Examples of Price mechanism in the following topics:
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- Inputs and outputs are determined by the State: the State has an elaborate planning mechanism in place that determines the level and proportions of inputs to be devoted to producing goods and services.
- Prices and paying for goods and services: prices are regulated entirely by the State with little regard for the actual costs of production.
- In western democratic and capitalist societies, the price mechanism is a fundamental operator in allocating resources.
- The law of demand states that the higher the price of a good or service, the less the amount of that good or service will be consumed.
- In other words, the quantity of a good or service demanded, rises when the price falls and falls when the price increases.
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- The mechanisms of supply and demand in a competitive market determine the price and quantities of products.
- In a market characterized by perfect competition, price is determined through the mechanisms of supply and demand.
- You're typically willing to buy less of a product when prices rise and more of a product when prices fall.
- Businesses are more willing to sell a product when the price rises and less willing to sell it when prices fall.
- We can now see how the market mechanism works under perfect competition.
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- The buyout caused cocoa prices to rise to their highest level since 1977.
- In finance, to corner the market is to get sufficient control of a particular stock, commodity, or other asset to allow the price to be manipulated.
- This can be done through several mechanisms.
- If the price starts to move against the cornerer, any attempt by the cornerer to sell would likely cause the price to drop substantially.
- The buyout caused cocoa prices to rise to their highest level since 1977.
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- Competitive-based pricing occurs when a company sets a price for its good based on what competitors are selling a similar product for.
- Competitive-based pricing, or market-oriented pricing, involves setting a price based upon analysis and research compiled from the target market .
- For instance, if the competitors are pricing their products at a lower price, then it's up to them to either price their goods at a higher or lower price, all depending on what the company wants to achieve.
- One advantage of competitive-based pricing is that it avoids price competition that can damage the company.
- Status-quo pricing, also known as competition pricing, involves maintaining existing prices or basing prices on what other firms are charging.
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- Price skimming is a pricing strategy where initially a product price is set very high, but lowered over time.
- Value based pricing (aka value optimized pricing) sets prices primarily on the perceived or estimated value to the customer (rather than on the cost of the product, the market price, competitors' prices, or historical prices).
- Value based pricing (aka value optimized pricing) sets prices primarily on the perceived or estimated value to the customer (rather than on the cost of the product, the market price, competitors' prices, or historical prices).
- These include: price skimming, price discrimination and yield management, price points, psychological pricing, bundle pricing, penetration pricing, price lining, value-based pricing, geo and premium pricing.
- Psychological pricing is one cause of price points.
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- Firms can engage in premium pricing by keeping the price of their good artificially higher than the benchmark price.
- Premium pricing is the practice of keeping the price of a product or service artificially high in order to encourage favorable perceptions among buyers, based solely on the price.
- A premium pricing strategy involves setting the price of a product higher than similar products .
- It is also called image pricing or prestige pricing.
- Luxury has a psychological association with price premium pricing.
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- Status quo pricing is the practice of maintaining current price levels that other firms are charging.
- Price-Quality Effect: Buyers are less sensitive to price the more higher prices signal higher quality.
- Status-quo pricing, also known as competition pricing, involves maintaining existing prices (status quo) or basing prices on the prices of competitor firms .
- Status-quo pricing, also known as competition pricing, involves maintaining existing prices or basing prices on what other firms are charging.
- Compare Nagle and Holden's nine laws of price sensitivity with status-quo pricing
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- confirming the impact the corporate strategies should have on pricing policy
- (TT Nagle, The Strategies and Tactics of Pricing, Prentice-Han, Inc.
- Englewood Cliffs, N.J., 1999. ) Price sensitivity reduces:
- A gray market comes about when individuals buy products in a lower-priced country from a manufacturer's authorized retailer, ship them to higher-priced countries, and then sell them below the manufacturer's suggested price through unauthorized retailers.
- Questions to consider are: What currency should a company price its products?
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- Differential pricing exists when sales of identical goods or services are transacted at different prices from the same provider.
- Price differentiation, or price discrimination, exists when sales of identical goods or services are transacted at different prices from the same provider.
- This usually entails using one or more means of preventing any resale: keeping the different price groups separate, making price comparisons difficult, or restricting pricing information.
- There are two conditions that must be met if a price differentiation scheme is to work.
- For example, airlines routinely engage in price differentiation by charging high prices for customers with relatively inelastic demand (business travelers) and discount prices for tourists who have relatively elastic demand .
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- Cost-based pricing involves calculating the cost of the product, and then adding a percentage mark-up to determine price.
- Cost-plus pricing is the simplest pricing method used by companies.
- Cost-plus pricing is the simplest pricing method.
- A firm calculates the cost of producing the product and adds on a percentage (profit) to that price to give the selling price.
- The other is direct cost pricing, which is variable costs plus a % markup.