price follower

A price follower is a company whose pricing strategy is aimed at following other price leaders in the market with its own pricing.

In most markets, there is at least one company that has a significant influence on the market price level through its pricing. This company is the price leader. Price followers with less strong products or a weaker market position accept the role of the price leader and position themselves with their prices below the price leader. By positioning themselves as price followers, companies are able to attract the customer’s attention  the price advantage. Especially in oligopolistic markets, such as the automotive or cigarette industry, the price follower often accepts this role and pursues a competition-based pricing policy that is oriented towards the price leader.