Marketing Management, 16th Edition

Initiating and Responding to Price Changes

To gain market position, increase sales revenues, and grow profits, companies often take aggressive pricing actions, either lowering their prices, typically to lure competitors’ customers, or raising prices to capture greater value from its current customers.

Initiating Price Cuts

Several circumstances might lead a firm to cut prices. One is excess capacity: The firm needs additional business and cannot generate it through increased sales effort, product improvement, or other measures. Companies sometimes initiate price cuts in a drive to dominate the market through lower costs. Either the company starts with lower costs than its competitors, or it initiates price cuts in the hope of gaining market ...