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Definition: Market Controlled Price Environment
Is a situation where tough competition between similar products, be it goods or services determines the prices. In this case, individual suppliers or producers exercise very little or no control. When two products are similar in terms of features, there prices are set not on the basis of your cost and profit objectives but rather depending on the competitor’s prices.
Before the price of the product is decided, research is done about the competitor products to determine what price or features should be there. Price environments can be market-controlled, company-controlled or government controlled and a company’s price environment determines what level of control it has over its competitive pricing. In order to charge a higher price, your product should have some better feature which gives it an edge over others.
There can be four ways to adopt the pricing strategy:
premium pricing strategy,dynamic parity, pure parity ordiscount pricing strategy. In pure parity, the prices are same as that of the competitor product. Dynamic parity keeps a gap between the two prices. Premium parity means setting a higher price for your product which makes the customer perceive better quality and higher benefits while in discount pricing your product is priced lower than rival products and is usually done by generic or store brands.For example - Pepsi and Coke are competing products hence, have similar prices.
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