Role of market structure for oligopolies

Pricing is related to product positioning, it affects other marketing mix basics for example promotion, direct decision and product features. While carrying out pricing seven major steps are followed. They are the development of a marketing approach, making marketing mix decisions, estimation of the demand curve, cost calculation, understanding environmental factors, pricing objectives being set and determination of pricing.

Pricing strategy matters because if the prices are wrong business will fail. Companies carry out different price strategies depending on what the market will bear and make a reasonable profit. Examples price skimming this is sometimes used when a new product is being introduced particularly when it is a new technology. The objective of price skimming is to set a high price that helps to recover the costs of production and advertising (Suttle & Media).

Penetration pricing is used to set low prices early to attract lots of customers. A company will make an effort to produce high-quality products and offer the best customer service in order to retain their customers. This method is used to increase market share or the percentage of total sales it holds in the market. Return on investment pricing strategy, the company might spend lots of time analyzing costs that will be used to make the product and projecting sales figures. Geographical pricing strategy, the company sets higher prices in certain markets (Suttle & Media).

In conclusion, oligopoly is a market structure that is majorly a small number of moderately large firms that dominate an industry. Which affects promotion, it plays a major role in pricing. Pricing affects the customer positively and at times negatively.