A Method for Understanding Price Determinants

Abstract

The binary flow chart is used to study and simulate price decisions. The elements uncovered include both market factors and organizational factors. Testing the model for predictive accuracy and simulative ability is reviewed. Marketing implications include a legitimate defense against charges of collusion in price-setting in an oligopoly, and a better understanding of the market's reaction to organizational components. Marketing strategists may benefit from insights into competitors’ behavior, and from tools useful for developing strategies in different markets.