Pricing in Market Uncertainties

Pricing in Market Uncertainties

DOI: 10.4018/978-1-4666-4094-8.ch010
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Abstract

The marketing environment for a competitive environment is a combination of factors that are used for pursuing marketing objectives in the identified markets for achieving targets. These factors have to be strategically mixed in the marketing planning for offering quality services and optimizing customer value. It is an integrated approach for promoting the services with a view to expand the area under services market. This chapter discusses the pricing strategies that can support the firms during marketing uncertainties. The author argues that many pricing decisions are driven by judgmental rather than data-rich uncertainties—the rate of demand shifts, the impact of substitute prices, the consumer conflicts on prices offered, or the extent of price war. This chapter also discusses the strategies for niche pricing. It is also illustrated in the chapter that there are three levels of price analysis in reference to competition—a price system, price at an individual competitor’s firm, and industry rival’s price.
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Introduction

Marketplace strategy includes elements of product and customer segments, competitive posture, goals, and moves and directions of the firm. The products and customers are categorized in different ways. Customers are segmented on the basis of the products and services they use at any point of time. The customer demographics are also considered to a large extent in segmenting the customers. The competitor’s position and direction of the competitor is better known to the distributing channels than any other external agency. Tapping of right information taking the distribution channels into confidence would be more appropriate than any other means to the company. Rival business firms often choose distinctly different channels to reach the end users. The competitive posture reveals how a competitor competes in the market place to attract, win, and retain the customers. The customer is the kingpin in determining the competitive posture. The competitive posture of the company consists of product line, attributes of the product, functionality, service, availability, image, sales relationship, and pricing pattern. The product line broadly refers to the range of products available with the competitor. The distributors and retailers are more concerned with the width (item under product range) of the product-mix. Some companies focus on narrow range of products and build high image among the customers. The product attributes vary in terms of shape, design, style, color and added advantages. Further, the customers may view the functionality of the product as the satisfaction derived from the products. The dimensions of the functionality are highly product specific. In the competitive markets, the efficiency of the services discharged and extended to the buyers also contributes in building or breaking the market place strategy. Products, in the same market or competitive domain, largely vary in their availability may be due to weak or faulty supply chain management. The competing firms must study this situation and develop strategies accordingly. Price game played by the mercantile and service sector companies is very sensitive and may carry enough strength to destroy the rivals business. Such market tactics among the companies dealing with Fast Moving Consumer Goods (FMCGs) and services have been observed time and again. An example of price war is of the low cost airlines in India. Jet Airways, Kingfisher Airlines, and Indian Airlines drive campaigns to attract potential customers as well as to prevent the switching of existing customers by slashing the prices on the domestic trunk routes. The position of products and services, and the level of competition in the marketplace may be assessed by measuring the dynamic moves (strategic and tactical) in the given product-customer segments in a competitive marketplace.

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