Depending on the degree of competition, the pricing strategy of enterprises will be different. According to the degree of competition, the market can be divided into three situations: perfect competition, imperfect competition and complete monopoly.
(1) In the case of perfect competition: there are a large number of buyers and sellers. The difference in product quality is small, and the influence of buyers and sellers on prices is balanced. The pricing strategy is very flexible and is mainly based on the company’s own pricing goals.
(2) In the case of imperfect competition: buyers and sellers have a greater influence on prices and product transaction volumes, and the quality of the products provided varies greatly. In this case, the intensity of peer competition has a greater impact on pricing. Sellers need to consider the impact of their own pricing on the competitive situation while considering the pricing strategy of competitors. The intensity of competition mainly depends on the difficulty of product manufacturing, supply and demand situation and patent protection. However, the competitive relationship between upstream and downstream of the industrial chain has a greater impact on pricing. In imperfect competition, whether the product meets a certain rigid demand of the customer determines the bargaining power of the merchant in the competition with the customer. If it is a rigid demand, the merchant has strong bargaining power and can generally adopt the cognitive value pricing method or fat removal pricing method. If it is an elastic demand, the merchant has weak bargaining power and can flexibly set prices according to market goals. Upstream suppliers in the industry chain mainly influence pricing from a cost perspective, mainly involving material costs, suppliers’ expectations for future products, etc., which affect the final pricing of products by affecting the total cost of products.
(3) In the case of complete monopoly: the supply of goods is completely controlled by one company. The product transaction volume and price are unilaterally determined by the monopolist. The market price is relatively stable, and pricing is mainly affected by whether customer demand is rigid demand.