Question

Discuss a product whose price you have seen change in response to its competition and how did the price change?

Answer 1

Discuss a product whose price you have seen change in response to its competition and how did the price change?
We are discussing a retail outlet, ‘Yihaodian’, a leading Chinese online retailer for consumer packaged goods but also grown as hypermarket in the industry. Here, we are trying to understand Dynamic Retail Competition through the Analysis of Strategic Price Response. Founded in July 2008 , Yihaodian achieved sales of $1.9 billion by 2013. Yihaodian has been considered as the fastest growing technology company in the Asia-Pacific region, with a three year revenue growth of 19.22%.
We are focusing on one particular product category sold by Yihaodian, ‘baby-feeding bottles’. This product presents a number of features that make it very attractive to the customers, characterized by a small number of well defined attributes: country of origin, brand, bottle size, bottle shape and material, nipple size, nipple shape and material, and price point. It is important to note that the given product characteristics makes it easier to identify competing or substitutable products, which plays a key role in the pricing decision.

The basic reason for the price change of this product includes the innovations in the product as compared to other baby-feeding bottles available in the market. The life cycle of this product is long compared to the time span of the product used, and also there were no new product introduced or innovated.
Another relevant characteristic of this Product is that most customers have engaged in repeated purchases in a short period of time (e.g., daily or weekly) since the product outlasts the baby’s need. Therefore, it is unlikely consumers will anchor prices based on their purchase histories. And since Competition-based dynamic pricing is a recent development driven by the competitive nature of online retailing. Conventionally, dynamic pricing has been applied mostly in settings with perishable inventory and finite selling season.