Once the product is ready for sales, the process of determining price follows. It is a very crucial part as it is one of the factors that affect the consumers buying decision to a great extent. This factor also covers the decisions of offering discounts, allowances, determining the payment terms that is will the payment be in cash or on credit and the credit terms. At present, The Sun is priced at 35p Monday to Friday, and 55p on Saturdays. The reason for the increase in price on a weekend is due to the fact that more content and features are included, such as free sections and supplements such as The Favourite and TV Magazine.
However, price is also determined or influenced by retail, ticket, subscriptions and special offer considerations. However, you cannot subscribe to The Sun nor are they sold on a special offer basis. It is clear to say that The Sun has an important objective in determining how it is to set its prices. The objective is to maximise profit and to raise market share by introducing realistic retail pricing as an example. Inserts are frequently supplied with the newspaper which also means that The Sun needs to
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Most importantly, market structure as well as the newspaper’s objective is very important to influencing pricing. As The Sun is in a perfectly competitive market, prices will be lower relative to costs than for monopolists. Due to the fact that The Sun newspaper has perfect competition prices, these are determined by the forces of demand and supply. However, in reality, a totally perfect market does not exist and therefore this pricing level is most often never met.
It is fair to say that The Sun cannot choose to set its own price and output levels, where these are set at a high output level and low price, as there is a large amount of competition to influence what it should set, such as competition from tabloids. A central idea on the pricing of the newspaper is that it is not so much the demand side of the market that affects price, but rather the supply side through costs of production. A method called cost-plus pricing is used by The Sun whereby price is closely related to the costs of production and printing the actual newspaper daily.
The Sun has used product differentiation when setting prices, especially between the 35p issues Monday to Friday, and the 55p edition on a Saturday. Because the newspaper is relatively homogeneous to that of its competitors, these prices have to be set at fairly similar levels as most people would choose the cheaper alternative if The Sun was higher than another. This is true in the sense that you will never see a huge price difference between particular tabloid newspapers, where a large majority are priced at around 35p to 70p although broadsheets are known to be higher.
It is realistic to say that if The Sun was to drop its prices, it would attract many customers away from its competitors such as The Times, unless this newspaper also did the same. In addition, the position of the newspaper in its life cycle will also influence the price it sets for the product. However, The Sun has a large amount of control over its pricing as it has the highest circulation of any daily English-language newspaper in the world, daily readership is high and is Britain’s most popular daily newspaper.
It is important to understand the three main stages of the product life cycle which are growth, maturity and decline. The Sun has priced its newspaper according to the impact of the three main stages of the product life cycle. In the growth stage, the total market size was increasing for the newspaper as a replacement for the Daily Herald in 1964. During this stage, decline in circulation was overcome and ownership of the market was increased. The growth stage saw the newspaper making decisions as to its pricing whilst adopting a ‘skimming’ strategy charging a high price which eliminated a small but lucrative part of the market.
However, this was soon removed and The Sun adopted a ‘penetration’ strategy charging a lower price and raising market expenditure in order to establish a much larger market presence. Moving on to the maturity stage, The Sun and its pricing decisions largely depended on the market share which they had already established during its growth phase and also on the quality of the product maintained. Pricing decisions are also influenced by its sister newspaper News of the World in which the two newspapers are managed together at senior executive levels.
During the maturity stage, prices were set as the newspaper proved very profitable. The Sun began introducing retail pricing which was realistic and special offers which included the newspaper being sold for 20p during specific times of the year. It is realistic to say that the pricing policy of the newspaper does not represent a large investment for the potential reader. In the decline phase, The Sun tried to maintain its high price, although in reality it was forced to low the pricing and to bring out newer designs.
This was the case during the years in which it changed track and caused a small stir by endorsing Margaret Thatcher in the 1979 general election, where sales fell drastically and forced the newspaper to reduce price in the process. The newspaper’s pricing has also been influenced by market segmentation, where it sets relatively low prices for each issue as it is aimed at a large section of the market and everyone in general. An important point to make concerns the elasticity of the newspaper involved. This is a very important factor that The Sun must consider when making its pricing decisions.
By working out the price elasticity of demand, the newspaper will then know just how much control it will be able to exert over the price it charges at 35p weekdays and 55p weekends. Due to the fact that The Sun has a relatively high price elasticity of demand, it is not able to make significant price changes without losing a vast part of its market. For example, if the price of the newspaper increased, the demand would change a lot as people do not need this specific newspaper to live their lives and would find alternative means of locating news, weather and sport in cheaper newspapers or via online resources.
However, even a small change in the price charged for the newspaper can result in a much larger change in demand, such as if the price rises the demand may fall as people could start to buy fewer newspapers. As a general rude, when the demand for The Sun increases, the price seems to fall. Many points have been discussed about the factors which influence the price which The Sun charges, being 35p Monday to Friday, and 55p on a Saturday. It is clear that many different situations take place regarding the environment the newspaper is set in, the main ones being the differing objectives and the different market structures of the newspaper.
There are many combinations of these for the newspaper, and therefore the pricing decision made by the newspaper is often complicated and its decisions are often individual and different to those even in the same market. The Sun has realistic retail prices, with special offers on the price during certain times of the year. Subscriptions are very rare as the newspaper is sold 35p Monday to Friday, and 55p Saturdays, where there are also rare instances of ticket pricing due to the fact that the newspaper relies on additional extras to set a price.