Competitor-orientated pricing is risky where a firm's cost position is stronger than its competitors.

Question

Quizplus · Accepted Answer

Competitor-orientated pricing involves setting prices based on the prices of competitors. This strategy can be risky because it does not take into account a firm's cost position. If a firm has a stronger cost position compared to its competitors, it may be able to offer lower prices while still maintaining profitability. In this case, competitor-orientated pricing would undervalue the firm's products or services and lead to lower profits. Therefore, it is important for firms to consider both their cost position and their competitors' prices when setting prices.

Competitor-Orientated Pricing Is Risky Where a Firm's Cost Position Is