Factors Influencing the Price of Polo Mints in the United Kingdom

This report examines the factors that determine the price of Polo Mints in the UK market. It begins with an introduction to supply and demand, illustrating their relationship with price through diagrams and identifying the equilibrium point. The report then explores reasons for changes in demand, including marketing activities, inflation, and customer needs, along with diagrams showing the impact on demand. Furthermore, it investigates the reasons behind changes in supply, such as natural conditions and fiscal policy, and analyzes how these changes affect the price. The report concludes by summarizing the key findings and the complex interplay of factors that influence the pricing of Polo Mints. The report provides insights into the economic principles that govern the price of goods in a market, making it a valuable resource for understanding market dynamics.

Factors in determining the
price of Polo Mints in UK

Table of Contents
INTRODUCTION...........................................................................................................................1
PART A...........................................................................................................................................1
Supply and demand diagrams showing relationship between supply, demand and price......1
Equilibrium point in the diagram...........................................................................................3
PART B............................................................................................................................................4
Reasons of changes in demand...............................................................................................4
PART C............................................................................................................................................6
Reasons of changes in supply.................................................................................................6
Impact of changes in supply and demand on price.................................................................8
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Demand and supply are the two main elements that are used by economists for the purpose
of determination of price in the market. Both these components get affected due to fluctuation in
price of goods and services. Relation of such two factors with rate is known as demand and
supply relationship (Cartwright and Cooper, 2014). This report is based on price determination
of price of Polo mints in UK. It was firstly manufactured in UK in year 1948. Various topics
such as demand and supply diagrams to explain relation of these two and price, equilibrium
using these diagrams, reasons that leads to a change in such elements and impacts of changes in
these factors will have of price have been covered under this report.
PART A
Supply and demand diagrams showing relationship between supply, demand and price
Polo mint is a peppermint flavoured mint with a hole in middle and this essay is all about its
price determination. It was firstly manufactured in year 1948 in UK and its idea was proposed by
John Bargewell. Supply and demand are two different components of microeconomy which is
used by economists to analyse impact of price upon both of them. When changes then it affects
demand and supply of items. The rate which is set by organisations to its goods is depends upon
market requirement if it is high the price will be high and in opposite situation it will be low due
to less demand of items by customers (Friedman, 2017). It is vital for all the companies to
analyse market conditions and then form decisions regarding pricing. If price is very low then it
may create risk for the company of not generating appropriate amount of profits. In order to keep
clients happy and attain higher profits managers of Polo mint try to ignore imbalance in supply
and balance customer’s demand with its supply. Business entities can sale all the products in
higher price if its supply is very good but if it becomes too high then it leaves negative impact on
the company so while formulating pricing decision the managers of Polo mint are required to
analyse market conditions. In such type of situation enterprises should lower the rate and attract
new buyer in order to achieve long term sustainability.
Demand and price of goods are inversely related to each other because most of the time when
price decreases the demand get increased and in opposite situation it gets decreased. When
companies set very high prices then substitutes try to capture their market share by attracting
their customers. For example, if Polo mints increases its price suddenly then its substitutes can
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try to capture its market share by decreasing their prices proportionally. When polo mints were
launched, they were unique for the customers which was resulted in its higher demand in the
market. All the manufacturers do not want that their products remain unsold so they try to set
such price for all the items that may result in higher demand and supply of them. From the above
analysis it has been identified that demand, supply and price are related with other all of them
affect each other. It is very important for managers of Polo mint to consider all the factors that
may affect its profits so that appropriate and attractive pricing strategies can be formulated (Hill
and Porter, 2016). The following diagrams can show the relationship of demand, supply and
price:
Relation of demand and price:
(Source: Relation of demand and price, 2019)
The above diagram shows that if price of polo mints gets decreased then its demand will
be increased. It shows that both of them are related to each other if organization is willing to
increase demand of its profits then it is vital for company to decrease price of the items so that
new customers can be attracted towards goods.
