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Vidyabharati International Interdisciplinary Research Journal 13(1) 4 2 9 - 4 3 2 ISSN 2319-4979
PRICING: A KEY INGREDIENT OF MARKETING STRATEGY
C.E. Khedkar and A.E. Khedkar
Dr D Y Patil School of Management, Lohegaon, Pune
chetankhedkar22@gmail.com
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ABSTRACT
Pricing decision is one of the major decisions for any marketer. It decides how to charge for a product or a service.
The external considerations such as potential customers and competition makes it difficult to decide the pricing
strategy. There are several pricing strategies, the marketer can choose from. The pricing strategies are - Skimming,
Penetration, Competitive, Premium, Loss leader pricing, Psychological pricing and Value pricing. The marketer can
choose any of them or a combination depending upon the customer feedback and considering competitor’s moves. An
effective pricing strategy can help the business cater to its target customer segment and defend its products from the
competition.
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Keywords: Pricing, competition, value, skimming, penetration
Introduction Literature Review
Pricing Strategy The topic of pricing strategies is well
The expression "pricing strategy" encompasses researched. Below are a few abstracts form the
all the methods that an entrepreneur uses to recent literature:
decide the amount to charge for a product or According to Kienzler and Kowalkowski
(2017), this article investigates the
service. To set a great strategy in motion, the development and current state of pricing
business will do some math, perform market strategy research by embraced a content
research, or collectconsumer insights first. analysis of 515 articles distributed in leading
A few organizations like to keep it basic by academic journals somewhere in the range of
using set markups (some of the time known as 1995 and 2016. The outcomes propose a few
cost plus pricing) or manufacturer suggested developments in research focus and
retail prices (MSRPs). In any case, when the methodology; ongoing research has focused all
firm forms a strategy that better accounts for the more firmly on services and applies more
market conditions and other factors that impact rigorous research designs. The outcomes
consumer behavior, it will actually want to take additionally show a persistent focus on
the competitive advantage. consumer markets and economic theories, just
Benefits of pricing strategy as an expanding consideration of demand side
For consumers, having the ability to compare respondents, to the detriment of supply side
various prices is the second most important respondents. A significant component of this
benefit of purchasing online. As online survey is a bunch of noteworthy takeaways,
business continues to develop, price with both theoretical and methodological
comparison is getting easier continuously, implications for pricing strategy research.
which means consumers will increasingly look Ali and Anwar (2021), have posited that, the
for the best value they can discover. current examination intended to analyze
Having a strong pricing strategy in place can pricing strategies as a deciding element in
help better meet customer expectations by influencing consumer behavior. The current
putting reason behind the prices. The strategy research applied quantitative research method
will create a repeatable interaction that through adjusting questionnaire from academic
encourages how the target audience and sources. The sample size for the current
perhaps even competitors will react to pricing examination is 162 which assembled through
decisions. random sampling method. The outcomes show
that Penetration Pricing has significant positive
influence on consumer behavior at 5% level.
The outcomes show that Price Skimming has
Sept. 2021 429 www.viirj.org
Vidyabharati International Interdisciplinary Research Journal 13(1) ISSN 2319-4979
significant positive influence on consumer free samples can be offered to permit
behavior at 5% level. The outcomes show that consumers to determine such uncertainty
marketing sharing sites has significant positive before buy. Product samples in this way can
influence on consumer behavior at 5% level. develop customer goodwill for the products by
The outcomes show that blog has significant diminishing consumers risk of product fit
positive influence on consumer behavior at 5% uncertainty. In any case, product samples may
level. The outcomes show that Competitive likewise have adverse consequences, since
Pricing has significant positive influence on consumers who acknowledge poor fits
consumer behavior at 5% level. subsequent to sampling preliminaries may
Morim et al. (2017), have argued that, the switch with a specific likelihood to competing
principal motivation behind this article is to products. With consideration of these tradeoffs,
introduce and investigate potential applications we study the sampling and pricing strategies
in marketing administration identified with for merchants of competing products in an
pricing strategy using fuzzy logic. Considering oligopoly market. We figure this issue as a
the recent trends in consumer behavior in Hotelling game and characterize the
Brazil's economy and the steady development equilibrium solution. We initially examine the
of C and D social classes an application was situation while competing retailers at the same
created by the creators to all the more likely time settle on the decisions. We show that the
understand and change pricing strategies. The intensity of product competition and consumer
Think Fuzzy System that consolidates fuzzy switching behavior assume significant parts in
logic and some other related strategic concepts, deciding equilibrium sampling strategy. At the
upheld by mathematical microeconomic point when product competition is strong and
modeling, utility factor, indifference curves no consumer switching behavior happens,
and an experiential hierarchic clustering model. competing retailers consistently receive
Toni et al. (2017), have opined that, the price symmetric sampling strategies.
policy definition is one of the main decisions in Moreover, there is research on the specific
administration as it influences corporate types of pricing strategies e.g.: skimming –
profitability and market competitiveness. In Nyaga and Muema (2017); penetration – Roma
spite of the significance that prices take in et al. (2019); competitive pricing - Xing et al.
organizations, apparently this component has (2018); premium pricing – Feng et al. (2019).
not gotten appropriate attention by numerous Pricing Strategies
academics and marketers since it addresses, as
indicated by gauges, under 2% of the papers on 1) Price Skimming
leading journals in the field. Subsequently, the At the point when price skimming strategy is
point of this investigation was to propose and utilized the business is launching a new
test a theoretical model showing the effects of product or service at a high price point, before
pricing policy on corporate profitability. To gradually bringing down the prices over the
this end, 150 organizations in the metal- long haul. This is a great way to attract
mechanic area situated in the Northeast of Rio consumers—especially high-income
Grande do Sul State, Brazil were examined, shoppers—who consider themselves early
coordinating customer value based pricing adopters or trendsetters. From an entrepreneur's
strategies, competition based pricing strategies point of view, price skimming can be
and cost based pricing strategies with price amazingly useful in assisting faster break even.
levels (high and low) and execution as for This strategy gives an ample amount of safety
profitability. The outcomes demonstrate that before making the product or service more
the profitability of the reviewed organizations accessible to the greater market (Fuessel,
is positively influenced by value-based pricing 2021).
strategy and high price levels while it is 2) Penetration Pricing
contrarily influenced by low price levels.
