There are three types of price leadership which have identified by economists:
a) Dominant price leadership
There is a large scale of firm dominate the whole industry and thus have a big market share. In the …show more content…
variable costs. With variable (or marginal costs) pricing, a price is set in relation to the variable costs of production, ignoring overheads and fixed costs. (Jim Riley, 2012) Marginal pricing strategy often used by businesses during periods of poor sales. For instance, marginal cost of an item is RM5.00 and normal selling price is RM6.00, the company which use marginal pricing strategy will lower the price to RM5.10 if the demand is declined. The 10 cents of incremental profit is better than no sale at all so the company will approach this strategy. The benefit of marginal pricing is that the lower price will enable the increase of customers demand. This strategy can also be used by small businesses to boosts short-term