Decision Point: Devising a Strategy to Deal with New Competition

Your strategy works! Hanvil ultimately decides to go along with the price increases, offering pricing and warranties that are similarbut not identicalto Sonable's. You have both succeeded in increasing your economic profit!

Although some in the medical profession have complained about the price hikes, others have suggested that the two-year warranty makes the increase in pricing worth it. Importantly, your shareholders are pleased!

A new challenge is bubbling to the surface, however, as a new firm is set to enter the market. The higher prices set by Sonable and Hanvil have left an opening for this company to come in and offer basic hearing aids with shorter warranties at significantly lower prices.

You need to figure out a way to retain your market share while not losing profits. This new firm is set to enter the market with a model at a price of $1,500.