Today, we’re going to learn about the function of price change. In simple words, this means understanding why businesses increase or decrease prices and what it helps them achieve.

Price changes are not random. Businesses change prices for specific reasons, and here are some of the main functions:

1. To Match the Market Situation

Markets change all the time. If competitors lower their prices, a business might do the same to stay competitive.
📍 Example: When Mr. DIY lowers the price of household items, Eco Shop might follow.

2. To Respond to Cost Changes

If the cost of raw materials or fuel goes up, companies may raise prices to cover expenses.
📍 Example: During fuel price hikes in Malaysia, delivery charges for food also increase.

3. To Increase Sales or Clear Stock

Sometimes, prices are lowered to attract more customers or clear old stock.
📍 Example: Year-end sales in AEON – prices are slashed to sell off old items before new stock arrives.

4. To Position the Brand or Product

Businesses might change the price to improve the brand image – either to be seen as affordable or premium.
📍 Example: A local skincare brand may increase price to reflect “premium quality” and attract different market segments.

5. To Meet Customer Needs

Different customer groups have different budgets. Changing prices can help reach more customers.
📍 Example: Telekom Malaysia offers student internet plans at lower rates to suit their budget.

💬 In summary, price change is an important tool. It helps businesses react to the market, manage costs, attract customers, and shape their brand image. Always remember, behind every price change, there is a business decision!