Power Game

Game theory is the main framework for pricing decisions in the Power Game. The small number of buyers and sellers in the market makes every negotiation a high-stakes tug of war. In high-tech markets, constant innovation and tight standards maintain a balance of power. Your path to growth depends on:

• Executing high‐stakes negotiations successfully: Your targeted negotiation plan should focus on the competitive and margin contexts where you have the best chances to win.
• Avoiding a price freefall: Every price decision you make will have an impact on your other prices, which means that negative impacts can spiral out of control. Price consistency and discipline are essential.
• Establishing a pricing model to drive efficiencies: Customer programs such as supply chain support and guarantees can save costs and strengthen the customer relationship.

Despite the limited scope for differentiation, successful players in the Power Game do not see themselves at the mercy of market forces. They know that their market does not have perfect symmetry, so they always look for slight advantages.