Which term describes strategies based on rival prices?

• A. Pricing strategy
• B. Penetration pricing
• C. Viral marketing
• D. Competitive pricing

Answer: (D)

When prices are set based on what competitors charge, the approach is competitive pricing. This means you monitor rival prices and adjust your own to align with or undercut them, aiming to attract customers who compare costs and to maintain your market position in a setting where products are similar. It can involve simply matching prices or engaging in price leadership where a dominant firm sets the benchmark others follow, or offering price matching to reassure customers.

This is different from a broad pricing strategy, which covers various ways to set price beyond just reacting to competitors. It’s also distinct from penetration pricing, which focuses on setting a deliberately low price to enter a market, and from viral marketing, which is about spreading a message rather than pricing.