A predatory pricing strategy attempts to sell products and services at such a low price that consumers do not even look at the competing brands. The main motive of consumers is to buy an item for the lowest price possible.
A prime example of predatory pricing tactics between two large franchises can be seen in the prescription drug price war between Walmart and Target in Minnesota. Walmart, seeking to undercut the competition, initially began offering certain prescription drugs at well below their price floor.
In most general terms predatory pricing is defined in economic terms as a price reduction that is profitable only because of the added market power the predator gains from eliminating, disciplining or otherwise inhibiting the competitive conduct of a rival or potential rival.
Predatory advertising, or predatory marketing, can be largely understood as the practice of manipulating vulnerable persons or populations into unfavorable market transactions through the undisclosed exploitation of these vulnerabilities.
To prevail on a predatory-pricing claim, plaintiff must prove that (1) the prices were below an appropriate measure of defendant's costs in the short term, and (2) defendant had a dangerous probability of recouping its investment in below-cost price.
The correct option is c) to maximize profits in the long run
As in result firm can maximize its profit by changing its price from low to high.
Predatory Targeting is striking at the weakness that arises from your competitor's greatest strength. Though it sounds like striking at your competitor's weakness, it's not. And trust me, that's a really bad idea. If you have a strong competitor with a certain weakness and you strike at it, it will just thump you.
In the case of predatory pricing, the competitor is said to have abused its dominant position by imposing unfair prices, lowering the prices, and restricting the production of goods or services in the market.
the pricing of goods and services in such a way as to cause a customer to be misled; an example of deceptive pricing is bait-and-switch pricing.
Intimidating Potential Competition
Businesses have developed a number of schemes for creating barriers to entry by deterring potential competitors from entering the market. One method is known as predatory pricing, in which a firm uses the threat of sharp price cuts to discourage competition.
Overview of Aggressive Pricing
When any company sets its product price too low to gain the hold of the market, it is known as aggressive pricing or predatory pricing. There is another type of aggressive pricing, where the company buys any product for more value than its original price; bidding is an easy example.
Limit Pricing is a strategy used by the existing supplier to restrict new entrants currently out of the market. On the other hand, predatory pricing is a strategy that one supplier uses to out the other supplier existing in the market.
To protect yourself and your loved ones, you should instantly recognize the most common Emotional Predator traits: they claim to be the victim, usually of the person they're in fact victimizing; they fake sincerity and make emotional displays to influence, intimidate, charm, disarm or seduce others; they pretend to be ...
So predation is the act of being a predator, catching and attacking. The noun predation is most commonly used to talk about groups like pirates or marauders who prey on innocent people.
What are the Disadvantages of Predatory Pricing? Competitors will eventually be unable to sustain themselves against the predatory company. In that case, they will be driven out of the market altogether. Under such conditions, prices are likely to rise sharply to compensate for the short-term losses.
Using long-term or exclusive contracts to stop customers from changing suppliers. Using contracts that prevent commercial partners from giving more favourable terms to rivals. Cutting off essential supplies to rival companies. Selling products or services below cost to hurt or discipline a competitor.
A predatory pricing strategy, a term commonly used in marketing, refers to a pricing strategy in which goods or services are offered at a very low price point, with the intention of driving out competition and creating barriers to entry.
The four target markets are geographic, demographic, psychographic, and behavioral.
advertising an item at an unrealistically low price as 'bait' to lure customers to a store or selling place.
Predation is an exclusionary pricing strategy which may be adopted by dominant undertakings so as to incur short-term loses, which would be recouped after the competitor is forced from the market.