How Will a Firm's Pricing Strategy Depend on the Structure of the Market?

Companies can choose many ways to set prices, skimming price strategy where a company sets a higher price than normal and a penetrating price where low initial price is set. “Pricing

The setting of ‘fair’ prices to consumers: the company should bear in mind that customers nowadays will shop around to compare the intended products and services. However for the business survival and growth purposes, the company should also maintain its profit margins to ensure its business growth and expansion. The company needs to consider its cost factors and business operation areas to reduce or minimise the costing areas.

Monopolist and oligopoly market structures are more common. Monopolist markets consist of several firms producing similar products. These firms are in competition with one another and have low barriers of entry into the market. Even though they face competition with other firms, monopolist make strategic decisions for their firms without much thought of the competitor’s actions or reactions. Dove will manufacture and sell their soap without regard to what Ivory may be producing or the selling price of Ivory soap.

The strategy for setting a product’s price often has to be changed when the product is part of a product mix. In this case, the firm looks for a set of prices that maximizes its profits on the total product mix. Pricing is difficult because the various products have related demand and costs and face different degrees of competition.

In this paper, I will cover five different pricing strategies used, by retailers and manufacturers, to sell their products. I will demonstrate how pricing products according to one of the five pricing strategies chosen works effectively for each company.

Pricing decisions are strategic and critical to the success of your company. The prices you charge for your products affect demand, thus causing a ripple effect across your company 's output, revenues, costs, and income. With a sound pricing strategy, your company is in a better

A pricing strategy takes into account segments, ability to pay, market conditions, competitor actions, trade margins and input costs, amongst others.

The overall pricing strategy of any company depends upon the type of demand that is being made by the

Price is considered as one of the most important 4 P’s of marketing. Price plays an important role toward the success of both types of small and large scale businesses. Price strategies are considered as basic step for marketing. Without deciding a price, companies cannot run their business in a well organized way. Price is considered as a flexible variable among the 4 P’s because price can be changes with changes in the overall marketing structure. My selected element from 4 P’s is price. In this essay, I will describe the ways through which price managers can perform their duties and responsibilities in an organized way.

Price has both direct and indirect effects on profit. The direct effect relates to whether the price covers the cost of producing the product. Price affects profit indirectly by influencing how many units sell. The number of products sold also influences profit through economies of scale -- the relative benefit of selling more units. The primary profit-based objective of pricing is to maximize price for long-term profitability. The firms are interested in keeping their prices stable within certain period of time irrespective of changes in demand and costs, so that

Making decisions are hard enough already, adding a tough decision to decide on which pricing strategy to choose from brings a great deal of stress to a company and the individuals that has to make the decision. Pricing consist of technique, strategy, planning and eventually success of the item and its number of sales. After carefully reading the background information, I realized that there’s more to pricing than just making a profit. Factors come into play from many different angles. Competitors effect the way companies price their product, the strategic planning of the organization itself effects prices. Weather a company lower its product manufacturing costs or use either a lower or higher material to produce the product effects the price customers are willing to pay. There are multiple pricing strategies that companies use to decide the price of their product, strategies such as; good-value pricing, value-added pricing, and value-based pricing to name a few. Companies have certain cost in which they have to cover when trying to price an item. The three major categories for costs of a company is fixed cost; price that do not vary with production or sales, variable costs; costs that vary directly with the production of the product, and there’s total cost; the sum of the fixed and variable cost for any given level of production (Pearson). Overall, making a decision on how much to charge for certain products requires many factors. Based on my knowledge and understanding on

This market structure is the most competitive there are many buyers and sellers and they are too small to have any level of individual control over prices. The type of product is identical, information regarding availability can be easily access by both buyers and sellers. In order for firm to try and maximise their profit they will need to decide what level of output need to produce by setting the cost of producing the last unit of the good equal to the revenue gained from the sale of the last unit.

Pricing is an important marketing strategy which helps organizations leverage and effectively use decision-making in a vertical and horizontal fashion to impact the demand for the products as well as bring a competitive effect ADDIN EN.CITE Noble1999552(Noble & Gruca, 1999)55255217Noble, Peter M.Gruca, Thomas S.Industrial Pricing: Theory and Managerial PracticeMarketing ScienceMarketing Science435-4541831999INFORMS07322399http://www.jstor.org/stable/19318110.2307/193181( HYPERLINK l "_ENREF_11" o "Noble, 1999 #552" Noble & Gruca, 1999). Effective pricing strategies help to optimize the revenues of buyers by maximizing revenue for the organization. For retailers, they have embarked on data collection activities which provide crucial information to enable them make effective pricing strategies for the present market conditions. This information helps the retailers to understand the price sensitivity of demand as well as how to influence the price elasticity of demand towards the success of their marketing strategies. This first part of the paper evaluates the type of information collected by typical retailers in contrast to information that is collected by retailers who run consumer loyalty schemes. It also finds how these pricing strategies apply to the classical economics theory of supply and demand and discusses the factors that affect the price point purchase behavior of consumers. The second part looks at the purchase decision-making

The markets today are so complex and deal with so many variables it can be difficult to understand just exactly how they operate. In the following I will reveal the different kinds of market structures along with their different pricing strategies. Relating to these topics, I will focus on the importance of cost, competition and customer.

Price, which is one of the most important elements of the marketing mix, can be difficult to get right. Pricing too high, or low, can negatively impact on customer satisfaction and revenue. Adopting a pricing strategy is necessary to achieve desired sales objectives (Chan & Wong 2005).