Answer :
An alternative product pricing by a leading tenderer can benefit the tenderer by offering a competitive edge, while potentially improving the client's options and driving down prices.
In the context of competitive bidding, a tender represents a company's bid for a project, detailing the charges and plans. If a leading tenderer prices an alternative product, it can significantly impact both the tenderers and the client.
For the tenderers:
- Alternative Product Benefits: The leading tenderer might see an advantage if the alternative product offers better value or performance, potentially leading to a more favorable ranking in the evaluation process.
- Competitive Pressure: Other tenderers might be forced to reconsider their pricing and product offerings to remain competitive, which could drive prices down.
For the client:
- Improved Offerings: The client might benefit from improved product offerings and lower prices, resulting in better value for money.
- Decision Complexity: The evaluation process might become more complex, requiring more detailed comparisons and assessments to choose the best bid.
However, market effects such as competition driving prices towards marginal cost can disadvantage initial entrant firms, which may not recover startup costs adequately. Overall, alternative product pricing introduces both opportunities and challenges for tenderers and clients alike.
