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.