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1. Discuss the effects of the economy on the company's pricing strategy? 2. Discuss why an...

1. Discuss the effects of the economy on the company's pricing strategy?
2. Discuss why an enterprise considers raising prices? Try for 2 illustrative examples of the problem of price increase in practice?
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Answer #1

Economics effects like recession and deflation cause lower consumption amd aggregate demand and hence disposable incomes reduce which leads to lowering of prices by firms or giving higher discounts using penetration pricing methodology to gain higher customer market share. Firms thus keep prices low for significant time and gradually increase when economy bounces back.

An enterprise considers raisjng prices for example Apple raises prices for each of its new smartphone to create buzz and offer quality and create differentiation. Similarly companies like Verizon increased prices to remain sustainable and competitive enough in market.

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