Marketing : prices vs costs - Essay Example

The value of pricing wars is significant since economic recessions hit any market in a specific period of time and thus take the bulk of the customers away with it. (Newman, 2006) A firm would ultimately resort to lower price levels as the competition gets heated up and when the rivalry amongst competitors is of immense importance for the overall well-being of the major players involved within the trade industry. Price is a major determinant of a firm and lowering it would mean that it has accepted the strengths of the competitive rivalry and thus economic rundowns are a major given under such settings.

Pricing is difficult to set internationally because there are different pricing indices all over the world. More than that, there are different currencies which are existent in various nations of the world. Apart from this perspective, there is the understanding which discusses each pricing index to be seen in the light of several mannerisms in which pricing is levied on the said products. This could include the off-the-rack pricing which means the product is sold at a price which is balanced with similar products, or it is skimmed high so that prestige issue arises from the equation.

At times, product is priced with respect to penetration levels, which keeps its price low when we compare with similar products. However, on all fronts, pricing in a global concern requires a single currency to be have in the first place and more than that, economies need to be of a similar level to make the pricing uniform the world over. (Kurtus, 2007) The monopolistic competition demands a sense of responsibility on the part of the dominant and the sole player as it has to take steps which are essential for the up and coming firms and businesses and it must be kept in mind that the new companies are there to serve the customer better and in a new manner and the customers have every right to demand the very same. (Jain) They cannot be