Price Leadership

When you're the brand, you set the price; you're the price leader. And the rest of the gaggle of geese-producing companies have to follow your lead. If you're Starbucks and you set the new high price of a grande latte half-caf mix at $9, then the rest of the world has to follow you. That's Peete's. And Mirabel's. And Coffee House. And Bean Counter, the coffee place of accountants around the world. They used to charge a buck less than you and averaged $6.50; now they can move their prices up to $8 as they generally lag SBUX by a buck, not bucks.

The same happens in the other direction. If you're a tech company suddenly able to make a semiconductor do twice as much for a fourth of the price, then you can drop prices in half or more and virtually bankrupt all of your competitors (it's the reason companies in this realm carry no debt and a ton of cash all the time).

Only the Paranoid Survive. Great book.