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Discussion Board Forum 5: Price
Stephanie Green
School of Business, Liberty University
BUSI 745: Marketing for Competitive Advantage
Dr. Gary Eaton
February 23, 2021
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Discussion Board Forum 5: Price
The pricing strategy is critical to the success of the business. It involves evaluating a
price range and understanding how well it fits with the overall marketing plan. The goal of the
price strategy is to charge enough to cover costs, understand the consumer perception between
price and value, charge a price that will be perceived as fair, and price relative to its competitors.
It is critical for companies to price its products and services based on the costs as well as what
consumers will pay for. If the price is perceived as too high, consumers will not buy the products
or services (Dominique-Ferreira et al., 2016).
Price Perceptions
Price perception is critical to the pricing strategy. Based on consumer values, consumers
could perceive the price of a product or service to be too high or low based on the consumers’
perceived value of the product or service. If consumers perceive the price as unfair, company’s
face performance issues. They will face issues of selling their products and services, as well as
experience issues with increasing inventory overstock costs, warehouse costs, manufacturing
costs, and product and services costs while not receiving revenue to balance those costs. This
issues often forces companies to implement price reduction strategies. While some price
reduction strategies can attract consumers and sell the products and services in stock, it can also
result in a price that does not cover the costs of the products and services. This can negatively
impact the company’s performance as well as its brand reputation. For instance, consumers, who
viewed the original price as unfair based on their perception of the products and services value,
often view the brand negatively. This can hurt the brand’s image (Abdul, 2017). One example of
this was in 2016 for Samsung’s Galaxy Note 7. The Note 7 was priced outrageously high. It also
had battery problem, which caused it to catch fire or explode. Due to this, the consumers’
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perception of its value decreased rapidly, and Samsung’s Galaxy Note product line received a
bad reputation. While Samsung was able to build trust again for its product line and its company,
at that time of the incident, it lost market share, credibility as a cell phone provider, and
competitive advantage as well as suffered sunk costs due to its Galaxy Note 7 products not
selling (Gilbert, 2019).
Price Range and Price Bundling Strategy
Price plays a significant role in all industries. Over-pricing often leads to loss of market
share and competitive advantage, while underpricing often leads to loss of revenue. In order to
determine the optimal pricing, companies need to understand the market and the price range.
Developing an effective pricing strategy requires understanding the product value, setting profit-
maximizing prices that should be accepted with the target segments (price range), and
understanding consumers’ price sensitivity. While there are many different pricing strategies to
implement based on the company’s objectives and goals, oftentimes there is no optimal single
strategy. As a result, companies often create a pricing bundling strategy in addition to another
pricing strategy. A price bundling strategy, which is often considered a marketing strategy instead
of a pricing strategy, is about a game of perception. It offers a package deal, such as busying two
or more products or services together for one price instead of buying the products or services
separately for their individual prices. This strategy helps consumers’ perception of value increase
and can help the company offer a slightly higher price for the product. By implementing this
strategy, companies can target frugal consumers as well as consumers willing to pay just for the
product or service (Dominique-Ferreira & Antunes, 2019).
Uniform Pricing Strategy vs. Price Differentiation Strategy
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Over the last several years, price differentiation strategy has been the optimal pricing
strategy for companies with both online and offline platforms. This strategy helps to satisfy
different types of customers. In addition, the differentiation strategy helps to provide optimal
profits by implementing different pricing mechanisms on different platforms. Consumers often
search for the best platform that offers the best price. However, in the last few years, a uniform
pricing strategy has started to become more popular (Qiang et al., 2019). For some companies,
the uniform pricing strategy can be better than the price differentiation strategy “when the cost
saving and demand increasing are large enough or the consumers’ acceptance of online channel
lies in a certain interval” (Qiang et al., 2019, p.932). The uniform pricing strategy also offers the
same price both online and offline platforms for the same products. This makes it easier for
consumers to research the products online and then purchase the product in store without a price
different or buy the product online and pick up instore. Each pricing strategy offers different
benefits to the manufacturers and stores and deciding between the two pricing strategies should
be based on cost saving and demand (Qiang et al., 2019).
Conclusion
The pricing step of the 4P marketing mix is the most critical step. If the pricing strategy is
not perceived as fair based on the consumers’ perceived value of the product or service,
consumers will not buy the product or service. The price is the main step of the marketing mix
that helps to cover the costs of products and services and helps the company’s performance. As
seen in the three main articles referenced in this paper, the pricing strategy is affected by many
factors, such as consumer perception. There are multiple pricing strategies that will meet
different objectives and goals, but it is by understanding the consumer values, demand, and cost
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savings that companies can develop an optimal pricing strategy that will help attract consumers
and maintain or increase competitive advantage.
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References
Abdul, W. K. (2017). Price reduction strategy: Effect of consumers’ price unfairness perceptions
of past purchase on brand equity. Asia Pacific Journal of Marketing and Logistics, 29(3),
634-652. https://doi-org.ezproxy.liberty.edu/10.1108/APJML-04-2016-0067
Dominique-Ferreira, S., Antunes, C. (2019). Estimating the price range and the effect of price
bundling strategies: An application to the hotel sector. European Journal of Management
and Business Economics, 29(2), 166-181. https://doi.org/10.1108/EJMBE-04-2019-0066
Dominique-Ferreira, S., Vasconcelos, H., Proenca, J. F. (2016). Determinants of customer price
sensitivity: An empirical analysis. Journal of Services Marketing, 30(3), 327-340.
https://doi-org.ezproxy.liberty.edu/10.1108/JSM-12-2014-0409
Gilbert, B. (2019). 25 of the biggest failed products from the world’s biggest companies. Insider.
https://www.businessinsider.com/biggest-product-flops-in-history-2016-12
Qiang, C., Chunlin, L., Xin, T., Shouyang, W. (2019). Uniform pricing strategy vs. price
differentiation strategy in the presence of cost saving and demand increasing. Journal of
Systems Science and Complexity, 32, 932-946.
https://doi-org.ezproxy.liberty.edu/10.1007/s11424-019-7082-y
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