You shouldn't lower prices as a direct reaction to your competitor. You should lower prices as a reaction to your customers willingness to buy at a given price. It's an indirect reaction but it factors in the actual market.
You shouldn't lower prices as a direct reaction to your competitor. You should lower prices as a reaction to your customers willingness to buy at a given price. It's an indirect reaction but it factors in the actual market.
This actually works well the other way around.
When sales are still growing YoY (like the post covid market), but prices are up 30% or 40%, you understand your customer is still willing to pay the higher price
Its similar to a McDonalds or Starbucks situation where you just keep increasing prices dramatically until you get a first quarter of lower than expected sales, then you start adapting downwards
Most corporations still haven't hit that limit, see streaming companies increasing prices every few months, they still haven't hit the point where profits decrease YoY. When they do the streaming prices start decreasing
>see streaming companies increasing prices every few months They can do that because they are practically monopolies.
They can do it because people are hopelessly addicted to screens.
You won't die if you stop watching Netflix. We aren't talking food or medicine here. In fact your life would probably improve. But addiction is a real animal.
I wish there were some term other than addiction here: addicts routinely steal from friends and family to feed their addiction; addicts who are parents sometimes threaten to stop allowing their children to visit with a grandparent unless the grandparent helps the addict pay for the addiction; drug addicts living in violent neighborhoods sometimes agree to murder somebody in exchange for drugs.
Screen addicts almost never stoop that low and the ones that do are addicted to a cam girl (e.g., Grant Amato), porn or gambling, not Netflix (or social media).
This is still so oversimplified. There's always bellwether products customers buy a lot and get used to. They use those to decide if you are cheap or expensive. Costco hotdogs are about satisfaction. If I can get one good deal or even a great deal that I find every time, I'm much more likely to be satisfied.
I was just thinking about this. Costco either loses money on or just barely breaks even on their hotdogs, but they keep selling them at $1.50. It's a part of their brand.
It would be smarter for them to raise the price of their membership another $10/yr to offset the losses than it would to raise the price of their hot dogs another $0.50 to make them profitable.
Don't know if it had anything to do with the price of hotdogs, but Costco did just increase their membership prices.
https://customerservice.costco.com/app/answers/answer_view/a...
I wouldn't be surprised if costco writes off the loss on hot dogs as a marketing expense.