INITIATING AND RESPONDING TO PRICE CHANGES

INITIATING PRICE CUTS

Due to excess plant capacity

To dominate the market through low costs

Price cutting strategy can lead to traps

•Low-quality trap

•Fragile-market-share trap

•Shallow-pockets trap

•Price-war traps

INITIATING PRICE INCREASING

Cost Inflation

Over demand

•Delayed quotation pricing

•Escalator clauses

•Unbundling

•Reduction of discounts