production companies may bring in markets the new products or adding new features to the products challenging their competitors. Little more prices of such products do affect competitors so much. However, such analysis cannot last long. Other competitors also may adopt such strategy. This may be only a periodical means to stop competitors’ reactions. After sometime, the company should seek other alternatives.
- Reducing price
Most of the customers become conscious about price. So, the producer should cut down the price of the products after certain time. Competitors of similar products also may adopt this strategy. The producers who cannot adopt such policy may get compelled to quit main market segments among many segments. Such markets once quitted need very hard labor to supply products to there again. Policy of taking low percent of profit should be adopted. Even decreasing price, quality, features and services should be maintained same. Only then, products can control markets.
Reactions of Competitors
Marketing executives must have a clear idea of the competitive environment in which they operate to estimate the extent of pricing flexibility available.
Like the customers, competitors also react to the price change of a company’s product. This reaction is inevitable if there are few competitors if buyers are highly informed, and if the product is homogeneous.
Like customers and competitors, the distributors, suppliers, and government may also react to a company’s price changes.
Reactions of Customers
Customers may react differently to price cuts, such as the item may be abandoned; it is faulty or not selling well; the firm may quit from this business; its quality has been reduced, or price may come down further.
Customers may equally react to the price increase of an item.
The price increase, though, normally reduces sales, may carry some positive meaning as well. Customers may consider the item as “hot” and may rush to buy it, anticipating that it may not be available in the future, or they may consider the item worth even if the price is raised.
Customers are normally price-sensitive to costly items or items frequently bought compared to less costly and less frequently bought items.
