Question

State few cost variable of competitors which have to be studied to spot cost advantage.

Answer 1

Answer:

Effective pricing is essential for a business. That’s the only way they’d know at what price they should offer a product, while maintaining a good profit margin and keeping up with the competition. A business can pick from a variety of pricing strategies and the selection depends on different factors.

A business can set a price to maximise profitability on each unit sold or on the overall market share. It can set a price to stop competitors from entering the market, or to increase its market share, or simply to stay in the market.

Pricing is one of the most important components when it comes to creating marketing strategies. The price is one of the first things that a consumer notices about a product and is one of the deciding factors when it comes to their decision to buy it or not.

Needless to say, the competition in the market has gotten much more aggressive and real-time, especially in the age of comparison shopping. This means that businesses need to keep an eye on their competitor’s pricing strategy while setting prices in order to get the much needed competitive edge in the market. Comparing prices online is easy and customers are well aware of the monetary value of a product. These factors are also important considerations while setting competitive prices.

Among the various models of pricing, competitive pricing is one that has caught the fancy of many businesses. Having a monopoly is one thing—you can set the price the way you want (of course there are few government norms) but setting pricing strategies based on competitors’ behavior isn’t an easy task.

Here’s an insight into competitive pricing analysis used by most companies around the world.