Wednesday, August 7, 2019
Main Factors Affecting Product Pricing in the UK Essay
Main Factors Affecting Product Pricing in the UK - Essay Example These factors are sometimes specific to products whereas at times they run across all or many products. (DBIS, 2011) Factors determining product pricing in UK One interesting factor that determines product pricing in the UK is gender. It might not affect all products but it does affect some products. According to the Association of British Insurers (ABI) research on Ã¢â¬Å"use of gender in insurance pricingÃ¢â¬ , gender plays a significant role in determining the price of insurance products. The researchers also report that there was, however, no patterned discrimination against either gender in this pricing. However, use of gender to determine the price of insurance commodities is conspicuous. For instance, ABI reports that young female drivers parted with less for insurance coverage as compared to their male counterparts. This is attributed to the lower chance of the female drivers having accidents in relation to male drivers. In another example, women gain more in matters of lif e insurance due to lower premiums because they have a longer life expectancy. Men, on the other hand, benefit from lower medical premiums between age thirty-five and fifty-five. This is due to the medical risks involved between the ages .i.e. women have higher medical risks. (ABI, 2010, pp. 4-10). Product differentiation is another determinant of product pricing in the UK. Product differentiation is bettering a commodity by making it different and of unique qualities as well as adding newness to the market. Product differentiation could bring with it advantages that include product variety which would result in lowered prices for consumers. Many differentiated products, therefore, are advantageous to the consumer. (Randall, 2009, pp. 17-19). Similar products by different companies lead to substitution by customers in case of price changes. Highly differentiated products, on the other hand, have lower price competition regardless of the number of companies that are competing. Example s of such products include cigarettes, beauty products and service industries like hotels among others. In such products, there is a monopoly in terms of pricing for the marketers since customers do not seem to look at pricing. British American Tobacco has not had a significant change in their number of customers despite an increase in its productsÃ¢â¬â¢ prices. Therefore the less differentiated a product is, the higher the chance of its customers shifting to other competing products as a result of changes in pricing. (Wiley, 2005, pp. 2-5) HolcombeÃ¢â¬â¢s concept of an advantageous product differentiation has been employed in the UK by several departments, among them, the UK Department for International Development (DFID). The department conducted a research to establish how an introduction to this strategy could make medicine more accessible to patients. (Yadav, 2010, pp. 5-10). Government interventions and strategies, for instance, increase in interest rates, also tend to aff ect product pricing especially on financial assets like shares. The Bank of England is charged with the responsibility to regulate these rates and therefore the bankÃ¢â¬â¢s decision on the rates affects the prices of these assets. Increase in interest rates on these assets leads to increase in prices of the related commodities. (Bank of England, 2011).