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Predatory pricing is a commercial pricing strategy which involves the use of large scale undercutting to eliminate competition. This is where an industry dominant firm with sizable market power will deliberately reduce the prices of a product or service to loss-making levels to attract all consumers and create a monopoly. [1]
While it may appear that MFCs benefit consumers because prices are lowered, authorities increasingly argue that such clauses prevent the offer of lower prices elsewhere and make the market entry of competitive offers considerably more difficult because they prevent new entrants from offering products at lower prices. It thus prevents competition.
Contestable markets are characterized by "hit and run" competition; if a firm in a contestable market raises its prices so as to begin to earn excess profits, potential rivals will enter the market, hoping to exploit the high price for easy profit. When the original incumbent firm(s) respond by returning prices to levels consistent with normal ...
Moreover, the negative effects of price wars on companies can extend beyond the short term, as the companies involved may struggle to recover their lost profits and maintain their market share. [4] Firms may be cautious when engaging in price wars as this competition can lead to prices that are unsustainable for long-term profitability. [5]
Price Intelligence (or Competitive Price Monitoring) refers to the awareness of market-level pricing intricacies and the impact on business, typically using modern data mining techniques. It is differentiated from other pricing models by the extent and accuracy of the competitive pricing analysis. [ 1 ]
"Pricing is competitive. We're seeing the pricing in the category more normalized, and that allows us to compete effectively and continue to grow all three brands, which are showing solid ...
Pricing strategies and tactics vary from company to company, and also differ across countries, cultures, industries and over time, with the maturing of industries and markets and changes in wider economic conditions. [2] Pricing strategies determine the price companies set for their products. The price can be set to maximize profitability for ...
A graphical representation of Porter's five forces. Porter's Five Forces Framework is a method of analysing the competitive environment of a business. It draws from industrial organization (IO) economics to derive five forces that determine the competitive intensity and, therefore, the attractiveness (or lack thereof) of an industry in terms of its profitability.