Part 3

B2B pricing strategy:

For any B2B retail market, the companies who are the key players have different options which

they can use for the pricing strategy; however, the two most significant of them are value-based

pricing strategy and competition-based pricing strategy:

Value-based pricing strategy:

Value-based pricing strategy is the type of strategy in which the greater values for customers are

kept in consideration while setting the prices of the products. It is the most customer-focused

pricing strategy as it focuses on creating value for the customers rather than just making a profit

for the business (M. Dholakia, 2016). In this way, the product will be priced depending on the

worth customers give them. It is different than the cost-plus, which is used for b2c pricing, and

calculation of the price is based on the cost of the manufacturing as well. Particularly when the

company is providing a different and unique product in the market, in this way, the business is

able to provide the other business with the values they will get from it by either using them for

their usage or by selling them to the customers.

Competition based pricing strategy:

Competition based pricing strategy is evident from its name that is focused on the competition

that is being offered by the competition and hence will adjust their price according to these price

levels. For example, amazon focuses on providing the customers with the lowest prices; hence

the competitors try to adjust their price level according to its price (Fisher et al., 2015). In

retailing, competition-based pricing provides a bigger chunk of the market to the company,

which is able to set the lowest price possible and hence gets the most of the market share.
Manager choice:

The best choice a marketing manager can make is the pricing over the product life cycle. On the

initial level of the product life cycle, the price of the products can be set on the promotional

prices, which are lower than the actual value of the product (Nair, 2019). At the mature age of

the products, when the product is in highest demand, the price will be at the highest value.

Eventually, when the product enters the decline stage, the marketer can give a discount over it,

and hence the price will be lowered. Therefore for the marketing purpose, pricing over the

product lifecycle is the best-suited option for the effective pricing of the products.

Effects of demand on pricing:

For the price setter, the demand is one of the most significant measures for the pricing of the

products. When the demand for the product increases, it makes the product worthy, and hence

the price of the product will increase (Gordon et al., 1975). If the demand for the product falls,

this will decrease the price of the product. Hence the pricing of the products is affected by the

demand they face. For example, if there is the demand for sanitary products higher than usual,

the prices will be higher to meet the demand for the products, and if the market shows lower

demand for these products, they will be given at lower prices.

References:

M. Dholakia, U. (2016, August 9). A Quick Guide to Value-Based Pricing. Harvard Business

Review. https://hbr.org/2016/08/a-quick-guide-to-value-based-pricing

Nair, H. (2019). Diffusion and Pricing Over the Product Life Cycle. SSRN Electronic Journal.

Published. https://doi.org/10.2139/ssrn.3380744

Fisher, M., Gallino, S., & Li, J. (2015). Competition-Based Dynamic Pricing in Online Retailing:

A Methodology Validated with Field Experiments. SSRN Electronic Journal. Published.

https://doi.org/10.2139/ssrn.2547793

Gordon, R. J., Nordhaus, W. D., & Schultze, C. L. (1975). The Impact of Aggregate Demand on

Prices. Brookings Papers on Economic Activity, 1975(3), 613.

https://doi.org/10.2307/2534150