Factors Determining the Price of Mobile Phones in the UK Market


Seminar Paper, 2018
8 Pages, Grade: 1

Excerpt

Table of Contents

Introduction

The factors determining the price of mobile phones in the UK

Why the Price of Mobile Phones are Falling despite Increase in Consumer Demand in UK

Conclusion

References

Introduction

The UK mobile phone market is one of the most competitive markets in the world. This sector has developed and also expanded over the years and the increasing competition has resulted into falling consumer prices of the mobile phones. The increased competition in the UK mobile phone market has underpinned decline in their prices despite the increasing demand from the mobile users (Ofcom, 2014). New investments and innovations have been witnessed in the mobile market in the UK which has resulted into new products and network services hence increasing the choice by the consumers. The consumers view on the mobile market in the UK is that the prices of these products are favorable, and the prices are competitive because of the increasing number of players in the market (Ofcom, 2014). Research in the UK market, therefore, shows that the mobile phones prices have continued to fall despite the increasing demand from the mobile phones users. This forms the basis of this research to explain the factors that determine the prices of mobile phones in the UK an also examine why the prices have continued to fall despite the increasing demand from the users in the UK.

The factors determining the price of mobile phones in the UK

Three prices of mobile phones in the UK are determined by the supply of mobile phones, prices set by other vendors, cost of production, competitive price disruptions, and innovation. The UK mobile phone market is characterized with innovation, more mobile phones being supplied in the market because of the stability in the economy, and competitive disruptions of prices emerging from developing economies. All these factors are thought to have continued to exert more downward pressure on the prices of mobile phones in UK market (Nagarkoti, 2009).

One of the factors that determine the price of UK mobile phones price is the supply of mobile phones in the country. Research shows that the UK mobile phone market is one of the most competitive markets in the country with many players joining the market. The UK mobile phone users have benefited from a wide variety of mobile phones which come with decreasing prices in the past ten years (Xavier & Ypsilanti, 2008). According to the users, the lowly priced mobile phones are bringing improved value for their money because in every household, there is a phone. The average price of a mobile phone in the UK decreased by 48 percent from 2004 to 2014 with the increasing competition in the industry linked with this fall in price. Total spending by UK mobile users has being increasing in the last ten years, and this has being driven by the increasing take-up of mobile phones. The mobile phone users in UK are taking more and more of the phones with research showing that in every household, there are more than three types of phones, and this has being linked with the declining phone prices in the UK market. This explanation, therefore, follows the law of demand and supply which says that if the supply is more, demand increases while at the same time the price fall (Nagarkoti, 2009).

Prices determined by other vendors also have an impact on the price of mobile phones in the UK. The vendors in UK have adopted a low price strategy for their products implying that any new vendor in the market has to consider the price set for mobile phones in UK. This implies that fixing a price higher than the price in the market would result into less demand for the product. The UK consumers are already used to the lowly priced mobile phones which have being set by the vendors and incoming vendors have to set the same price or even lower for their products. The market forces such as demand and supply are used to determine the price of goods and services in the market but in the case of UK mobile market, despite the fact that the supply and demand are high, the prices for the products are continuing to fall (Xavier & Ypsilanti, 2008).

The cost of production also determines the cost of mobile phones in UK. For the retailers, they fix their price depending on per unit cost of buying the product from the manufacturers. Per unit costs of buying the product is of huge importance to the retailers as they set the prices of phones in UK. The cost of production is also factored in, and this depends on the amount of resources used to produce that product in the market. In the UK for instance, the mobile phone manufacturers have access to cheap technology implying that the cost of production is minimal compared to other manufactures who have to import technology in terms of human capital so as to produce the product. As a result, the cost per unit of production is low implying that the product will be sold at a lower price in the market despite the increase in demand for the product (Xavier & Ypsilanti, 2008).

The UK mobile market is characterized with innovative products that have attracted most of the consumers as technology continues to increase. Technological advances in the mobile industry witnessed in most of the leading manufacturers of mobile phones such as Apple, Microsoft, and Samsung have had an impact on the price of these products. All these companies have adopted a low pricing strategy for their products so as to achieve a greater market share thus resulting into changes in prices of the handsets. Consumers in the UK market have variety of demand, and this is another characteristic that has being witnessed in the market. The UK regulation has allowed market entry for more sophisticated products thus stimulating competition in prices in the region (Nagarkoti, 2009).

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Excerpt out of 8 pages

Details

Title
Factors Determining the Price of Mobile Phones in the UK Market
Grade
1
Author
Year
2018
Pages
8
Catalog Number
V430696
ISBN (eBook)
9783668742611
File size
503 KB
Language
English
Tags
factors, determining, price, mobile, phones, market
Quote paper
Caroline Mutuku (Author), 2018, Factors Determining the Price of Mobile Phones in the UK Market, Munich, GRIN Verlag, https://www.grin.com/document/430696

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