Competitive Pricing - Meaning, Strategies, Advantages, and Examples of FedEx and Walmart (Video 226)

Competitive pricing refers to the process of selecting a pricing strategy based on the product prices of rival brands.

Competitive pricing is generally used in markets that have lots of competitors with similar products.

Competitive Pricing Strategies.

Setting higher prices

If an organization sets higher prices, then it needs to differentiate the product and position it as a premium item. The customers should be made aware of the uniqueness to justify the price.

Setting lower prices

Organizations set the price at lower rates than those of the competitors and sell at a loss to increase their customer base. The mindset is to hook the customer to the product, increase sales and thus generate profit.

Matching the price levels

The safest bet for an organization is to match the price levels of the competitor brands to maintain the customer base and sales figures.

Competitive Pricing Advantages

1. Keeps the price competition minimum
2. Prevents the loss of market share to rival brands
3. Retailers can maintain control over their product position
4. Can know about the strategies of rival brands
5. Organizations can avoid the trial and error costs it normally incurs while creating a pricing strategy
6. Competitive pricing strategy helps to achieve equilibrium

Competitive Pricing Disadvantages

1. If the revenue does not cover production cost then it is a loss for the organization
2. Creates passive mindset amongst the employees

Competitive Pricing Examples

1. Pepsi vs Coke
2. McDonald's vs Burger King
3. Federal Express (FedEx) vs The United States Postal Service ( USPS)
4. Amazon vs Walmart

This video is on Competitive Pricing and it has the following sub-topics.

Time Stamps

0:00 Introduction to Competitive Pricing
00:22 Definition of Competitive Pricing
00:47 What is Competitive Pricing?
01:18 Competitive Pricing Strategies
02:11 Competitive Pricing Advantages
03:02 Competitive Pricing Disadvantages
03:36 Competitive Pricing Examples
03:41 Example – Pepsi vs Coke
03:44 Example – McDonald's vs Burger King
03:50 Federal Express (FedEx)
04:50 Example: Amazon & Walmart