Young Budding Entrepreneurs' Perspective

International Journal of Advance Study and Research Work (2581-5997)/ Volume 6/Issue 1/Jan-Feb-Mar-2023
Skimming and Penetration Pricing: A Dynamic Strategy

for Organisational Growth and Successful Expansion
– Young Budding Entrepreneurs’ Perspective
Dr.R.Fahima Sultana1*, Nandhini.A2 & Sneha.R3
1*
Assistant Professor, Department of Accounting & Finance
Shri Shankarlal Sundarbai Shasun Jain College, Chennai, India.
2&3
M.Com (Accounting & Finance), Shri Shankarlal Sundarbai Shasun Jain College, Chennai, India.
Email Id: fahimamubeen@gmail.com
DOI: 10.5281/zenodo.7794557
Abstract
This survey has been taken to understand how young budding entrepreneurs’ viewpoint is on the pricing strategies, which is
embodied in the current market scenario. As prices are the foundational segment any business’s revenue, selecting the optimal
pricing strategy is quite challenging task for every business as this pricing strategy impacts the growth of the firm and the
expansion process. The pricing strategies can be set to achieve various objectives such as winning a large market share or to
discourage competitors from entering the market. Taking the fundamental pricing strategies into consideration the penetration
pricing and skimming pricing achieve different objectives such as obtaining large market share and premium brand recognition
respectively [1]. So out of the various dynamic strategies what is contributing to the organisational growth and successful
expansion is debatable as some consumers likely to associate less expensive products with cheap quality and the products of a
higher price will tend to be associated with higher value [2]. Under this survey the awareness level on the basic pricing strategies
called the skimming and penetration pricing is conducted among the young entrepreneurs. This study aims to evaluate the
impact of pricing strategy stimulating market growth which leads to expansion and also to study how challenging to select
penetration pricing strategy in order to win large market share. Effort has also to been taken to offer suggestion to improve on
choosing the best pricing strategies. The young budding entrepreneur’s insights on the impact of pricing strategy is collected in
this survey. A strong association between pricing tactics and the age, gender, and educational background of the young aspiring
entrepreneurs was discovered through this lengthy investigation. It has also been demonstrated that choosing a pricing strategy
for gaining a sizable market share is rather difficult. Additionally, it is shown that the skimming price strategy and market
expansion and growth are strongly related [3].
Keywords: Price Skimming; Price Penetration; Organisational Growth; Organisational Expansion; Young Budding
Entrepreneurs.
Introduction
The monetary value charged for goods and services is referred to as the price. A product's price comprises both the cost of
production and the cost of delivery to the consumer. It also contains the profit that the company must make after each product sale.
Pricing a product is a difficult task for a company. Only a technique known as pricing strategy is used to establish the ideal price for
a product or service. [4] Pricing a new product is much more difficult due to the high cost of research and development as well as
promotional effort. “Pricing strategy is considered to be most important launch attribute in obtaining new product success” (Hultink
& Schoormans 1995).
There are two fundamental marketing pricing strategies. Skimming and penetration pricing are the two primary marketing price
tactics. (e.g., Kotler & Armstrong 2012, p.314; Monroe 2003, p.380; Nagle et al.2011, p.125). A skimming approach entails
charging a high initial price, which is thereafter reduced. (Dean 1976). It is adopted when the firm is free from entry of competitors.
Charge a low price to immediately reach a sizable segment of the market and encourage word-of-mouth as part of a penetration
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pricing strategy. (WOM) (Dean 1976, Nagle et al. 2011 p.127). Penetration pricing is intended to increase market share and
capitalise on economies of scale or experience (Tellis 1986). It is recommended to use when the firm faces the possibility of
potential entry competition. However, there are other more considerations to consider while determining which method to follow. In
their study, Hultink and Schoormans (1995) discovered that when choosing between these core tactics, half of the professional
respondents preferred penetration while the other half preferred skimming. Nonetheless, the skimming pricing approach and the
penetration pricing strategy are the most frequently discussed and recommended. Other pricing approaches include cost-plus pricing,
psychological and odd pricing, and promotional price. In this research, we will determine whether pricing strategy penetration or
skimming is more appropriate for organisational growth and profitable expansion [5]. Take, for example, the Apple iPhone series,
which used the skimming pricing approach, and Android phones, which used the penetration pricing strategy; hence, both strategies
are successful [6].
Review of Literature
Sara Azad Fouad Arif and Prof. Dr.Satya Subrahmanyam (2022), researched the association between pricing strategies
(penetration price) and patron retention in Kurdish international hotels. The current study used a random sampling procedure to
ensure that each customer had an opportunity to contribute to the study. Despite this, the current study indicated that pricing methods
(penetration price) were favourably associated with customer retention [7].
Meihan He [2021], investigated the iPhone's marketing plan and discovered that it has its own marketing strategy. In terms of
products, Apple strives for innovation and strives to improve the product as much as possible. Simultaneously, Apple Care is utilised
to ensure its benefits and to provide rewards to Apple supporters. The corporation uses the price skimming approach to determine
the product price. Because Apple's target clients are middle- and upper-class individuals, Apple sets the price high in order to
increase income. In terms of sales channels, Apple's store, independent retailers, and internet shopping are available. In terms of
promotion, Apple Inc. decreased prices to some extent, used hunger marketing and virus marketing to get more people to buy Apple
products, and expanded advertising investment. This is why Apple has always maintained a high level of sales while having less
potential for innovation and improvement [8].
Bayad Jamal Ali, Govand Anwar [2021], discovered that young people often utilise pricing strategy websites and spend a
significant amount of time there, exposing themselves to an increasing amount of marketing influence and persuasion, in their study
