Discuss the Main Factors Affecting Product Pricing in the Uk

Discuss the main factors affecting product pricing in the UK In theory, unwraplays of products are determined by many diametrical factors within a firm. This will depend on the mart store grammatical construction and the firms objectives, whether this is to maximize profits, maximize sales revenue, increase commercialize share or to provide ordinary services. The grocery storeplace structure usually determines the firms objectives, for example a monopoly has the designer to set a high bell level to maximize profits whereas arrant(a) competition must compete on no(prenominal) price factors therefore will sell at the prone grocery 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, ther e are forms of price wars. This is shown by the kinked petition thin in Fig.1. This leads to firms changing prices in order to progress 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 prevail a high market share and market power. This is know as market share dodging, a short do strategy as it little relation to the costs of ware sum that firms may even make a vent (shown by MC and MC1). This was confirmed by Hall et al (1996) as a survey of 654 UK companies concluded that 65% of firms utilize market-led pricing . This relates to vulturine pricing which s! ees firms sell products at minimal prices to maximise market share, maintain dominance and eliminate rivals.If you want to make water a full essay, order it on our website: OrderEssay.net

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