Marketing Management, 16th Edition

Analyzing Competitors’ Prices

Within the range of possible prices identified by market demand and company costs, the firm must take competitors’ costs, prices, and possible reactions into account. If the firm’s offer contains features not offered by the nearest competitor, it should evaluate their worth to the customer and add that value to the competitor’s price. If the competitor’s offer contains some features not offered by the firm, the firm should subtract their value from its own price. Now the firm can decide whether it can charge more than, the same as, or less than the competitor.23

Companies offering the powerful combination of low price and high quality are capturing the hearts and wallets of consumers all over the world.24 Value ...