Both retailers and manufacturers are impacted by price transparency. Retailers will experience customers who have a greater understanding of a product's wholesale costs, as seen with the evolving practices of car dealerships. Nowadays, car buyers enter equipped with detailed breakdowns of wholesale auto prices that can be downloaded for free from various websites. On the other hand, manufacturers will face consumers who can more easily deduce a product's manufacturing costs, making it challenging to establish substantial price premiums.
As the level of transparency regarding prices rises, so does the potential for issues to arise for companies. Typically, such issues manifest in three different ways. The first of which is the significant hindrance it can impose on a seller's ability to achieve high profit margins.
There are three reasons why price transparency can harm brands. Firstly, it can impact British Airways. Secondly, it can weaken customer lo
...yalty to brands like Procter and Gamble. Thirdly, it can damage companies' reputations due to perceptions of price unfairness.
When consumers are presented with clearer costs, they may start to believe that their favourite brand's sellers have been purposely increasing the retail price to benefit the company's profits. As a result, long-lasting distrust can occur, making it challenging for companies to regain their previous customers. Overall, price transparency enables the breakdown of price discrimination within the European Union, depending on various factors like product type, industry organization, and vertical connections between buyers and sellers. Rapidly developing pressures like the shift to a single currency, eCommerce expansion, competition policy effectiveness, and liberalizing and privatizing telecommunications and energy companies drive price transparency.
Since the introduction of the Euro, prices have changed across Europe, although the
still vary surprisingly in the countries that use the Euro currency. While some argue that small differences in consumer goods prices aren't significant because consumers won't travel internationally just for a toothpaste tube, indirect taxes such as VAT explain price gaps in the Eurozone for products like cars. The remaining price gaps come from manufacturers' price discrimination. It's particularly interesting to note the price reductions in the UK resulting from pressures of transparency, which demonstrate that sterling currency doesn't protect UK businesses from its effects.
Price transparency impacts retailers and manufacturers alike, as it enables customers to gain a clearer understanding of a product's wholesale costs, and therefore for retailers this is significant. On the other hand, for manufacturers, price transparency bears a challenge, as consumers will be able to deduce production costs more easily, and as a result, it will be tough for them to impose hefty price premiums.
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