This document discusses several key factors that affect price determination for businesses and products. It identifies factors such as costs, including fixed and variable costs; competition from both direct and indirect competitors; supply and demand in the market; elasticity of demand for different types of products; economic conditions; government regulation; intermediaries in the distribution channel; and a company's objectives and strategies. These various internal and external factors all influence how businesses determine appropriate pricing for their goods and services.

1. INTRODUCTION
 SUBMITTED BY SAKSHI GARG
 SUBMITTED TO DR. NIDHI SINGHAL MAM
 SUBJECT- MARKTING MANAGEMENT
 CLASS- MBA 1sem
 TOPIC – FACTOR AFFECTING PRICE
DETERMINATION
 DATE OF SUBMISSION- 13CT2015

2. Factors that Affect Pricing

3. Pricing Terms
 Price: The amount charged to customers in exchange
for goods and services.
– Price communicates value to customers and profit to business
owners.
 Market Price: The price that prevails in the market for
a particular good at a specific time.
 For example, the price of gasoline posted at the gas
stations around your town reflects the market price.
 Supply, demand, and time are key elements of market
price. For example, during oyster season, prices are lower
because they are more abundant (there is more supply).
Restaurants would not have to pay as much for them.
During the spring and summer months, oysters aren’t “in
season” so the prices are higher.

4. Costs
 Fixed Costs: Costs that
remain constant over a
period of time regardless
of sales volume.
– Insurance
– Rent/Mortgage
– Salaries
– Depreciation
 Variable Costs: Costs
that vary based on sales
volume or changes in
business needs.
– Commissions
– Advertising
– Office Supplies
– Utilities
Factors that Affect Price

5. Competition
 A rivalry between two
or more businesses
for scarce consumer
dollars.
Factors that Affect Price

6. Classifications of Competition
 Direct Competition:
Competition between
businesses that have
similar formats and sell
similar products.
– McDonald’s & Burger King
– Coke & Pepsi
– Hilton & Marriott
– Nike & Reebok
– Lowe’s & Home Depot
 Indirect Competition:
Competition between
businesses that have
dissimilar formats and
sell dissimilar products.
– A movie theatre & the mall
– A restaurant & miniature
golf course
– An airline & a cruise line

7. Supply and Demand
– Demand: The number of
products consumers are
willing to buy at a given
time and at a given price.
– Supply: The number of
products manufacturers are
willing to produce at a given
time and at a given price.
Factors that Affect Price

8. Elastic Demand Inelastic Demand
 A product is said to
have elastic demand if
demand for the product
is sensitive to a change
in price.
 Non-essential products
such as entertainment,
specialty foods, fashion
Factors that Affect Price
•A product is said to have
inelastic demand if
demand for the product is
not sensitive to a change
in price. These products
are usually considered
necessities to the
customer.
•Gasoline, milk, bread, and
electricity

9. Other Factors That Affect Price
 Economic conditions: Economic health affects price
by affecting consumer buying power. Consumers who
experience changes (positively or negatively) in their
buying power alter their spending habits in response to
those changes. An individual who is laid off from his/her
job will not tend to spend a great deal of money on non-
essential items due to the uncertainty of his/her economic
future.
 Government regulation: Aside from federal and state
laws that prohibit unfair pricing techniques, labor laws,
environmental regulations, and tax policy can have an
effect on how a business owner has to price products.

10. Other Factors That Affect Price
 Channel Members: The intermediaries in a channel
of distribution all charge a fee for their services. These fees
are affected by the same factors that affect retail price. As a
result, channel members’ price changes reach the
consumer by affecting the cost of products to businesses.
 Company Objectives/Strategies: An
organization whose sole objective is to survive the first
critical year of business will look at price planning
completely differently from an organization whose goal is to
remain the market leader. Price planners must examine the
objectives and strategies of the company and consider all of
the various elements that combine to make a business
successful.

11. ANY QUESTION
THANK YOU