on the subject “Marketing Strategy: Pricing strategies and its influence on consumer purchasing decision”. Advertisers who utilise
pricing tactics, however, must handle them differently from traditional marketers since they have innate traits like search capability
and a tendency to spontaneously flock together as audiences and index their opinions. The most crucial thing is that people
understand how to use these pricing strategy networks since social graces have entered pricing strategy and there are now laws
dictating what kinds of behaviour are acceptable on these platforms. The statistics demonstrate that penetration pricing significantly
improves customer behaviour at 5%. The findings also demonstrate that Price Skimming, at a level of 5%, significantly improves
customer behaviour. The statistics show that at a 5% level, marketing sharing websites have a considerable positive impact on
consumer behaviour. The statistics indicate that blogs, at a level of 5%, significantly improve consumer behaviour. The findings
show that at the 5% level, competitive pricing significantly improves customer behaviour. Pricing strategies platforms must provide
consumers with useful tools for connecting, linking, and communicating with other consumers, whereas pricing strategies networks
require marketers to learn how to engage with customers on their own terms [9].
Cristina Antunes and Sergio Dominique-Ferreira [2020] The price responsiveness of consumers of exclusive hotels was
discovered in order to determine the impact of bundling strategy on consumer price responsiveness. The authors used the van
Westendorp's price sensitivity metre to calculate it (PSM). The univariate and bivariate methods are utilised to understand the
influence of the bundling approach. The results of Price Sensitivity Meter reveal the optimal prices and the upper limit of
permissible prices for exclusive hotels. The results of the bundling approach show that clients of exclusive hotels are less sensitive to
mixed-leader bundling. When it comes to mixed-joint bundling, managers can boost sales by using a bundling strategy provided they
choose an appealing service (e.g. restaurants). The findings assist hotel management in understanding the varied pricing sensitivity
levels based on hotel typology. Price management is possible without the danger of losing market share. The findings aid managers
in determining which bundling method to employ and which services to include in order to maximise profitability. [10]
Shuai Feng, Xiaojian Hu, Aifeng Yang, and Jiqiong Liu [2019], published "Pricing Strategy for New Products with Presales" in
their paper. The paper explores customer preferences while purchasing new products in this study and uncovers the retailer's two
separate pricing models: a penetration pricing strategy and a skimming pricing strategy, from a powerful advantage. Research shows
that the creation of a presale channel has no impact on the retailer's pricing policy. They found that, regardless of the retailer's
pricing strategy, a presale channel should be used to boost profits. The creation of a presale channel helps clients avoid the risk of
shortages and increases their sense of confidence while also lowering inventory risk and expense, growing market share and
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profitability for the business. This article's research was done with one market entity in mind—a single retailer debating whether to
use the presale channel and its price strategy. Yet, there are multiparty competitions in the omni channel competitive environment,
and it is unclear which criteria should be taken into account when multiparty competition is present. [11].
Sahoum Ali AlJazzazen [2019], examined the ideal price. In his post New Product Price Strategy: Skimming vs. Penetration, the
author describes a pricing plan for a new product depending on numerous factors and circumstances. Indeed, the high price in the
skimming pricing can only be maintained for a lengthy period if the firms consistently produce a monopolistic product. Furthermore,
brand loyalty protects the company against competition or imitation. Customers' price sensitivity is one of the primary elements that
drives the organisation to use skimming pricing or penetration pricing. Product promotion and marketing are critical processes. The
quantity spent on marketing in skimming pricing is relatively high, while the amount spent on penetration pricing is very low. The
general public believes that low prices imply bad quality, which is the biggest disadvantage of using penetration pricing.
Furthermore, due to the modest earnings contribution, the firm's ROI will be quite poor. Long-term strategy is penetration pricing.
As a result, businesses should exercise greater caution if they implement this technique. Nonetheless, penetration pricing is
appropriate when the price elasticity of the new product or service is very high; also, the penetration strategy is the best choice when
there is no elite market [12].
On their work titled Skimming or penetration: optimal price of new fashion products in the presence of strategic consumers, Peng
Du and Qiushuang Chen [2017], the cost of new apparel products in the vicinity of strategic consumers is a significant difficulty
for the corporation, as it faces uncertainty about both demand strength and the number of strategic consumers. As a result, they
created a stylized two-stage model and determined the ideal pricing strategy for the organisation as well as the optimal purchase
timing for strategic consumers. Furthermore, they created a methodology for investigating the expected value of demand information
(also the expected value of revealing strategy). They discovered through numerical research that only when the business's discount
factor exceeds a certain threshold may the skim pricing method be used; in all other cases, the penetration approach is applied.
Studies also find that the company's capacity to adopt a price-skimming plan is diminished by the customers' strategic purchasing
behaviour, and that the exposing strategy is the most successful. when the firm is (nearly) indifferent between skimming and
penetration. Furthermore, the effects of various characteristics on pricing strategy, profit anticipation, and expected value of demand
information are investigated. In the current model, they assumed the firm has enough production capacity to supply the entire market
demand. In a vast market, the firm may not have adequate manufacturing capacity to satisfy the entire market [13].
Andreas Kramer, Martin Jung, and Thomas Burgartz [2016], describe the characteristics of price wars in their paper titled 'a
small step price competition to price wars: understanding cause, effects, and countermeasures', pointing to recent examples that have
