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External factors affecting pricing decision essay


external factors affecting pricing decision essay

little incentive to introduce improvements to the product. For instance, this can be made in a new hotel in order to introduce itself in market. Inflation, interest rates, boom or recession affect consumer perception of the price and, therefore, consumer buying decisions. At the beginning we shall see the peoples reaction toward the Lazzzzerlight Product Machine. Willingness to Pay: Knowledge of consumers reservation price (the price at which a consumer is indifferent between buying and not buying the product) or willingness to pay (reservation price at which the consumers utility begins to exceed the utility of the most preferred item). The competition may arise from different sources: Directly similar products like Coke and Pepsi, available substitutes speed post versus couriers, or unrelated products seeking the same rupee cricket match versus cinema, coke versus juice, new year dinner versus vacation for three days, etc. And the low price must help to keep out the competition. Nowadays, this research is very easy because all the hotels put their prices in internet sites.

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Image of the firm: advertisements: The price of the product may also be determined on the basis of the image of the firm in the market. Pricing an Innovative Product. Elastic Demand: Hotels are considered to be in a market that exhibits thesis logo elastic demand when a certain percentage change in price results in a larger and opposite percentage change in demand. Other Environmental Factors (economy, resellers, government Economic Conditions, Reseller Needs, Government Actions, Social Concerns do play an important role in price fixation. The hotel's marketers must have a clear view of regulations in each market they serve. Should he set prices to maximise current profits or to maximise long-run market share or to prevent competition from entering the market? The final price for a product is affected by many factors internal and external company factors. Advertisements: The pricing decisions for a product are affected by internal and external factors. In the introductory product life cycle or liberal returns policy, the price is likely to be high.



external factors affecting pricing decision essay

Basically, the prices of products and services are determined by the interplay of five factors, viz., demand and supply conditions, production and associated costs, competition, buyers bargaining power and the perceived value.
A company s pricing decisions are affected both by internal company factors and by external environmental factors.
These factors are shown in Figure.


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