Decision Point: Devising a Strategy to Deal with NewCompetition
Your strategy works! Hanvil ultimately decides to go along withthe price increases, offering pricing and warranties that aresimilar—but not identical—to Sonable's. You have both succeeded inincreasing your economic profit!
Although some in the medical profession have complained aboutthe price hikes, others have suggested that the two-year warrantymakes the increase in pricing worth it. Importantly, yourshareholders are pleased!
A new challenge is bubbling to the surface, however, as a newfirm is set to enter the market. The higher prices set by Sonableand Hanvil have left an opening for this
company to come in andoffer basic hearing aids with shorter warranties at significantlylower prices.
You need to figure out a way to retain your market share whilenot losing profits. This new firm is set to enter the market with amodel at a price of $1,500.
- Decision Point Devising A Strategy To Deal With New Competition Your Strategy Works Hanvil Ultimately Decides To Go Al 1 (121.44 KiB) Viewed 10 times
Your strategy works! Hanvil ultimately decides to go along with the price increases, offering pricing and warranties that are similar-but not identical-to Sonable's. You have both succeeded in increasing your economic profit! Although some in the medical profession have complained about the price hikes, others have suggested that the two-year warranty makes the increase in pricing worth it. Importantly, your shareholders are pleased! A new challenge is bubbling to the surface, however, as a new firm is set to enter the market. The higher prices set by Sonable and Hanvil have left an opening for this
company to come in and offer basic hearing aids with shorter warranties at significantly lower prices. You need to figure out a way to retain your market share while not losing profits. This new firm is set to enter the market with a model at a price of $1,500. Select an option from the choices below and click Submit. Launch an aggressive ad campaign directed at drawing a contrast between Sonable and this new firm. You would saturate the market, touting the benefits, features, warranties, and long- standing history and reliability of Sonable products. ↑ Rather than compete at the lower end of the market with the entry of new firms, you instead raise the price of hearing aids further to $3,000 to capitalize even more on the part of your customer base that is not price-conscious. You can then cater to them with longer warranties and stronger service. Į Decrease the price of all Sonable devices across the board to $1,750. This could well make the difference in price compared with the lower-cost hearing aid negligible in consumers' minds. Preannounce a new program that provides qualifying lower-income customers with a discount of $1,000 on the purchase of any hearing aid, which comes with all of Sonable's warranties.