caused a stir in the public as well as in the respective industries. A fresh, succinct definition of pricing war is proposed. The second
chapter discusses and explains price war drivers based on behavioural economics (understanding the competitor's strategy as well as
a company's own cost condition). There is a significant risk of unwanted price rivalry, which could result in a price war, particularly
in businesses with a high proportion of medium-term fixed costs and low variable costs. When decision makers overestimate the
price elasticities, even minor price reductions might have disastrous implications. They investigated a case study of a price war,
focusing on the market of long-distance bus journeys in Germany. Since the liberalisation of the market for intercity bus connections
in 2013, the newly created market segment has experienced rapid growth and intense rivalry. Using a multi-source-multi-method
approach, it is demonstrated how the market entry of the UK-based company Megabus affected bus ticket prices and triggered
competitive reactions from the German train operator Deutsche Bahn. The combination of many characteristics (low entry barriers;
high similarity of products/services; fixation on market share and capacity utilisation) results in ruinous price competition and few
opportunities for long-term profitability. There are measures suggested to avoid or halt a continuing pricing war [14].
Martin Spann, Marc Fischer, and Gerard Tellis (2015), In their study titled "Skimming or Penetration? Strategic Dynamic
Pricing for New Products. This study develops a method for classifying observed dynamic pricing strategies or patterns and
describes the selection and correlates of dynamic pricing strategies such as skimming and penetration pricing. The study includes an
in-depth empirical analysis of a differentiated competitive market. We discovered them specifically analysing the market for digital
cameras in a major European country during the initial stages of growth. All 663 cameras released under 79 brand names are
included in the data collection on a monthly basis over a four-year period. This combination results in a large panel data set of 11,
8357 camera month observations [15].
Dudu Oritsematosan Faith and Agwu M. Edwin [2014], investigated the impact techniques for pricing consumer goods. The
effect of the internet (online presence) on well-informed purchasing decisions was another focus of their research. Their research has
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advanced understanding in a variety of areas related to pricing tactics and the purchasing selection process. Price sensitivity issues in
both online and offline channels have been investigated. Customers will pay more for a product if they believe it is comparable with
the value they place on the product, which may be due to additional benefits received or enjoyed from the product's usage. Proper
pricing tactics, or a combination of strategies, can also boost demand. The rapid evolution of technology has added new types of
pricing and established a platform for product consumer orientation. Future studies, on the other hand, could experimentally
investigate these in relation to individual firms [16].
Antony Sije and Margaret Oloko [2013], in their study penetration pricing strategy and performance of small and medium
businesses in Kenya, the authors found a statistically significant correlation between the penetration pricing strategy and the
performance of small and medium businesses in Kenya. This shows that the organisation truly uses the strategy, that customers like
it and so help boost performance tremendously, and that workers' understanding and application of the penetration pricing plan are
significantly correlated with their length of service. The company should concentrate more on the bundle pricing strategy because
the penetration pricing strategy has a significant impact on the number of customers, customer loyalty, and the quality of the food
and services. The correlation reported was positive, and using the Pearson correlation(r) value, the correlation is statistically
significant. This indicates that the business should keep releasing fresh products at fair prices in order to draw new customers and
keep old ones, as customers prefer unique and improved products at reasonable prices [17].
Céline Bonnet and Vincent V. Requillart [2012], published Strategic Pricing and Health Price Policies. Their goal was to develop
a system for measuring the effects of price policies. Considering strategic pricing in the agro-food industry to ensure that ignoring
strategic pricing results in inaccurate price policy estimations Different price policy scenarios (ad valorem tax and excise tax) were
tested, and the results indicate that, the type of tax influences price transmission by manufacturers and merchants. If vertical
relationships are not taken into consideration, the influence of policies may be underestimated. The excise tax is the most effective
tax for lowering added sugar consumption (equivalent to a taxation on the sugar input) [18].
Hassan Shavandi and Ata G.zare (2012), investigated a new model for pricing a new product in the presence of competition using
a skimming pricing strategy. They considered two price-setting periods: skimming and the economy period. The model's goal is to
maximise total profit during both the skimming and the economy periods. They discovered that the company faces a monopolistic
market during the skimming period, but there is at least one competitor during the economy period. The penetration rates in the
skimming and economic phases were modelled as an exponential function, and the effect of competition pricing was modelled as a
loss of market share in the economy Penetration rate. The optimal economy price is determined by taking the skimming price into
account. Based on the lower and upper bounds established from structural analysis, an algorithm was created to solve the model. As
an extension, this subject can be analysed using game theory to represent competitiveness in a dynamic context while taking rival
and corporate reactions into account [19].
This study, by Ben Lowe and Frank Alpert [2010], attempts to comprehend the establishment and evolution of reference prices in
novel product contexts, adding to an expanding body of study. Two significant marketing research streams were combined to
examine how reference prices are created and how they change in new product categories: the literature on reference prices and the
literature on pioneer brand advantage. According to the findings, the pioneer brand appears so as to specify the reference price. The
reference price is strongly skewed skywards when the pioneer brand is expensive and straight down when the forerunner brand is
cheap. All else being equal, this would favour a skimming tactic over a penetration one [19].
Objectives of the Study

