Question

1. Which of the following is most likely to result in price-based competition in an industry?

	A.	Fixed costs in the industry are low
	B.	Companies in the industry offer products with unique features
	C.	Most customers are more concerned about quality than price
	D.	Customers face substantial costs in changing from one supplier to another
	E.	The industry’s products become obsolete rapidly if not sold

Answer 1

1a, The price based competition is best in the companies offer products with unique features.The unique features products have high demand in the market because customers need that.why the customers choose unique products without compare the price of the product.For example, some ovens include features such as self-cleaning, smooth stovetops, warming bins, or convection capabilities.

Unique feature are the reasons customers buy the product or service. For example, the benefits of some ovens to buyers include safety, ease of use, affordability, or—in the case of many ovens that feature stainless steel casing.

The uniqueness of a product or service can set it apart from the competition. Features can communicate the capability of a product or service. But features are only valuable if customers see those particular features as valuable. You want products or services with features which customers perceive as valuable benefits. By highlighting benefits in marketing and sales efforts, you’ll increase your sales and profits.

It’s important to remember that customers buy products and services because they want to solve a problem or meet a need. Consciously or unconsciously, your customers will always be asking the question, “What’s in it for me?” Your product and service offerings have to deliver solutions and satisfy needs, or they won’t be successful.

so the unique feature products have high demand in every where, so unique featured products is best example of price based competition.

Decrease of fixed cost not suitable in the price based competition.Fixed costs, sometimes referred to as overhead costs, are expenses that don’t change from month to month, regardless of the business’ sales or production volume. In other words, they are set expenses the company must pay, at least in the short term.

Some businesses have high fixed costs. For example, manufacturers tend to have high fixed costs because they need equipment and space for their operations, even if they haven’t sold a single product.

Knowing your fixed costs is essential because you typically don’t know for sure how much revenue you will earn each month. But if you know your fixed costs, you know how much you need to make each month to keep the lights on. You can also plan for a slow period of time by building cash reserves or setting up a line of credit.

When reduce the fixed costs that also effect the manufacturing filed ,that also decrease the supply of product and quality of product so reduce of fixed cost not a good strategy.

Most customers looking quality than the price ,that judgement is basically right.because the current scenario most customers looking the quality other than price.in other words ,when we go to purchased something ,we are first check the quality of the product then check the price so that the best example.so high quality products is the best example of price competition.

Customers face substantial costs in changing from one supplier to another.these are create high price in a product ,that price are different from actual price of the product.so these cycle is not good for price competition market so trying to avoid these third party involvement.

Some times these cases arises in price competition market. so when you entered in the price competition market as a seller keep the price of the product at optimum level. dont decrease high and don't increase high keep optimum level pricing at also helpful to avoid obsolete products.

Thanking you....