Dumping
When a firm sells a product in a foreign market cheaper than the normal price to try to put competitors in that nation out of business.Predatory Pricing
Setting a price abnormally low to put a competitor out of business or discourage potential competitors from entering your market. A dubious strategy that is considered anti-competitive behavior that is prohibited by law in many jurisdictions.Loss Leader
A shop or ecommerce site that sells a number of items cheaply to attract customers in the hopes they buy full price items when they visit or in the future.Market Penetration
A low price for a new brand or product that is seeking to gain their first customers and establish brand awareness.Inventory Clearance
Prices designed to clear inventory that is unpopular or soon to be out of season.Product Positioning
A product that isn't seen as high quality by customers may have no other way to position their product than by offering the lowest price.Umbrella Price
A price set by a high quality product or service that has strong customer demand. Weaker competitors need to set prices below the umbrella price or demand for their product will fall towards zero.Commodities
Commodity prices are set by the supply and demand in a market. Individual firms have little or no influence over prices and must accept the market price to sell.Premium Pricing
Brands, products and services that are viewed as high quality by customers. Implies a firm that has discipline in pricing such that they don't lower prices for a quick short term gain but are interested in maintaining their premium image. Premium pricing is still competitive. For example, a luxury hotel might need to beat the price of a nearby competitor that is viewed as more luxurious.| Overview: Price Competition | ||
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Definition | The process of setting competitive prices to achieve objectives in a market. | |
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