MARKET AND PRICING

Reported by: Maria Theresa A. Velasco

Master in Business Administration

Market is an actual or nominal place where forces of demand and supply operate, and where buyers and sellers interact (directly or through intermediaries) to trade goods, services, or contracts or instruments, for money or barter.

Competitive Market

A competitive market is one in which a large numbers of producers compete with each other to satisfy the wants and needs of a large number of consumers. In a competitive market no single producer, or group of producers, and no single consumer, or group of consumers, can dictate how the market operates. Nor can they individually determine the price of goods and services, and how much will be exchanged.

Market Structure

There are 4 basic market models: pure competition, monopolistic competition, oligopoly, and pure monopoly. Because the competition among the last 3 categories is limited, these market models are often referred to as imperfect competition.

Market Structure

Characteristics Number of firms Type of product Ease of entry Market power/Price control

Perfect or Pure Competition Large number of

firms Homogenous product Easy entry/exit No market power

(price taker) Perfect information Examples

(Agriculture- wheat, corn)

Monopolistic competition

A large number of firms

Similar but differentiated products

Low barriers to entry Market power

(limited) Examples

(restaurants, hotels)

Oligopoly

A few large firms Standardized or

differentiated products Significant barriers to

entry Market power

(interdependent) Examples (Steel, oil,

automobiles)

Pure monopoly

One firm Unique product Blocked entry Market power (price

maker) Examples (local

utilities)

Pricing

Pricing is one of the most important elements of the marketing mix, as it is the only mix, which generates a turnover for the organization. The remaining 3p’s are the variable cost for the organization. It costs to produce and design a product, it costs to distribute a product and costs to promote it. Price must support these elements of the mix. Pricing is difficult and must reflect supply and demand relationship.

Pricing factors

Fixed and variable costs. Competition Company objectives Proposed positioning

strategies. Target group and

willingness to pay

Pricing strategies

Bundle Pricing Competition Pricing Cost Based Pricing Cost Plus Pricing Optional Pricing Penetration Pricing Premium Pricing Product Line Pricing Psychological Pricing Skimming Pricing

THANK YOU!