Price is closely related to the product itself. It is often difficult to gain a competitive advantage through pricing strategy; it is easy to be come non-competitive through poor pricing practices. It is possible to isolate pricing decisions; two broad areas can be separated. First, business firms are faced with the problem of establishing pricing policies and strategies. These are the broad guidelines under which more specific pricing activities take place. Second, managers are faced with the actual task of determining specific prices. The most important factors bearing on price policy decisions are external environmental elements and internal constraints. Research for policy decisions tends to rely on studies of industry structure and examination of internal secondary data. This research reveals the nature of price as a competitive variable and constraints on the flexibility of pricing.

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