2.1.3.2 Pricing
Pricing is one of the most visible aspects of a company’s marketing program. This is because the role price plays in the determination of buyers’ choice on one hand and the determination of revenue, market share and profitability of companies on the other hand (Kotler and Keller, 2006).
Product which is well developed, well packaged with good distributive channels and efficient advertising but no fair price will not succeed in the market. The price which the market can take is what is referred to as fair price.
Oxenfeldt, (1973) said that the field pricing have remained largely in the domain of economic theorist who discuss price primarily in relation to specific market structure. He traced the pricing literature trend from those dealing with tactics and strategy for particular firm to those drawing heavily on the behavioral sciences, quantitative tools and detailed empirical research.
The present day theorist employs simulation techniques and other computer application. All these efforts show that pricing receives more attention from market specialist today than in the past.
Stanton (2000) identified the many objectives pricing is supposed to achieve. Among these are to achieve target return on investment, to stabilize prices, to maintain or improve share in the market to meet prevent competition and to maximize profit.
Coughlan (2001),in their work on the pricing strategy for a new product concluded that two pricing strategies that is price skimming and penetration can be employed. The price skimming strategy uses high introductory price to skim the cream of demand; while the price penetration strategy uses low introductory price to speed up the products widespread and market acceptance.
Kolter (2006) looked at the different pricing strategies a company may adopt from the viewpoint of the prevailing environment. These environments he grouped into period of shortage, inflation and recession and he concluded that whichever, strategy the company decides to employ be it price rise, aggressive pricing, reduction of allied services and discounts offerings or rebates etc. the long term interest of the firm must be the retention of consumer goodwill, avoidance of clash with government agencies and up-grading of product quality.
The corporate pricing function within the decision making structure is therefore a very complex process, many components must be integrated and managed as a unit of the firm is to capitalized it’s pricing opportunities.