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Summary of the topic - Competition

HA2 - Hospodářská angličtina 2

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Vyučující: Mgr. Dita Gálová

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he product and grab a large slice of the market by selling their similar product at a lower price. PRICING FOR MARKET PENETRATION Once the market has been skimmed, companies reduce the price to encourage greater sales and go for market penetration. Of course, they have to make sure that they have the manufacturing capacity available to satisfy the increased demand. If they are able to produce the product in sufficient numbers, they will gain economies of scale, as each unit sold makes a lower contribution to the fixed costs. However, early adopters who paid a high premium to obtain the earliest examples of the product may be angry if the price drops too far, too quickly. This means they will be reluctant to purchase any future innovation straightaway because they will be expecting that the price will soon go down. PRICING FOR EXPORT Firms may decide to adopt an aggressive pricing policy to help them sell their goods in overseas markets. The assumption here is that all original costs and overheads have already been absorbed by the initial production. Therefore, the price of any further units only needs to cover the variable costs and make a reasonable profit. This is an effective way of quickly obtaining market share in an overseas market and hurting your foreign competitors. Two dangers of this approach are that your firm could be accused of dumping, or leave itself vulnerable to the working of the so-called grey market. Quality While businesses have always been concerned with the quality of their goods or services, in the past two decades the quest for quality has almost become an obsession. This can partly be explained by changes in the availability of goods. In a seller’s market where goods are in short supply, consumers may be prepared to accept products which are ‘good enough’. For instance, in the past consumers who had waited months for the delivery of a car would have expected that there would be teething problems in the months following its delivery. Nowadays, the car market has become saturated and choice far exceeds demand. Manufacturers compete more and more on quality and after-sales service. A brand’s reputation for quality and reliability often defines the consumer’s choice or repeat p

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Vloženo: 2.10.2009

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