Market Strategies and Tactics

Market presents opportunities and threats for the opening firms. In a perfectly competitive market, there is extremely high degree of competition. The competitive strategy designed by the firm and tactical operations in view of the design work depends on the nature of competitive environment. It is very difficult to find a market where identical products, standardized and homogeneous, are produced and sold in a way that no firm enjoys any special and specific cost advantage.

1. Dominant Price Leadership: A large firm because of dominate position in the market may act as a price leader and small firm may act as a price followers.

2. Collusive price Leadership: In an oligopoly market several firm may feel that strength in unity and accounting, may combine together as a cartel and collude on price. Such collusion may be explicit and tacit.

3. Barometric Price Leadership: In some markets, one ‘barometer’ firm (which is not necessarily a dominant firm) best assesses changes in demand and supply conditons; other firm may then follow such price changes. Barometer firm itself may well change overtime.

Price discrimination as policy may constitute another strategic design. Become of its monopoly power, a monopoly firm enjoining absolute and related power may like to price its homogeneous and standardized product (goods or services ) differently depending upon the nature of market. Economists often talk about different degrees of price discrimination.

1. First Degree Discrimination: A seller may be in a position to charge N-prices from N-different buyers such that note a single buyer is left with any amount of consumer’s surplus.

2. Second Degree Discrimination: A seller may be in a position to change block rates for different blocks to his customer

3. Third degree Discrimination: A seller, because of this monopoly power, may not allow buyer’s choice and preference to decide on the block/segment/user’s category.

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