Price-Setting Behaviour

In: Business and Management

Submitted By gracekim430
Words 3387
Pages 14
Price-setting Behaviour – Insights from Australian Firms
Anna Park, Vanessa Rayner and Patrick D’Arcy*
Since 2004, the RBA has been conducting a survey of how firms set prices, how frequently they review and change prices, and what factors influence these decisions. the results show that firms employ a range of approaches to price setting, with around half reviewing their prices at a regular interval. early in the survey period, costs were the most important factor in price setting, though demand considerations became more important when economic conditions softened.

The way firms set prices can be a key determinant of the dynamics of the inflation process. Given this, over recent years a number of central banks, including the Reserve Bank of Australia (RBA), have conducted surveys of how firms set prices, how frequently they review and change their prices, and what factors influence these decisions.1 This article discusses the results of an ongoing survey that has been conducted by the RBA since 2004. The main findings can be summarised as follows: • the surveyed firms employed a range of approaches to price setting, with slightly more setting prices as a mark-up on costs rather than in response to various demand factors; broadly the same number of surveyed firms reviewed prices at regular intervals (most commonly annually) as reviewed prices with each transaction or in response to external factors, although behaviour differs across sectors; and

costs were the most important driver of price adjustment over the first part of the sample period, with demand considerations becoming more important when economic conditions softened in late 2008.

The Survey
The RBA has been surveying firms about the way they set prices since 2004. The survey has been conducted in two parts. The first was undertaken over an 18-month period from late 2004, with…...

Similar Documents


...A particular setting or settings are always present within a story. The setting may affect how the reader perceives a character. Setting also allows the reader to determine the mood and or disposition of that, the writer tried to portray. “A Rose for Emily,” by William Faulkner is no different than any other story, in the sense that the settings were an essential element to the story by providing the reader with a basis to determine the atmosphere of the town and mood of Miss Emily Grierson. The time frame, in which “A Rose for Emily” is set, is an important component to the setting of the story. The story is based sometime during the late eighteen hundreds, after the battle of Jefferson and the end of slavery. The time frame is important because it displayed how families or persons of prestige and wealth usually set themselves apart from other ordinary inferior citizens. It was almost as though the town and its people in which, the Griersons lived, were in debt to the family. The author states, "Miss Emily had been a tradition, a duty, and a care; a sort of hereditary obligations upon the town. (Pg 80)” Miss Emily was not compelled, or to be forced to adhere to any request made by the town. Since the town was under new authority and not Colonel Sartoris who was already dead, but had previously remitted Emily's taxes, so she felt under such circumstances it was necessary for her to pay them. When the smell developed in her house and disturbed the neighbors...

Words: 337 - Pages: 2

Explain Why You, as Manager of a Firm in a Perfectly Competitive Firm, Would Have No Discretion in Setting Prices of Your Product

...have no discretion in setting prices of your product ANSWER Perfect competition demands very strict assumptions that are unlikely to be found in many if any markets in the real world. Markets that most closely equate to perfectly competitive ones are those in which there are very large numbers of buyers and suppliers, reasonably free entry and exit from the market and well informed consumers. It is in such markets that the purchase decision is driven by price. A perfect competitive (price taker) market exists when the following conditions occur: • Low entry and exit barriers - there are no restraints on firms entering or exiting the market • Homogeneity of products - buyers can purchase the good from any seller and receive the same good • Perfect knowledge about product quality, price, and cost • No single buyer or seller is large enough to influence the market price Managers must take the existing market price; if they set a price above the market price, no one will buy their product because potential buyers simply will go to other suppliers. Setting a price below the market price does not make any sense because the firm can sell as much as it wants to at the market price; selling below the market price will just reduce profits. Because Managers must take the current market price a purely competitive market is also called a "price takers" market. The firm can sell as much as it can produce at the existing market price, so demand is......

Words: 603 - Pages: 3

Chocolate Package Design Combined with Price Setting: a Consumer Purchase Intention and Overall Impression Investigation

...Chocolate package design combined with price setting: A consumer purchase intention and overall impression investigation Cao Youjia, Wang Yicheng, Li Simei, Gao Junhong Abstract In our experiments, the research sheds light on consumers’ purchase intention and overall impression towards six types of combination of chocolate package and price: 1. aesthetic package with a relatively high price, 2. aesthetic package with an intermediate price, 3. aesthetic package with a relatively low price, 4.plain package with a relatively high price, 5.plain package with an intermediate price, 6.plain package with a relatively low price. After the six between-subject experiments, we find that package design and price setting do have influence on customers’ preference to purchase, but not as strong as our perception. On the other hand, the packaging has significance influence on the customers’ overall impression towards the product. The aesthetic package with the highest price leaves the customer the best impression. Implications for future application for businesses are discussed in the final part. Key words: Package design, price setting, analysis of variance, purchase intention. Introduction “Man shows that he is affected by appearance, by something that causes him pleasure over and above the immediate utility of the object” (Clay, 1908). Designing aesthetic products to satisfy the consumers’ need is of growing importance in marketing. As core attributes of product,......

