Nokia Pricing Strategy

Price elasticity is an important concept to understand when beginning and maintaining a business that distributes goods or services. Elasticity is the economic concept that estimates when products should be introduced to consumers, and how (provided that all other variables remain constant) demand or supply will be affected by changes in the environment that affect price (Basic Economics, 2007-2010). Depending on how the percentage demanded/supplied is affected by price differentiation will determine whether or not a good or service is considerably elastic or inelastic, providing a sound guideline for business owners. The higher the elasticity, the more the demand will change if the price varies in the competitive market. Elasticity

Price discrimination is a pricing tactic that charges consumers different prices for the same product or service. In other worlds, price discrimination exists, when identical product or service transacted at different prices from the same supplier.

Those consumers that have flexibility to choose when they demand a product will benefit from price discrimination. An example of this would be workers that have the ability to take a holiday at short notice might be able to benefit from a heavily discounted price. This is second-degree price discrimination and it can be shown below on the diagram.

The price adjusts to rise when the quantity demanded exceeds the quantity supplied and for price to fall when the quantity supplied exceeds the quantity demanded is a central elements to supply and demand. Although individuals tendencies to change prices exist as quantity supplied and quantity demanded differ the changes in price brings the law of supply and demand into play. Whenever the quantity supplied and quantity demanded are unequal, price will stay the same cause no one will have an incentive to change. One thing to remember equilibrium is not the model framework they use to look at the world. Although to establishing the current value of a consumer product Economics has evolved through the centuries there are a few factors that led to a change in

there are a number of different buyers and sellers in the marketplace. This means that we have competition in the market, which allows price to change in response to changes in supply and demand. Furthermore, for almost every product there are substitutes, so if one product becomes too expensive, a buyer can choose a cheaper substitute instead. In a market with many buyers and sellers, both the consumer and the supplier have equal ability to influence price.

Price Elasticity of Demand is the theory of elasticity that focuses on the relationship between the price and the demand for a good or service. The study of how sensitive consumers are to a price change, is the study of Price Elasticity of Demand (Anderson). The idea is that when there is a change in the price of a good or service the demand will also change. In order to predict consumer behavior suppliers will study the consumer’s responsiveness to price change. Price Elasticity of Demand is measured by a difference in percent changes. The difference between the percent change in demand and the percent change in price (Anderson). If there is a larger respond in the amount demanded due to the price change the good or

Price discrimination is a microeconomic pricing strategy where identical or largely similar goods or services are transacted at different prices by the same provider in different markets. In today’s society we see price discrimination in many places and you don’t even realize that it is price discrimination. Price differentiation is distinguished from product differentiation by the more substantial difference in production cost for the differently priced products involved in the latter strategy. It essentially relies on the variation in the customers' willingness to pay and in the elasticity of their demand. There are three different types of price discrimination. First Degree Price Discrimination involves charging consumers the maximum price that they are willing to pay. Second Degree Price Discrimination involves charging different prices depending upon the quantity consumed and lastly Third Degree Price Discrimination which involves charging different prices to different groups of people (EconomicsHelp, 2015).

The discrimination is not present were buyers pay the same price for the commodities they buy. They can determine any price on the products they sell in future, even if the their costs in serving one buyer are much higher than the costs of serving the other.

Price elasticity of demand refers to the way prices change in correlation to the demand. People with lower incomes are inclined to have lower price elasticity because they have less money to spend. People with a higher income are inclined to have higher price elasticity since he can afford to spend more money. In both cases, “ability to pay is negotiated by the intrinsic value of what is being sold. If the thing being sold is in high demand, even a consumer with low price elasticity is usually willing to pay higher prices” (WiseGeek, 2010). Basically, goods or services presented at a lower price lead to a demand for greater quantity. Price elasticity of demand also explains that price becomes more elastic, because consumers can always choose to buy a good or service that is cheaper, in this case, prices will change with demand. In addition to this, completion for a certain good or service can also affect price elasticity of demand because it keeps prices lower.

The prices should reflect what a consumer is willing to pay. For an example, the EPI pens, which is a life saving device for many people with severe allergies including myself. The public and many politicians have recently been outraged by the high cost of the Epi-Pens. Contemplate in purchasing one for myself because, of the marked-up price of the Epi-pens, and since it has been rise about 25% per year for nearly a decade. Even though the officially is offering a generic brand one that would lower the price and, one might expected it to be at an affordable drug to all consumers. The fact is, people are refusing to buy them at their new prices, although many people are at risk of being without a life saving drug. But the, demand is designed

According to Vivian Guo (2012), Cost-plus pricing is the simplest and oldest method of determining price and provide the basis for doing business. For calculating this price we need add together the direct labour cost, direct material cost, selling and administrative costs, and overhead costs for a product. Then we need to add to it a markup percentage (AccountingTools, 2016). The pricing formula is:

Prices are based upon the price elasticity of demand in each given market. In other terms, this means that during ladies night at the local bar, it costs more for men to have a beer than women simply because these bars find it o.k. to charge females less, as a way to draw more females to the business on a specific night.

Price discrimination can be defined as when the same good or service is sold at different prices to different consumers. If we look at this definition of price discrimination, for an example, we can show that price discrimination can be seen in the entrance tickets of parks such as Universal studios; this is due to the fact that there are discounts for children and senior citizens. (Phlips L. , 1983) However, this can be seen as not being discriminative at all due to the fact that if the price difference full reflects the difference in the cost of carrying the good from the seller’s location to the buyers’ location.

Based on these 6 factors in setting a price: selecting the pricing objective, determining demand, estimating costs, analyzing competitors costs, prices and offers, selecting a pricing method and selecting the final price, Singapore GP Pte Ltd employed 2 different pricing strategies. They are

Quite often, consumers purchase goods and services based on their perceived need. Upon making the decision that a need is present and a solution is available consumers are more equipped to react to that need. Although previously perceived that consumers will normally accept prices as presented by suppliers that remains to not be the case. Consumers assess and process prices based on past purchases and other psychological process they went through previously such as persuasive marketing strategies, accessibility of the goods or services and possibly information gathered from prior purchasers of a product. There are countless options that are available to consumers. Consumers are then faced with the choice of choosing the product that best fulfills their need at that given point. Consumers who are knowledgeable regarding prices will be aware of the approximated price for products (Zhao, Zhao & Deng, 2015).