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INITIATING PRICE CHANGE
Initiating Price Cuts
WHY???
EXCESS CAPACITY
DOMINATING MARKET SHARE
Low Quality Trap -Customers’ Perception
Fragile-market-share Trap -Customers shift to any low priced firm
Shallow-pockets trap -Higher Priced competitors match the lower price, but stay longer in power due to deeper cash reserves
Price-war trap Competitors respond by lowering their prices even more
Initiating Price Increases
Delayed Quotation pricing
The company does not set a final price until the product is finished or
delivered
Escalator ClausesThe company requires the customer to pay today’s
price and all or part of any inflation increase that takes place before delivery
UnbundlingRemoves free delivery or
installation
Reduction of DiscountsNo more normal cash and quantity
discounts
Smart Vending Machines -Raise prices as temperatures rose
ALTERNATIVE APPROACHES AVOIDING INCREASING PRICES
Shrinking Amount
Substituting less-expensive ingredients
Using less expensive packaging
Created by Subhasis Panda, IIT Bombay, during an internship by Prof.Sameer Mathur, IIM Lucknowwww.IIMInternship.com