The Strategy and Tactics of Pricing, 5th Edition

Chapter 11Competition

Managing Conflict Thoughtfully

Pricing against competition is more challenging and hazardous than pricing a unique product.¹ In the absence of competition, managers can anticipate the effect of a price change entirely by analyzing buyers’ price sensitivity. When a product is just one among many, however, competitors can wreak havoc with such predictions. Price discounting in competitive markets—whether explicit or disguised with rebates, coupons, or generous payment terms—is almost a sure bet to enhance immediate sales and profits. It is easy to become seduced by these quick highs and fail to recognize the long-term consequences. The price cut that boosts your sales today will invariably change the industry you compete ...