Rivals Revealed: An Exploration of Competition Analysis

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Pricing and Competition in Business

Pricing in business is important in a business since it affects a variety of things like profit, return in investment, promotion and image this is according to (Egelhoff, 2018). This creates an opportunity for competition between firms especially ones dealing with the same products, hence price of the product to be sold by the different firm determine which one gets more profit and customers meaning they have to lower their prices so that the firm can capture the attention of the customers. Since if it is one firm only the product prices will be high since they are the only providers available. Competition can be in different forms they include direct or indirect form, direct competition is where the competitors offer same products or services that appeal or cater to the same audience while indirect competition is where different firms compete for the customers through the firms do not make or sell products that make them similar.

Competition Analysis

Competition analysis must be performed so as to enable a firm to assess themselves while comparing themselves to the local and international competitors. The analysis also helps in deciding on strategies or options they can consider in order to stay relevant in a market. These three options that a firm considers when setting the price for their products or services are; setting it below their competitors, setting the price at the same level with the competitor or setting the price above the competitors. All these influences how the firm operates and also illustrate the type of industry or market that they are in. For a firm to set the price above the competitors they must set an environment that can guarantee the customer that the money they have spent on that particular product or service is worth it. A firm considering setting the price of the product or service offered lower than the competitor are backing on the idea that even though the firm bear a loss with the price set, the customers buying from them can buy or purchase other things that they offer so long as the customers are exposed to those extra things being offered.

Firm Strategies in the Face of Competition

Firms have strategies that they can put in use when faced with huge competition for example when a competitor firm changes its price in a move that was unexpected or the firm cannot handle the fluctuation in prices that the competitor has caused at the time. The price can be equated to the level of the competitor by the retailer. Making the retailer hold a competitive price point for those firms competing while not changing their price officially since it will only affect those firms that know the advertised prices offered by their competitors. This move will benefit both the retailer and the firm also helping in leveling the pricing range in the market. According to (Katz& Shapiro 1994).

Factors to Consider in Competition Analysis

For the analysis or research on the firm’s competitors, there are factors they have to consider so that the research gives needed information. These factors will help in determining how the firm fairs in the market or how the firm can have an edge over their competitors. The factors include; price environment, this helps determine the amount of control the firm has over the competitors. There are three things that maintain control of the price environment they include; market, company, and government. Competition is high in a market-controlled environment, this is due to the little control the individual company has over their prices since they have similar products. In the company-controlled environment the individual firms have a lot of control due to moderate competition and special goods and services while in a government-controlled environment the government takes in from certain companies and decides the price of the product or service.

Another factor is the product that the firms produce. For the product to attract or maintain customers they have to have lasting differences this will ensure they stand out from their competitors. The firm also has to consider what kind of product or service they offer, it can have low-cost flexibility meaning the demand of the product or service will increase or it can have perishable differences which means it will be special or unique at first then it will fall to medium difference after some time. Price range is also another factor that has to be considered when doing analysis, the firm has to look at the price range that the competitors have and decide how they can fit in or if they can decide on outside the price range. Product comparison is another factor to be considered, a product with most features charge the highest hence ensuring the firm gets profit or income. The target market is also another factor, the firm has to research on the market that their competitors are focused and choose on a different market this can be achieved by designing a product or service for that specific group that the competitors haven’t got to yet.


Katz, M. L., & Shapiro, C. (1994). Systems competition and network effects. Journal of economic perspectives, 8(2), 93-115.

September 18, 2023


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