Words: 2560 - Pages: 11


...Factors that Abraham Isaac manufacturer (AIM) should consider when setting prices for their products at home and in new markets. AIM is manufacturer of Teak Furniture and the head office is based in Jakarta, Indonesia. Price Price can be defined as the sum of all the values that customers give up in order to gain the benefit of having or using a product or service. In simple words it’s the amount of money charged for a product or service. Pricing have a direct impact on the company’s bottom line. Even a small percentage of improvement in price can generate a large percentage in profitability. Price also plays a key role in creating customer value building customer relationships. AIM should avoid the common mistakes of pricing, which are:- a) Too cost oriented b) Not revised often enough to reflect market changes c) Fail to take into account the other element of the marketing mix d) Not varied for different products, market segments and purchase occasions The AIM marketing manager will have to consider the below mentioned factors for the prices of their finished products at home and in new / emerging markets. Internal Factors The pricing decision can be affected by factors that are controlled by the marketing department of AIM organisation. These factors include: 1. Marketing Objectives Pricing decisions can be influenced by different types of objectives, but AIM will have to look at the four key objectives in which pricing plays a......

Words: 330 - Pages: 2


...Carla Muñiz Professor Zhelezcheva ENG 102 Essay 1 9 / 21 /13 Cultural Heritage & Literary Settings For the literacy work I’ve chosen to go to a real location and take notes as observed to compare and contrast with the literary setting of my choice. As for the location I chose Coney Island in comparison with the Carnival Feast in “The Cask of Amontillado”, by Edgar Allan Poe. Judging by my experience in Coney Island, I can state that there is an abundance of cultural heritage in that specific location. Coney Island gave me a perspective; on how cultural heritage consists of a unity with joyful events that bring different types of ethnicities, art, music, and overall culture together in one location. Coney Island is a very big attraction, for the most part known by many New Yorkers and tourists. “Coney” has very big, loud, and extravagant rides starting from the most famous/oldest ride the “Cyclone” and “Wonder Wheel” and most recently added amongst the hall of fame the “Polar Express”. To their race tracks, bumper cars (a place in a dark room filled with neon blue, red, yellow and green lights, my personal favorite). It was night time so everything was lit up. I imagine this is what Edgar Allen Poe meant when he mentioned the carnival season in “The Cask of Amontillado.” The carnival setting briefly described in the story of “The Cask of Amontillado”, isn’t much different from the scenery I observed in Coney Island. Edgar Allan Poe described scenery of......

Words: 1038 - Pages: 5


...the set to be completely white but with a lot of entrances and exits for the actors so that it does not make the set feel so one dimensional, I want the set to feel busy but not with props and set pieces. I would want only a few pieces of set to be on stage at one time, for example, a chair for Hillary and maybe a small table, but several entrance and exit points for t keep the play moving and less static. When the scene changes I would have different lighting to indicate so, as they play went on the audience would begin to recognise which lighting reflects which scene or certain place in the play. For example when the lighting would always be the same for every scene in the house, and as the scene/ setting changes so does the lighting. This means the audience know that the setting is different without the use of extensive prop use and background sets....

Words: 962 - Pages: 4

Setting the Price

...INTRODUCTION A firm must set a price for the first time when it develops a new product, when it introduces its regular product into a new distribution channel or geographical area, and when it enters bids on new contract work. The firm must decide where to position its product on quality and price. Most marketers have three to five price points or tiers. Marriott Hotels is good at developing different brands or variations of brands for different price points - Marriot Vacation Villas (highest price), Marriot (high-medium price), and Fairfield Inn (low prices). Firms devise their branding strategies to help convey the price quality tiers of their products or services to consumers. The firm must consider many factors in setting its pricing policy. Following are the six steps in the process: STEP 1: Selecting the Pricing Objective The company first decides where it wants to position its market offering. The clearer a firm’s objectives, the easier it is to set price. Pricing objectives are goals that describe what an organization wants to achieve through pricing efforts. Developing pricing objectives is an important task because pricing objectives form the basis for decisions about other stages of pricing. A marketer can use both short- and long-term pricing objectives and can employ one or more multiple pricing objectives. The major objectives are: survival, maximum current profit, maximum market share, maximum market skimming, and product quality leadership. Survival –...

