In the business world, retaining and increasing market share may require some sacrifices. The free market economy allows for competition. In fact, it thrives on competition. Consumers of goods and services are looking at getting more value for less money. Thus, a business is forced to review the value it offers as well as the price it gives it to the market. It can be very demanding on the business at that particular time as the competitor may have the capacity to easily mark down prices. However, there needs to be a price review to ensure that business is not taken by customers to the competitor.

Breaking it down

Thus, there is the existence of competitive pricing. Competitive pricingis the strategic use of pricing points to generate more sales for a product. The essence is to have more sales for the product. However, the benefit of this strategy is predicated on the market reception of the product and the branding. The business must have studied the market to know how the product will fare. On the flipside, competitive pricing has helped many brands retain their market share and gain more customers.

Competitive pricing and matching offers

It happens with big brands. This occurs when a company offers a mark down on the prices of many items and its competitors didn’t anticipate or plan for this. The competitors can simply offer a matching price program to have the same prices as the competitor. The prices are not going lower but are at par. For instance, in the American retail sector, Walmart and BestBuy are competitors with Amazon. If there is a price reduction by Amazon on products, it is expected that these also match the price reduction so that they wouldn’t lose their market share to Amazon. This played out in 2014 when Amazon projected price changes to approximately 80 million items in preparation for the holiday season. Walmart and BestBuy announced a price matching program.

Premium Pricing

How do you think Apple has been able to stay in the market with its expensive products and the biggest market share in the telecommunication market in the United States? The company has always offered premium pricing and has relied solely on the brand image it has created for itself. With the use of innovation, uniqueness, beauty, and elegance, the company creates high-end products that are largely and widely accepted by its customers all over the world. For a business to be able to achieve this, there must be a difference in what the business is offering. The product must be difference from others of its kind in the market. More, the manufacturer must focus on the competitive edge of the product projecting it as unique and innovative.

Loss Leaders

This is a strategywhereby the price of a product is offered at a notable discount. The essence of this is to drive more sales for the products. However, if sales don’t meet up to expectation there can be loss as cost hasn’t been derived.