W7 Pricing and competition Essay Summary

W7 Pricing and Competition
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W7 Pricing and Competition
A low-cost price leader would enforce its leadership by reducing the cost of its products without compromising the quality. Reducing the product costs increases the market share, thus, strengthening its competitive advantage. This strategy will give rivals a hard time staying competitive. Such a strategy applies in an oligopoly market, a market dominated by a few firms recognizing their competitor's actions. These firms know that the competitors would respond to any action they take (Rittenberg & Tregarthen, 2019).
To survive in an oligopoly market, a company must consider using a pricing strategy to sell its products at a low cost. This strategy helps the business to maintain customers and attract more customers despite sales. For a low-cost price leader, reducing the product costs discourages potential new entrants and...