Pricing strategies based on the prices charged by rivals.

Pricing strategies based on the prices charged by rivals.

• A. Pricing strategy
• B. Cost plus pricing
• C. Penetration pricing
• D. Competitive pricing

Answer: (D)

Basing prices on what competitors charge is competitive pricing. In markets with similar products, customers compare prices, so firms monitor rivals’ prices and set theirs to sit in the same range. This helps protect market share and reduces the risk of losing customers to cheaper alternatives or sparking price wars by pricing too high or too low. It differs from cost-plus pricing, which builds price from production costs plus a markup, and from penetration pricing, which aims to win customers by starting with a deliberately low price regardless of competitors. It’s also more specific than a general “pricing strategy,” which can refer to many different approaches. So, aligning with rival prices best captures the idea described.

Basing prices on what competitors charge is competitive pricing. In markets with similar products, customers compare prices, so firms monitor rivals’ prices and set theirs to sit in the same range. This helps protect market share and reduces the risk of losing customers to cheaper alternatives or sparking price wars by pricing too high or too low. It differs from cost-plus pricing, which builds price from production costs plus a markup, and from penetration pricing, which aims to win customers by starting with a deliberately low price regardless of competitors. It’s also more specific than a general “pricing strategy,” which can refer to many different approaches. So, aligning with rival prices best captures the idea described.