PRICE ANALYSIS

Price Analysis

Abstract

In this study we try to explore the concept of “Price” in Managerial Economics”. The main focus of the research is on “Price Analysis” and its relation with “Demand and Supply”. The research also analyzes many aspects Companies Pricing Policy, and tries to gauge its effect on the Product Price. Finally the research describes various factors which are responsible for “Price inelasticity” and tries to describe the overall effect of “Price” by formulating a point of balance in the market.

Introduction

Definition of price according to “Philip Kotler and Gary Armstrong”, author of "Fundamentals of Marketing”

“The price is the amount of money charged for a product or service. In broader terms, the price is the sum of the values that consumers place in exchange for the benefits of having or using the product or service”. [Pp-2].

Pricing is extremely important, because it has more influence on the perception of the final consumer about the product or service. Never forget what market oriented product or service. If the consumer wants quality, no matter much the price or if the price is one of the main decision variables, in many cases a pricing error is responsible for a low demand for a product or service. Price tells us that the price is the amount of money allocated to a product or service, or the sum of the values that buyers exchange for the benefits of having or using a product or service. The price does not necessarily equal to "value" of goods or services, or the cost as the price fluctuates according to many factors among others, the price varies according to supply and demand conditions. In the structure of market, the availability of information for buyers and sellers increased bargaining power of agents, etc. (Sean and Alan, 2008)

Price Analysis

In many cases, a pricing error is responsible for a low demand for a product or service. Pricing policies of a company determine how it will perform on demand. It is important to consider the price of entry into the market, volume purchasing discounts or early payment, promotions, commissions, adjustments according to demand, among others. A company may decide to enter the market with a high introductory price and enter with a low price compared to competition or not look at the price differentiation of the product or service and, therefore, come with a price close to that of competition. Be analyzed the advantages and disadvantages of any of the three options, covering in all cases the costs incurred by the company. They cannot forget the profit margins expect to see the different elements of the distribution channel Pricing policies of a company.(Courty and Pagliero, 2008).

Pricing Policies of a Company

It determines how it will perform on demand. It is necessary to consider the price of entry into the market, volume purchasing discounts or early payment, promotions, commissions, adjustments according to demand, among others. A company may decide to enter the market with a high-introductory price and enter with a ...