Some aspects of price strategy

A firm's success, within a rapidly growing and dynamic market, depends upon its ability to respond to market demand and to react to competitive forces. A key factor determining success is the pricing policy employed by the firm. Product pricing, however, is not simple; supply and demand, as well as the interaction and reaction of competitors, must be taken into consideration. By simulating a competitive market environment, however, a firm should be able to evaluate different pricing strategies prior to employing a strategy in practice. The goal of this research was to propose a simulation model to serve this purpose. Particularly, the objective was to demonstrate that if an industry can be characterized as one in which cost as well as price decline with cumulative volume, a pricing policy leading to market dominance exists. A simulation model is desirable for evaluating the proper pricing strategy for achieving such a market position.