 To investigate the impact of demographic factors on pricing strategy on successful organisational growth and expansion.
 To investigate the connection between the leadership in product quality and the skimming price strategy.
 To research how challenging it is to choose a penetration pricing approach to capture a sizable market share.
 To determine how pricing has an effect on stimulating market growth which leads to expansion.
 To offer suggestion to improve on choosing the best pricing strategies.
Statement of the Problem

This article investigates the young budding entrepreneurs’ perspective on the fundamental pricing strategy known as skimming
pricing strategy and penetration pricing strategy, as well as the deployment of such approach in the market and its awareness among
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different age groups, genders, and educational qualifications. As a result, this paper examines how these dynamic pricing strategies
will persuade organisational growth and successful expansion.
Research Methodology
Since this study focuses on the responses of young budding entrepreneurs towards pricing strategy. The goal of the current article is
to give better understanding of how young entrepreneurs feel about the fundamental pricing strategy. Since they are the future pillars
of business. So, it is importance to know about their views. The descriptive study that served as the foundation for research survey
helps us to understand more about the determination and significance of pricing strategies. The primary and secondary data are used
to complete this research project. Only after reviewing various research paper and articles the questionnaire was prepared. The SPSS
with version 20, software was used to convert raw data from the questionnaire. The data for this research were gathered using
random sampling method and the survey resulted with 290 responses from young budding entrepreneurs. 290 replies from young
aspiring entrepreneurs were obtained in the survey, which was utilised for gathering the data for this study. The techniques used in
SPSS for data analysis are frequency distribution, correlation, regression and also the reliability test. Obtaining reliable sources for
academic research and streamlining the research process were difficult tasks. Several online databases, libraries, and specialised
search engines were employed to compile extra data for the earlier research work.
Hypothesis
H1: There is a significant correlation between impact of pricing strategy on organisational growth and successful expansion and the
young entrepreneurs’ age.
H0: There is no significant correlation between impact of pricing strategy on organisational growth and successful expansion and the
young entrepreneurs’ gender.
H3: There is a correlation between impact of pricing strategy on organisational growth and successful expansion and the young
entrepreneurs’ educational qualifications.
H0: There is no correlation between impact of pricing strategy on organisational growth and successful expansion and the young
entrepreneurs’ educational qualifications.
H4: There is a significant correlation between skimming pricing is setting of high premium price and pricing strategy works to
quality leadership.
H0: There is no significant correlation between Skimming pricing is setting of high premium price and pricing strategy works to
quality leadership.
H5: There is a significant correlation between challenges to select penetration pricing strategy and to win large market share.
H6: There is a strong link between pricing strategy stimulates market growth and leads to expansion.
H0: There is no strong link between pricing strategy stimulates market growth and leads to expansion.
Statistical Analysis and Interpretation
Table – 1: Frequency Distribution

