How the environmental factors are affect on pricing decision.
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Nature of the market and demand:
What is the expectation of the market about the product or services? What is the demand level for the product at different prices?
Market must also be understood whether there is monopoly, perfect competition, oligopoly, monopolistic competition or duopoly.
To understand demand, the supplier or marketer prepares demand curves for the product at different prices. The marketer prepares separate curves for normal products and prestige goods. In addition to understanding price and quantity relationship, the marketer must determine the price elasticity of demand to understand price sensitivity of customers.
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