What term refers to the use of competitive prices in establishing retail prices?

The term that refers to the use of competitive prices in establishing retail prices is competitive pricing. This strategy involves analyzing the prices set by competitors in the market and setting one's own prices accordingly. The primary goal of competitive pricing is to ensure that a retailer remains attractive to customers by offering comparable prices to similar products available from competitors.

Retailers employing competitive pricing will often adjust their prices based on market trends, competitor behavior, and consumer demand. This approach not only helps in maintaining profitability but also aids in positioning a brand within the marketplace, making it essential for retailers in competitive industries.

Other pricing strategies, while effective in their own contexts, focus on different aspects: market-driven pricing centers around broad market trends and consumer demand, value pricing emphasizes offering lower prices in relation to product value, and psychological pricing plays on consumer perceptions, often involving price points that create a psychological impact on purchasing decisions. Competitive pricing, however, specifically targets the responses to competitors’ pricing strategies, making it distinctively relevant in establishing retail prices within a competitive landscape.