According to Wu et al. (2018), consumers are A penetration pricing strategy is something
often questionable about how products fit their contrary to price skimming. Instead of starting
individual preferences. In the present situation, with high prices, business starts with low
Sept. 2021 430 www.viirj.org
Vidyabharati International Interdisciplinary Research Journal 13(1) ISSN 2319-4979
prices and gradually increase them as they gain 6) Psychological Pricing
traction. While this puts the firm at risk for The numbers consumers see can influence
restricted or zero profit before all else, it can them. Instead of changing consumer
bounce back in short time. Similarly, that a free perceptions about a product, psychological
sample can encourage a customer to make a pricing interestingly aims to change
purchase, this strategy is giving a discounted perceptions about what the price even is in the
experience to create customer loyalty. first place. A couple of common examples of
Penetration pricing is intended to put the focus this strategy that are demonstrated to work
on the brand. Because of this, the prices will include: Ending a price with an odd number to
always start lower than the competitors are make a customer feel like they're spending
charging. Once the product has effectively significantly less ($5.99 instead of $6, or 97
achieved market penetration, the pricing can be cents instead of $1). This is often known as
increased. charm pricing.
3) Competitive Pricing 7) Value Pricing
Competitive pricing is incredibly similar to Value pricing is perhaps the most important
penetration pricing in that the goal is to drive pricing strategy of all. This takes into account
the target audience away from the competitors how beneficial, high-quality, and important
and towards the brand. Be that as it may, customers accept the products or services to be.
instead of making price increases later on, the Value pricing is what makes a wedding dress
business continues to track what the worth thousands more than a prom dress. To
competitors are charging and beat them out. set value-based prices, the business should
Although this strategy can be hard to sustain, have a profound understanding of the target
thus why many entrepreneurs stay with a audience's needs, pain points, and motivations,
penetration pricing strategy. as well as the brand's own reputation.
4) Premium Pricing Conclusion
Low prices aren't always the most attractive Pricing is to decide how much to charge for a
offer. At the point when the target audience product or a service. Even though it might look
looks for quality over a decent deal, the like an easy task, it is a difficult job
business needs to demonstrate the advantages considering various complexities such as
that the brand can give. A top-notch pricing customer considerations and competition in the
strategy can help assemble the perceived value market. There are various pricing strategies
of your product or service, straight from the which help decide how to price the product or
initial launch. The prices may drop somewhat service. Skimming is the strategy to launch the
over the long haul, however they should in any product at a high level in the beginning which
case give the purchasers a sensation of targets early customers and then lower the
exclusivity and, by and large, luxury. price to capture wider market. Penetration
5) Loss leader Pricing strategy is just the opposite of skimming. The
Many retailers, both online and offline, attract products can be launched at near breakeven
customers by offering one major discounted level to garner the market share and then the
product or product line while encouraging pricing might be increased. Competitive
them to purchase more. The outcome is greater pricing strategy keeps a close eye on what the
profit for the business per transaction. In spite competition is doing and offers products at a
of the fact that this pricing strategy is often discount to attract the customers. It is a
associated with promotional pricing, which difficult call to decide if this strategy can be
uses short term sales, it very well may be long followed for a longer term. Prices can be
term. Long term loss leader pricing is often increased after some time just like the
found as group pricing, in which you offer penetration strategy. Premium pricing is the
greater savings when consumers purchase strategy to charge a premium to the price if the
more. product is considered as a luxury product by
the consumers. Loss leader pricing strategy
Sept. 2021 431 www.viirj.org
Vidyabharati International Interdisciplinary Research Journal 13(1) ISSN 2319-4979
offer one product at a discount considering the rather than a dollar). Value pricing strategy
customer has to buy other products with it. The offers price considering the perceived value of
bundled purchase will take care of the the product by the customer. Summarily, the
discount. Psychological pricing offers comfort marketer has to choose the appropriate pricing
to the customer that the product is cheaper than strategy by anticipating consumer behavior and
it is actually (offering a product for 99 cents competition.
References
1. Ali, B. J., & Anwar, G. (2021). Marketing 6. Morim, A., Fortes, E. S., Reis, P., Cosenza,
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Research, 5(2), 26-39. Journal of fuzzy logic system (IJFLS), 7(1),
2. De Toni, D., Milan, G. S., Saciloto, E. B., 1-15.
&Larentis, F. (2017). Pricing strategies and 7. Nyaga, P. K., & Muema, M. W. (2017).
levels and their impact on corporate Effect of skimming pricing strategy on the
profitability. Revista de Administração profitability of insurance firms in
(São Paulo), 52(2), 120-133. Kenya. International Journal of Finance
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with presales. Mathematical Problems in (2019). Sharing economy and incumbents'
Engineering, 2019, 1287968. pricing strategy: The impact of Airbnb on
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https://www.podium.com/article/pricing- 9. Wu, L., Deng, S., & Jiang, X. (2018).
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Pricing strategy: A review of 22 years of 10. Xing, W., Liu, Q., & Chen, G. (2018).
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Sept. 2021 432 www.viirj.org
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