Relation of supply and price:
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(Source: Relation of supply and price, 2019)
The above graph shows relationship between price and supply of Polo mints in which if
company is willing to increase supply of its goods then it can raise price of its products. It is very
important to enhance price up to a specific level because if the price reach to too higher level
then it may affect organization negatively where it may lose its existing clients.
Equilibrium point in the diagram
The point where demand and supply curve intersect with each other then it is called
equilibrium point. It also shows that both the elements are equal at this point. The optimum
position of a market price which helps companies to generate identical demand and supply for
the organisation so that higher profits can be generated is known as equilibrium point (Pigou,
2016). The diagram below shows intersection of two elements of Polo mints:
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(Source: Equilibrium point, 2019 )
The image shows relationship of demand, supply and price and the intersection of
demand and supply for Polo. It shown the situation where the company increases the price in
order to enhance supply which results in increment of demand. It is a comparative static of
equilibrium which compares on position with other when it changes with fluctuation in
price. As the image shows that increment in price has resulted in raised demand of products
so it shows a comparison of both the level which is done under a comparative static analysis
of equilibrium.
PART B
Reasons of changes in demand
There are various reasons that may result in change in demand of the products of Polo mints.
Some of them which results in decreased demand are as follows:
Marketing activities: If Polo mints are not able to market its products properly then it can
affect its demand in the market because when customers are not aware of the items offered by
company then it is not possible to retain them. In order to deal with this cause, it is very
important for marketers of Polo mints to formulate impressive marketing strategies so that it can
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attract large number of consumers. It helps to establish a good image of company in the minds of
customers so that profit can be maximised by fulfil all their requirements (Reasons of changes in
demand, 2018).
Fluctuation in inflation: Different types of economic conditions like fluctuation in
inflation rate can also result in decreased demand of Polo mint because it directly affects
purchasing power of customers. When they are not able to pay the amount, which is set by the
company for its products then it will affect demand of its items. In such type of situation
companies are required analyse economic conditions and formulate effective strategies to ignore
consequences such as decreased demand.
Increased price of goods: Sometimes companies increases demand of its products such as
Polo mints due to their higher demand in the market. Most of the time it results negatively for
organisation because customers do not prefer to buy same products on higher prices. In such type
of situation, they switch to a substitute which can be bought by them on low price. It is very
important for business entity to deal with such type of situation appropriately because if
customers switch to other products then it is very difficult to grab their attention back.
Change in the needs of customers: Needs of customers changes with time and if
companies are not able to fulfil them then it results in decreased demand of products. For Polo
Mint it is vital to analyse that customers are satisfied with its products and if they are not then it
should make changes in the mints according to their preference (Wang and Nicolau, 2017).
The diagram below can show a decrement in demand of Polo mints:
(Source: Changes in demand, 2019)
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The image shows that demand of the products gets decreased with a reduction in price.
There could be different reasons for it such as preference changed, inflation and unattractive
marketing activities. To deal with this problem it is very important for Polo mints to focus on all
the aspects that can help to increase demand (Tunca, Wu and Zhong, 2014).
The reasons which results in increased demand of items of Polo mints are as follows:
Increased number of buyers: When number of buyers in the market get increased then it helps
to increase demand of products. If Polo mints is able to attract large number of new customers
then it can help to increase demand. In order to raise number of clients, managers of Polo mints
are required to form strategic decisions for future so that demand can be increased (Wong, Tsang
and Kong, 2014).
Invention and innovation: When customers get something innovative then it attracts them
towards it. As mints offered by Polo have different flavours so it helps it to increase demand of
its products by increasing number of buyers because they always want to try something new. It is
a good option for all the other companies that can help them to raise demand in the market.
Advertisements: Promotions is the main element which is required to aware customers
regarding the products. Effective advertisements are used by Polo mints in order to retain its
customers and establish a good brand image in the mind of them so that demand of its products
can be increased.
The diagram below can show increased demand of Polo mints in the market:
(Source: Changes in demand, 2019)
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The image reflects that demand of Polo mints is being increased with a rise in price of its
products. Reason behind it could be impressive advertisement techniques, new innovative
goods etc. All of them can help to increase demand of products and profitability of whole
company.