Words: 3513 - Pages: 15


...Price Controls After reading the required textbook “Economics Made Easy” by Les Livingstone, discuss the advantages and drawbacks of price controls. You may want to do some independent research about minimum wage and price control to enhance your discussion. The following are some questions that might help direct your research and discussion. Be sure to explain why you answered as you did, stating the logical reasons for reaching your conclusions, including APA referencing of sources used. 1. There are federal and state laws setting minimum wages for workers. There are also city laws setting price ceilings for housing rents. a. Why are there laws setting minimum wages for workers and maximum rents for housing? b. Why are there no laws setting maximum wages for workers or minimum rents for housing? 2. It has been stated that price controls cause shortages or surpluses. a. Do rent controls cause shortages or surpluses, and why? b. Do minimum wage laws cause shortages or surpluses, and why? 3. What are the advantages and disadvantages of minimum wage laws for: a. Workers? b. Employers? c. Consumers? d. If minimum wage laws are beneficial, why are minimum wages set as low as they are – for example, what about a minimum wage rate of $100 per hour? e. If rent controls are beneficial, why are rent ceilings set as high as they are – for example, what about a rent ceiling of $100 per month for every rent-controlled......

Words: 279 - Pages: 2

Setting Price for Ikea

...Canada). The company offers a vast array of space conscious furniture units as well as kitchen ware and accessories for the home. The marketing strategy- “make less expensive items without making them cheap”, in other words, the company relies on its current success of making good quality products with low prices. Prices typically run 30 to 50 percent lower than that of its competitors and although cheaper, the idea is not to leave the customer with an inferior product. The process of keeping prices down from product conception and design to final distribution, these are the mainstays for this world leader. We will briefly describe the steps taken by IKEA in order to a produce one of its most famous products, the Trofe’ mug. The first step is establishing and setting the price of the product. During the process of product development also known as bringing the product to life. This involves numerous factors such as color, design, suppliers and most importantly, product price and in the case of the trofe’ mug, the price had to be extremely low, relying on sales volumes to generate sales and profits. As the development process of the product continues and once the price has been established, the next step is to choose a manufacturer to produce it. By choosing factors such as changing the design of the handle, shortening the overall length of the mug and streamlining its packaging to make shipping more cost efficient. In addition, by creating, establishing and......

Words: 762 - Pages: 4

Organization Behaviour

...motivation, personality, attitudes, learning, goals, expectation, perceptions, cognition. * Sociology: groups, status, hierarchy, influence, trust, reciprocity, social identity, social networks. * Economics: perfromance, efficency, effectiveness, incentives, monitoring, coordination. * Political science: power, governance, negotation, politics. INDIVIDUAL BEHAVIOR Managers achieve results by working with and through others. The abilitiy to undestand, predicit and control individual behaviour in the absence of direct monitoring is one of the most important- but also difficult managerial skill to master. FORMAL ORGANIZATIONS A formal organization is a social system with specific goals and usually consisting of several interrelated groups of subunits. Formal organizations are governed by clearly stated and enforced norms that typically survive the churning (mescolare) of organizational members. PURPOSE OF ORGANIZATIONAL BEHAVIOR The purpose of organizational behaviour is to inform the optimal design(progettare) of the organizational strcture and processes to promote improvement in the satisfaction and productivity of oganizational members while increasing the efficency and effectiveness of the organization as a whole ( nel suo complesso). SATISFACTION AND PRODUCTIVITY * Are happy, motivated workers also productive workers? * Under what conditions? * What are the trade off involved? * What drives individuals motivation? * How......

Words: 9829 - Pages: 40


...Describe the "setting" in "Country Lovers". Do not include a summary or the theme. Write between 100 and 150 words. The setting in the short story “Country lovers” takes place in the narrator’s home country, South Africa, and is about dealing with the complications of having a relationship, which includes a black girl and a white boy, during the apartheid period. At first the narrator presents us to the life, of a physical environment, the life on the farms. And the years gone by, and the white people starting there school life far away from the farm. We get encountered with the village, the town and the “dried up river bed” known as the place, where the two lovers meet secretly. The farm is described as the white mans farm with natives surrounding the white men while working for them, and the town is known as the place where the white boy Paulus had been to school and where the trial in court takes place.   Describe the setting (and only the setting) in "Tony's Story". Write between 100 and 150 words. “Tony’s Story” takes place somewhere near the city of Albuquerque in the state of New Mexico, that houses American Indian reservations. The first scene is on the 10th of August, San Lorenzo’s Day. We get introduced to two young Indians; the weather is dry, dusty and dehydrated. It is a hot summer. On the reservation were the Indians lived, they were religious, poor and kind they did not want any trouble, but just to be them selves, without fearing the white......