Frequency Percent
Gender of the Female 229 79.0
Young Male 61 21.0
Entrepreneurs
Age of the Below 69 23.8
Young 18
Entrepreneurs years
18 -21 165 56.9
Above 56 19.3
21
High 66 22.8
Educational School
20

Qualification UG 149 51.4

of the Young PG 75 25.9
Entrepreneurs Total 290 100.0
Source: Primary Data
Figure–1: Frequency Distribution of Gender of the Young Entrepreneurs
Figure–2: Frequency Distribution of Age of the Young Entrepreneurs
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Figure–3: Frequency Distribution of Education of the Young Entrepreneurs
Inference: Table-1 and Figure-1, 2 & 3, Frequency distribution illustrates the demographics of the 290 young entrepreneurs who
responded; among them, 21.00% were men and 79% were women. 23.8% of the young entrepreneur respondents were under the age
of 18, 56.9% were between the ages of 18 and 21, and 19.3% were over the age of 21. Of the respondents, 22.8% had finished High
School, 51.4% were the Under-Graduates, and 25.9% are the post-Graduates.
Table – 2: Frequency Distribution

Frequency Percent
It’s SDA 15 5.2
Challenging DA 13 4.5
to select
pricing N 31 10.7
strategy A 137 47.2
SA 94 32.4
Penetration SDA 15 5.2
pricing DA 11 3.8
strategy is
done to win N 27 9.3
large A 143 49.3
market
share SA 94 32.4
Penetration SDA 16 5.5
pricing DA 23 7.9
strategy is
chosen to N 60 20.7
discourage A 125 43.1
competitor
entry SA 66 22.8
Pricing SDA 15 5.2
strategy DA 18 6.2
stimulates
market N 55 19.0
growth A 126 43.4
SA 76 26.2
22

