In most highly competitive markets, the use of certain strategic and tactical pricing practices is a key factor in determining profitability. Discusses the extent to which these practices can benefit a firm. Evidence from research conducted in the markets of two groups of industrial distributors (paper merchants and engineers′ distributors) suggests that price wars are inevitable under certain market conditions, and that a strong and defensible position in the market is a necessary prerequisite for control of price levels. The purchase of market share by investment, rather than competition, emerges as the preferred strategy for firms wishing to make a long‐term commitment to remaining in a highly competitive market.
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