Words: 317 - Pages: 2


...Setting in Soilder’s Home In the story ‘Soldier’s Home’ by Ernest Hemingway, the setting throughout the story helps us better understand the main character and why he acts the way he does. In stories the setting helps us build a frame around the characters about the environment they live in and what they go through in their life. “In most stories they also serve as more than backgrounds and furnishings. If we are sensitive to the contexts provided by the setting, we are better able to understand the behavior of the characters and the significance of their actions (Meyer131).” In this story, the author gives us glimpses of Harold, the main character, and what he is going through in his life once he returns home from war. After the earlier wars, many soldiers would return home to no good welcomes, and people would scold them for going and fighting for their country. Many of the soldiers had very hard times getting back to reality when they came back. They had hard times getting work and being able to do things normally because of the horror they faced at war. In this story, the opening scene talks of Harold, also referred to as ‘Krebs’, going to war after being a student at a Methodist college in Kansas. It talks about a picture of him in a fraternity, with all his fraternity brothers being the same height and wearing the same kind of collared shirt. Opening the story in this setting tells us that before the war, Krebs was just a normal college student who had many......

Words: 1488 - Pages: 6


...believe in American Dream and gave up everything – include his own life – to achieve the ultimate goal, he gets nothing in return. Besides, the East Egg residences, which represent the highest status in society, were sad and shallow, empty besides the wealth and the respect they get from the society. This is represented by Daisy’s expectation for her daughter – a beautiful fool – is all they can get from their upper-upper class status. Other than that, The Valley of Ashes that filled with the peoples who faithfully worship the idea of American Dream, they get nothing back from the dream. George and Myrtle Wilson work hard and bend their knees to serve the riches get to nowhere, but death. In conclusion, the American Dream that poisoned the settings brings nothing but despair for these places and its residences. This is a big lie that covers the America in the roaring twenties....

Words: 1057 - Pages: 5

Historical Behaviour of Food Prices and Their Likely Future Path

...Historical behaviour of food prices and their likely future path By Anne-Sophie Corbeau Georgios Gavotsis Jie Yue Michael Mahmoud Nanditha Chinnaraj Raphael Zumofen Business Economics Lecturer: Professor David Shepherd Imperial College Business School MSc Management Word Count: 2495 10th November 2011 “The common theme for why all these commodity prices are higher is the substantial increase in fund flow into these markets, which are not big enough to withstand the increase in funds without pushing up prices” By Kevin Morrison, Journalist for the Financial Times April 9, 2006 Table of Contents  i. Introduction 1 ii. Movements in food prices 1 iii. Structure of the food market 8 iv. Government Intervention in the Food Market 10 a. Tariffs and Quotas 10 b. Subsidies and Export Taxes 11 c. Price Support Mechanisms 13 v. Forecast of food prices evolution over the next 20 years 16 vi. Bibliography 21 Introduction The aim of this paper is to analyse the various factors that have contributed not only to rise of food prices over the last two decades, ending the trend of falling food prices#, but also how the structure of the food commodity market and government intervention have contributed to price spikes and generally increasing food commodity prices. The paper will conclude with a forecast of long-term food prices and the factors that will contribute to a continued......

Words: 3902 - Pages: 16


...profile street marketing events with paid performers are planned.  They kick off with “The full monty”  They agreed with“opinion leading” youth magazine editors to publish advertorial pieces extolling them Constraints  Make sure Virgin’s prices are competitive  Make sure that its profitable  Don’t want to trigger off competitive reactions Pricing There are three options for pricing 1. Clone the industry prices 2. Pricing lower than the competition 3. Completely new pricing system First Option: Cloning The Industry Pros  Easy to promote  Simply to apply  Low or maybe no cost for commissioning  Customers are familiar with the pricing system Cons • No differentiation in pricing • Hard to attract targeted young customers • Risk of losing the advantages of Virgin Xtra • Complicated system Second Option: Below The Industry Pros Additionally to pros to the first option  Attracts new customers easily  Competitive price advantage  Fits to their costumer segmentation Cons In addition to cons for the first option • Possible price reaction of competition • Risk of low profit • Low quality image Third Option: “A Whole New Plan” Pros  Allows to start from scratch and setting new rules  Price differentiation besides service differentiation  Flexible pricing options  Attracts customers who feels conned by market pricing Cons • Risk of an unused system • More costly to promote • Higher risks of churn Third Option: “A Whole......

Words: 1485 - Pages: 6