Question

If Macy's department store managers looked at Dillard's department store prices for identical national brands and, based on that information, decided to advertise a sale on those products, they would be exercising which pricing method?

Answer 1

Answer:

Competition-based.

Explanation:

Competition-based pricing is a strategy of adopting similar pricing to companies in the same industry. It is a method based on competitive price observation and publicly disclosed information.

This method is not fully effective, although the added benefits of simple implementation, low risk and accuracy, there may be several missed opportunities when adopting the competition-based pricing method. Copying competitors' prices may not be a good solution to maximize profits, it is a short-term solution that may not be aligned with business strategy and the value and perception of consumers about your products and services.

So there are several other variables that influence profitability, and often following a criterion of copying prices is not enough, the ideal is for each company just to orientate itself to the other and establish a pricing that justifies its strategy.