Pricing SDA 17 5.9

strategy is DA 17 5.9
based on
demand and N 36 12.4
supply A 125 43.1
SA 95 32.8
Skimming SDA 13 4.5
pricing is DA 17 5.9
setting of
high N 40 13.8
premium A 132 45.5
price
SA 88 30.3
Skimming SDA 14 4.8
pricing DA 17 5.9
strategy
works to N 62 21.4
quality A 113 39.0
leadership
SA 84 29.0
Skimming SDA 12 4.1
leads to DA 15 5.2
expansion
N 63 21.7
A 120 41.4
SA 80 27.6
Pricing SDA 13 4.5
strategy DA 20 6.9
focus on
higher N 50 17.2
sales. A 136 46.9
SA 71 24.5
Price wars SDA 13 4.5
starts with DA 14 4.8
too many
competitors. N 34 11.7
A 124 42.8
SA 105 36.2
Total 290 100.0
Inference: The responses of the young aspiring entrepreneur are shown in Table-2 above. In response to the question, "Is it difficult
to choose a pricing strategy?" 5.25% of young budding entrepreneurs strongly disagree, 4.5% disagree, 10.7% are neutral, 47.2%
agree, and 32.4% strongly agree. When asked if a penetration pricing approach is used to gain a substantial market share, 5.25% of
young aspiring entrepreneurs strongly disagreed, 3.8% disagreed, 9.3% neutralized, 49.3% agreed, and 32.4% very agreed.
Similarly, 5.5% of young aspiring entrepreneurs strongly disagree, while 7.9% disagree. 20.7 percentage points for neutral 43.1
percent of people agree 22.8% highly support a price strategy that discourages competitors from entering the market. 5.2% of
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aspiring young entrepreneurs strongly disagree. 6.2% are opposed. For Penetration, 19% are neutral, 43.4% agree, and 26.2%
strongly agree. Price strategy promotes market expansion. Pricing strategy is based on demand and supply; 5.9% of young aspiring
entrepreneurs strongly disagree. 5.9% of people disagree 12.4% were neutral, 43.1% agreed, and 32.8% strongly agreed. Skimming
pricing is the setting of a high premium price; 4.5% of young aspiring entrepreneurs strongly disagree. 5.9% of people disagree
13.8% in favour of neutral 45.5% for agreement 30.3% of people strongly agree. Pricing strategy contributes to quality leadership,
with 4.8% of young aspiring entrepreneurs strongly disagreeing. 5.9% of people disagree 21.4 percent for neutral 39.0 4% agree
29.0% of people strongly agree. Skimming leads to expansion; 4.1% of young aspiring entrepreneurs strongly disagree. 5.2% of
people disagree. 21.7% agree, 41.4% disagree 27.6% of people strongly agree. Price strategy depends on increased sales- 4.5% of
young aspiring entrepreneurs strongly disagree. 6.9% of people disagree. 17.2% for the neutral 46.9% of people agree 24.5% of
people strongly disagree. The young budding entrepreneur's 4.5% for highly disagree 4.8% for disagree 11.7% for neutral 42.8% for
agree and 36.2% for strongly agree.
Table–3: Frequency Distribution of Skimming Strategy Fetch More Competitors to the Market
Frequency Percent
No 76 26.2
Skimming strategy fetch more
Yes 214 73.8
competitors to the market
Total 290 100.0
Figure–4: Frequency Distribution of Skimming Strategy Do Not Fetch More Competitors

Inference: The analytical findings are shown in Table-3 and Fig.4. According to the above table and figure, 73.8% of young
entrepreneurs agreed that setting high starting prices does not attract additional competitors to the market, while 26.2% disagreed.
Table-4: Frequency Distribution of Impact of Market Demand on Pricing Strategy

Frequency Percent
No 30 10.3
Market Demand have an
Yes 260 89.7
impact on pricing strategy
Total 290 100.0
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Figure–5: Frequency Distribution of Impact of Market Demand on Pricing Strategy
Inference: The Table and Figure-5 present the findings of the analysis. It is evident from the above table and figure that 89.7% of
the young entrepreneurs agreed that market demand has an impact on pricing strategies for goods and services, whereas 10.3% of
young entrepreneurs disagreed.
Table–5: Frequency Distribution of Impact of Pricing Strategy on Organisational Growth & Successful Expansion
Frequency Percent
Impact of Pricing strategy on No 28 9.7
organisational growth and Yes 262 90.3
successful expansion Total 290 100.0
Figure–6: Frequency Distribution of Impact Of Pricing Strategy On Organisational Growth & Successful Expansion
25

