Strategic Management: Formulation and Implementation

Initiating And Responding To Price Changes

Several circumstances might lead a firm to cut its price, for example: excess capacity, falling market share.

Companies will also initiate price cuts in a drive to dominate the market through lower costs.

Circumstances provoking price increase are: the occurrence of cost inflation or overdemand.

When a firm considers initiating a price change, it must carefully consider customer's and competitors' reactions. The firm initiating the price change must also anticipate the probable reactions of suppliers, middlemen, and government.

The company that faces a price change initiated by a competitor must try understand competitor's intent and the likely duration of the change. The best response requires an analysis of the particular situation.

A Functional Strategy For The Place Component

Functional strategy for the place component identifies where, when, and by whom the product/ services are to be offered for sale. The primary concern here is the channel(s) of distributions.