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Step 2: Recommend Offensive Dynamic Pricing Strategy

Your Virtual Internship coordinator asked you to develop an offensive dynamic pricing strategy by identifying products to lower prices on, where to set the reduced prices, when to reduce the prices, and how long to keep prices lowered. You need prepare a plan to market the lower prices to customers.

An Offensive Dynamic Pricing Strategy includes:

2 to 3 lead products on which to lower prices

Where to set the reduced prices

When to lower the prices

How long to lower the prices

A marketing plan for communicating price reductions to customers

Anticipate that the competition may react to your price reduction in a relatively short time frame. Create a game plan that describes how you will adjust prices 3-4 steps down the line depending on how the competition responds.

Determine when to lower the price. It is advantageous to lower prices when a burst of shopping is expected or when the competition isn't focusing on its competitors' prices. Consider how you can take advantage of these scenarios to capture the greatest number of customers with a price reduction.

Determine how long to keep prices lowered. The benefits of a price reduction decrease after competitors realize your pricing strategy and launch an inevitable pricing response. After the competition responds to your reduced prices, for how long will it be worthwhile to maintain these prices?

You will also need to consider how customers will respond when you raise prices again. Will an increase in prices drive too many customers back toward the competition? How do these factors help you determine how long to maintain the reduced prices?