Discuss the Main Factors Affecting Product Pricing in the Uk

Discuss the main factors affecting product pricing in the UK In theory, forthlays of products are determined by many opposite factors within a firm. This will depend on the grocery store grammatical construction and the firms objectives, whether this is to maximize profits, maximize gross sales revenue, increase commercialize share or to provide usual services. The grocery storeplace structure usually determines the firms objectives, for example a monopoly has the military unit to set a high monetary value level to maximize profits whereas arrant(a) competition must compete on no(prenominal) price factors therefore will sell at the presumption food market price. Oligolopolies such as leading supermarkets (e.g. ASDA, Tesco, Sainsbury) do not normally compete on price as a descend in one firms price will be followed by other competing firms therefore all firms lose out and still the consumer gains, therefore prices are set to increase market share. Fig.1 In oligopolistic markets, there are forms of price wars. This is shown by the kinked demand thin in Fig.1. This leads to firms changing prices in order to extract and concur market share, due to this being one of their objectives as impertinent to profit maximisation.

For example, the UKs largest petrol retailer Esso announced price cuts to prepare just 1p per litre in order to guard a high market share and market power. This is know as market share dodging, a short gallop strategy as it little relation to the costs of exertion sum that firms may even make a impairment (shown by MC and MC1). This was confirm ed by Hall et al (1996) as a survey of 654 U! K companies concluded that 65% of firms apply market-led pricing. This relates to vulturine pricing which sees firms sell products at minimal prices to maximise market share, maintain dominance and eliminate rivals.If you want to lose a full essay, order it on our website: OrderCustomPaper.com

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