Supply, Demand and Easyjet Essay Example | Topics and Well Written Essays - 1500 words

Supply, Demand and Easyjet - Essay Example This project would talk about one component of marketing mix which is pricing strategies. The project is projected to address the pricing strategies that are followed by Easy Jet Airline and compare the price with the British Airways. Role of Pricing The fundamental rule of supply and demand states that when there is excess of supply over demand, the price tends to go down and when there is excess of demand over supply of products, the price tends to rise. Thus it can be suggested that prices moves upwards or falls in order to eliminate the risk of excess demand and to bring the supply and demand in the same equilibrium. Price is one of the most important components of marketing mix but also its importance does vary from product to products. Prices are based on certain calculation of cost providing the result in unit cost which tends to remain constant or reduces. The nominal price is determined by the prudence which is often experienced by a customer in the process of acquisition of their personal needs and human wants. It is actually the value that the customer expects from the price paid. The type is market price at which the products are sold off. Market prices rise and fall when the offers exceed the demand or stays below the demand. The price of the product thus depends on two forces the supply and demand (Papantoniou, 1992, p.167). Price is termed as an ingredient which a customer has to pay in order to obtain a product. It is most often regarded as the most flexible components out of the four marketing mix elements. It is one of the quickest elements which can change. Marketers have the ability to raise or even lower the prices more frequently than they change the other marketing variables. Price is regarded as an important competitive weapon and is essential for the organization because price gets multiplied by the number of units sold which equals to total revenue of the firm (Lamb & Hair &McDaniel, 2008, p. 47). In order to survive in the highly comp etitive market place, companies are going for the strategy of obtaining pricing objectives which are attainable, specific and measurable. Pricing objectives are divided into three categories which include profit oriented, sales and status quo. Pricing objectives of a firm often reflects the reality of the market. Pricing objectives are not always used to increase the profit of the firm. Sometimes a firm maintains the price to retain the position which is relative to the competition. This form of pricing objective is termed as status quo. When it comes to the basic law of supply and demand it does influences the pricing strategy. Although the inverse relationship between the price and demand is understood and well known, it is often seen on the perspective of supply side which means that the relationship between price and demand is usually seen from the marketer’s perspective. Another important issue with regards to supply and demand is the expectation of the customers with re spect to price. The customers often tend to have expectation when they purchase a product but in some case the customer expectation about price can be the driving force used in the pricing strategy. According to the situation demand, a marketer sets prices which are in accordance with what the market would pay irrespective of the cost, competition and other factors which affect the