What strategy may be employed when pricing below competition?

Pricing below competition is primarily employed to capture price-sensitive consumer segments. This strategy is effective in attracting customers who are looking for the best deals and may choose based on price more than any other factor. By setting prices lower than competitors, a business can draw in these customers, potentially increasing market share and volume sales, even if it means lower margins on each sale.

This approach can be particularly beneficial in markets where consumers have multiple alternatives and are motivated by cost considerations. Brands that successfully implement this strategy often focus on maintaining a balance between low prices and acceptable quality, ensuring they still satisfy customer expectations while appealing to budget-conscious buyers.

In contrast, denoting premium quality typically involves pricing above the competition to create an upscale perception, while creating a perception of overpricing can drive consumers away. Establishing brand loyalty often requires more than just pricing strategies; it typically involves building relationships and trust with consumers, which may not directly relate to pricing tactics alone.