Pricing Strategy

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There are a number of instances were lowering a price can entice a purchase. One recent instance was with respect to a camera lens that I wanted. This lens was priced at around $200, which was not a bad price. However, it was a little bit more than I wanted to pay. I kept checking the price online at a few different outlets and it changed almost every day. The outlets went back and forth raising and lowering their prices, something I was surprised about. The price finally hit $150 at one of the outlets and I bought.

The pricing strategy seemed to be oriented towards revenue maximization (NetMBA, 2010). The price is set along a range of the demand curve. It appears that the two companies were competing with one another along this range, trying to time the market and but also responding to daily changes in demand. One of the companies was Amazon and the other was a smaller niche market company. With both companies, revenue maximization seemed to be the objective as they were trying to strike a balance between attracting buyers to purchase this discretionary item, trying to get them to purchase it from their outlet, and trying to still cover their costs on the item.

The price-matching approach is characteristic of firms in an oligopoly. For this product, there were only two sellers able to bring their prices this low, and the smaller of the two companies appeared to be pricing in response to the larger. If Amazon was seeking to win business with lower prices, the

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