1. WHEN SHOULD A COMPANY
INITIATE A PRICE CHANGE?

2. Initiating Price Cuts

3. Several circumstances might lead a firm to
cut prices.

4. One is excess plant capacity:
The firm needs additional business and cannot generate it
through increased sales effort, product improvement, or
other measure.

5. The other is to dominate the market through lower costs.
Either a company starts with lower costs than its
competitors, or it initiates price cuts in the hope of gaining
market share and lower costs.

6. However, a price cutting strategy can lead to the
following traps.

7. Low-Quality trap

8. Fragile-market
share trap

9. Shallow-pockets
trap

10. Price-war trap

11. THANK YOU
.
Created by
Kunal Eapen, IIIT Allahabad
During an internship under
Prof Sameer Mathur, IIM Lucknow
www.iiminternship.com