When two firms compete primarily on price to attract price-sensitive customers.

When two firms compete primarily on price to attract price-sensitive customers.

• A. Indirect Competition
• B. Price Competition
• C. Direct Competition
• D. Non-price Competition

Answer: (B)

Price competition is when firms win customers mainly by offering lower prices to price-sensitive buyers. The scenario describes two firms that focus on price as the primary way to attract customers who care most about cost, which is exactly what price competition is about. This approach often involves discounts, promotions, or lower price points to gain market share, even if it means thinner margins. Indulgence in other forms of rivalry, like emphasizing features, quality, or brand (non-price competition), would not fit the description, and competition from substitutes or alternative products would be indirect competition. Direct competition is broader and can include price or non-price fighting, but the key detail here is that price is the main lever.

Price competition is when firms win customers mainly by offering lower prices to price-sensitive buyers. The scenario describes two firms that focus on price as the primary way to attract customers who care most about cost, which is exactly what price competition is about. This approach often involves discounts, promotions, or lower price points to gain market share, even if it means thinner margins.

Indulgence in other forms of rivalry, like emphasizing features, quality, or brand (non-price competition), would not fit the description, and competition from substitutes or alternative products would be indirect competition. Direct competition is broader and can include price or non-price fighting, but the key detail here is that price is the main lever.