PRICING

Pricing

Pricing

Introduction

The subject of pricing relates to the field of economics. In terms of the economic strategy building, the pricing issues are the main block of economics. The subject studies as to what strategies do producers apply in setting the economical prices and other related aspects and what rational behavior do the common people impose on the prices set by the government.

This essay will look into the case of the Blackpool Tower, which has been one of the iconic tourist attractions in the entire UK. The owner of tower, Merlin, has decided to restructure its pricing strategies. This essay will focus on such concepts of economic pricing policy, price discrimination and some recommendation regarding the future pricing strategies for Blackpool Tower.

Discussion and Analysis

The concept of price plays a significant part in the economic settings of every country. Every market is defined by the mechanism of demand and supply functions. The balance or price which reflects the overlap in property valuation of consumers and producers would occur at the intersection of both functions. Therefore, the pricing system in an economy is determined by the intersection of the two forces of demand and supply. Just at the point where they interact, the equilibrium prices occur. These are the prices where the ruling price of market exists. When the State seeks to supplant the market activity in the allocation of goods and services can be done through a policy of maximum and minimum prices. Another type of price control is to set a minimum price. This system has been used frequently in agricultural markets, where the State has sought to keep farmers' incomes will be drastically reduced. (Dale, 2009, 20-12)

Prices have a major role in microeconomic theory, the aim of which is to essentially determining the allocation of specific resources uses, i.e. the study of behavior of households (Individuals and families), business and organizations of the State acting individually or in groups within particular market of goods and factors production. The simplification of economic activity is based on the analysis of supply and demand. The distinction between variables affect on the demand function, which, in turn, affect the function of supply and those affecting both simultaneously, yields conclusions about the effects that changes experienced in the various variables on prices and business.

Price Discrimination

Since, prices are the main players involved in all the activities of the market, it also gives rise to other concepts. One such related concept in economics is the practice of Price Discrimination. It refers to those practices used by some of imposing different price groups to different consumer. It is applied on the same customers in similar markets for the different units very well. It is one of the strategies of marketing used by the companies trying to adapt the price of a product to their demand, in order to obtain the maximum benefit possible. This pricing will not affect the proportional difference in costs and try to adapt to the intensity of demand for different segments to ...