Inference: The analysis results are shown in the Table-5 and Figure-6 It is obvious from the above table and figure that 90.3% of the
young entrepreneurs said yes to the impact of pricing strategy on organizational growth and successful expansion and 9.7% said no.
Table–6: Reliability Statistics

Reliability Statistics
Cronbach's Alpha N of Items
.889 16
Inference: Reliability refers to the likelihood of getting the same result if a measurement is repeated. A researcher can develop a
scale of those dimensions to measure the factor study as a whole using Cronbach's alpha for internal reliability of a series of
questions after finding the dimensions underlying a factor (scales) Cronbach’s. The young entrepreneurs’ attitudes on the pricing
strategy for organisational growth and successful expansion have an alpha value of 0.889. (88.9%). It is a very good acceptable value
level.
Hypothesis 1:
Table–7: Correlations
Impact of Age of the
Pricing Young
Strategy on Entrepren
Organisatio eurs
nal Growth
& Successful
Expansion
Impact of Pearson
1 -.254**
Pricing Correlation
Strategy on Sig. (2-
Organisational .000
tailed)
Growth and
Successful N 290 290
Expansion
Pearson
-.254** 1
Age of the Correlation
Young Sig. (2-
.000
Entrepreneurs tailed)
N 290 290
**. Correlation is significant at the 0.01 level (2-tailed).
Inference: The coefficient of correlation between the impact of pricing strategy and age of the student is .254 in the table above.
Here, the p value is less than 0.00. The null hypothesis is rejected. It is concluded that there is a substantial relationship between the
impact of pricing strategies on organisation growth and successful expansion and the age of the young entrepreneurs.
Hypothesis 2:
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Impact of
Pricing
Strategy
Gender of on
the young Organisati
entrepren onal
eurs Growth
and
Successful
Expansion
Pearson
Gender Correlati 1 -.175**
of the on
Young
Sig. (2-
Entrepr 0.003
tailed)
eneurs
N 290 290
Impact
of
Pricing Pearson
Strategy Correlati -.175** 1
on on
Organis
ational
Growth
and Sig.(2-
0.003
Successf tailed)
ul
Expansi N 290 290
on
**. Correlation is significant at the 0.01 level (2-
tailed).
Inference: The coefficient correlation between the impact of pricing strategy and gender of the student is .175 here, the p value is
0.00. The null hypothesis is rejected. It is concluded that there is a substantial relationship between the impact of pricing strategy and
gender of the young entrepreneurs.
Hypothesis 3:
H1: There is a correlation between impact of pricing strategy on organisational growth and successful expansion and the young
entrepreneur’s educational qualifications.
H0: There is no correlation between impact of pricing strategy on organisational growth and successful expansion and the young
entrepreneur's educational qualifications.
Table – 9: Correlations
Impact of Educational
Pricing Strategy Qualification
on of the Young
Organisational Entrepreneurs
27

Growth and
Successful
Expansion
Impact of Pearson Correlation 1 -.270**
Pricing Strategy Sig. (2-tailed) .000
on
Organisational
Growth and N 290 290
Successful
Expansion
Educational Pearson Correlation -.270** 1
Qualification of Sig. (2-tailed) .000
the Young
Entrepreneurs N 290 290
Inference: The coefficient of the link between the impact of pricing strategy and educational qualification .270. Here, the p value is
less than 0.00. The null hypothesis is rejected. It is concluded that there is a substantial relationship between the impact of pricing
strategy and educational qualification.
Hypothesis 4:
H1: There is a significant correlation between skimming pricing is setting of high premium price and works for quality leadership.
H0: There is no significant correlation between Skimming pricing is setting of high premium price and works for quality leadership.
Skimming Pricing Skimming Pricing
is setting of high Strategy works to
Premium Price Quality Leadership
Skimming pricing is Pearson Correlation 1 .679**
setting of high Sig. (2-tailed) .000
Premium Price N 290 290
**
Skimming Pricing Pearson Correlation .679 1
Strategy works to Sig. (2-tailed) .000
Quality Leadership N 290 290
Inference: The coefficient of the link between the skimming pricing is setting of high premium price and pricing strategy works to
quality leadership is .679. Here, the p value is less than 0.00. The null hypothesis is rejected. It is concluded that there is a substantial
relationship between. The skimming pricing is setting of high premium price and pricing strategy works to quality leadership.
Hypothesis 5:
It’s Challenging Penetration
to select pricing pricing strategy is
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strategy done to win large