PART C
Reasons of changes in supply
There are various reasons that may result in changed supply of products in the market.
Some of them that decreases supply are as follows:
Natural conditions: Different types of natural disasters such as climate change, flood
etc. can affect supply of Polo mints in the market. It is not possible to stop them but managers
can plan to deal with them in advance by preparing solutions. It can help to deal with the
problematic situation effectively at the time when it takes place (Ivanic and Martin, 2014).
Too high price: Sometimes companies increases prices to enhance supply but a little
mistake can affect their demand and supply by decreasing interest of customers as they do not
want to pay high amount that item. While planning to increase price the managers of Polo mints
it is very important to formulate pricing policy appropriately so that supply can be managed
effectively.
Fiscal policy: There are various types of governmental policies are implemented by
government of UK and it is very important for Polo mints to comply them so that goods can
supplied with no interference of government in supplying activities. Sometimes government
increases import or export related taxes that directly affect supply of goods from one place to
another.
The graph below can show the decreased supply of Polo mints:
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(Source: Changes in Supply, 2019)
The graph shows that when price of Polo mints will be increased by the organisation then
its supply will be decreased as it will result in decreased number of buyers. The reasons behind it
are natural conditions, high prices and fiscal policies.
The reasons that may result in increase supply of goods of Polo mints are as follows:
Monopoly in the market: When a supplier is having monopoly in the market then it helps to
increase supply of whole organisation. As Polo mints are the only peppermint dealer in the
market which helps it to be on the top of the industry and enjoy monopoly in the market. In order
to be on the same position, it is very important for Polo mints to maintain quality of its products
so that its supply remains high (Silver, 2016).
Technical progress: Amount of supply get influenced with progress in technique of
production. For Polo mint technology enhancement is very important so that supply in the
market can be enhanced.
Improvements in transportation processes: As technology is getting enhanced with time
which helps companies to improve their transportation. When distributors receive goods on time
then it results in increased supply in the market. For all business entities it is very important to
deliver products on time so that supply can be raised.
The graph below can show increased supply of Polo mints due to different reasons:
(Source: Changes in Supply, 2019)
The above chart reflects that slight reduction in price can result in increased price. There
could be various reasons for the change. These causes are monopoly in the market, technological
progress and enhanced transportation processes.
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Impact of changes in supply and demand on price
There are various reasons have resulted in changes in supply and demand. All the changes
leaves impact upon prices of Polo mints. When demand get increased then price of the mints can
be increased by company in order to attain higher profits. If demand gets decreased then it is
very important for organisation to decrease price in order to attract large number of customers.
When supply get increased then it can result in increased prices and decreased supply will leave
negative impact upon price because enterprises are required to reduce prices so that profits can
be managed (Thompson, Strickland and Gamble, 2015). It is very important to for Polo mint to
manage demand and supply so that higher profits can be attained by the company.
CONCLUSION
From the above project report it has been concluded that demand and supply are two
different elements that affect price and also get affect due to fluctuation in price. When both of
them intersect in the diagram then the intersection point is known as equilibrium. There are
various reasons which may affect demand and supply of products. These reasons are too high
price, innovation, technological enhancement, fiscal policy, increased number of buyers, natural
disasters, improvement in transportation of goods etc. All of them can result in increased or
decreased supply and demand of products. These changes affect price of the products because
when they fluctuates companies are required to manage their price according to them.
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REFERENCES
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The World Bank.
Pigou, A. C., 2016. Industrial fluctuations. Routledge.
Silver, M. S., 2016. How to better measure hedonic residential property price indexes.
International Monetary Fund.
Thompson, A., Strickland, A. J. and Gamble, J., 2015. Crafting and executing strategy:
Concepts and readings. McGraw-Hill Education.
Tunca, T. I., Wu, D. J. and Zhong, F., 2014. An empirical analysis of price, quality, and
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Wong, T. C., Tsang, A. and Kong, S., 2014. How does loan-to-value policy strengthen banks’
resilience to property price shocks–evidence from Hong Kong.
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