1. What determines price?

2. Nature of the market Prices is influenced by:
The Nature of the Market
Consumer Demand of Product
Production and Marketing Costs
Consideration of Channel Members
Before pricing is established, you must recognize what type of market you are in:
Pure competition,
Monopolistic competition
Oligopoly
Monopoly

3. Pure competition
In pure competition, there are many small firms marketing the same basic product; therefore, no single firm can dictate or offset the market
Commodities such as wheat, barley, and sugar fall into this category because they have no choice but to charge the going rate of the products

4. Pure competition
In the case of pure competition, it is the market that controls the price
Often, the prices determined by the market rely simply on supply and demand
Sometimes, the price can be determined by expectations about supply and demand for a certain product
For example, if it was predicted that the supply of gas was to go down there would be a rush to buy gas forcing the demand to go up and the supply to go down
This expectation would therefore cause a rise in the price of gas in the market

5. Monopolistic competition
In monopolistic competition, there are many competitors selling the same product that, though similar, are perceived to be different by customers
Companies selling good such as coffee, cereal, or tooth paste market their brand as “different” or “superior” in order to distinguish it from others
Factors such as quality, service, style, function, and packaging are used to convey a difference to the consumer
These qualities are known as “non-price competition” and create the presence that brands such as Colgate are superior products and can be sold for more

6. Monopolistic competition
Traditionally consumers have been willing to pay more for a few items due to brand loyalty
With the decrease in disposable income however this trend is shrinking
Lower priced products therefore are becoming increasingly more successful in selling products rather than factors such as quality

7. Oligopolistic market
In a oligopolistic market, there are a few large sellers of a particular good or service
Examples od such industry's are the brewery industry (dominated in Canada by Molson and Labatt) and the gasoline industry dominated by (Petro-Can, Imperial Oil, and Shell)
In oligopolistic markets, competitors watch each others actions and prices extremely closely
For example, if a gas station raises or lowers its price, competitors will do so shortly after

8. monopoly
A monopoly is when a single seller with no similar substitutes serves the market
With this amount of power, companies can manipulate supply and demand and therefore change pricing in the market
In Canada monopolies are rare but do exist, examples include SaskPower and Hydro- Quebec