market share
Pearson Correlation 1 .775**
It’s Challenging to
Sig. (2-tailed) .000
select pricing strategy
N 290 290
**
Penetration pricing Pearson Correlation .775 1
strategy is done to win Sig. (2-tailed) .000
large market share N 290 290
Inference: The coefficient of the link between it’s challenging to select pricing strategy and pricing strategy is done to win large
market share is .775 Here, the p value is less than 0.00. The null hypothesis is rejected. It is concluded that there is a substantial
relationship between it’s challenging to select pricing strategy and pricing strategy is done to win large market share.
Hypothesis 6:
H1: There is a strong link between pricing strategy stimulates market growth and leads to expansion.
H0: There is no strong link between pricing strategy stimulates market growth and leads to expansion.
Table–12: Model Summary

Model R R Square Adjusted R Square Std. Error of the Estimate
1 .691a .477 .475 .741
a. Predictors: (Constant), Pricing strategy stimulates market growth.
Table–13: ANOVA
Model Sum of Squares df Mean Square F Sig.
Regression 144.445 1 144.445 262.832 .000b
1 Residual 158.276 288 .550
Total 302.721 289
a. Dependent Variable: Pricing strategy leads to expansion
b. Predictors: (Constant), Pricing strategy stimulates market growth.
Table–14: Coefficients
Model Unstandardiz Standar t Sig.
ed dized
Coefficients Coefficie
nts
B Std. Beta
Error
(Const
1.305 .162 8.063 .000
ant)
Pricing
strateg
1 y
stimula .666 .041 .691 16.212 .000
tes
market
growth
29

a. Dependent Variable: Pricing strategy leads to

expansion
Inference: The R and R square values are provided in this table. The R value measured statistically is .691, indicating a
straightforward correlation with a high degree of correlation. The R square value of .477 suggests that the dependent variable varies.
In this, Dependent variable is pricing strategy leads to expansion, and independent variable is pricing strategy stimulates market
growth. In our research, it is 47.7%, which is a significant percent.
The Anova data table in the regression model states that the dependent variable in our research study, ‘Pricing strategy leads to
expansion’ is significantly related. The regression model's significance is shown in the table. The total regression model is
statistically significant because the p less than 0.05.
The coefficient table provides the necessary information and determine whether the independent variable pricing strategy stimulates
market growth is statistically significant and contributes to the dependent variable, pricing strategy leads to expansion.
As a result, the null hypothesis is rejected, and it is demonstrated that there is a strong association between skimming leads to
expansion and pricing strategy stimulates market growth.
Suggestion
The techniques and procedures taken into consideration by businesses to set a price for their goods and services are known as pricing
strategy. If pricing is the amount one charges for goods and services then, pricing strategy is a way to find what a products cost
should be, consumers improved awareness, literacy and involvement in the goods they would like to buy. As a result of economic
and technological advancements has raised the significance of even a corporation's pricing policy as well. [21]
When deciding on a pricing plan, the following suggestions should be considered in order to help a firm prosper and grow. The
entrepreneurs should keep in mind about the external factors such as their competitors and market environment around them.
 The pricing strategy set by the start-ups should not be in a way of exploiting customers.
 The government of India should control the price levels by setting minimum price floor and maximum price ceiling.
 If a business follows skimming pricing strategy the price set by it should be according to its quality and their innovation
because this strategy involves premium rate.
 Your customer must notice that your pricing is within their acceptable price range and that your capacity to set a price is
limited by your costs.
 Measures to win a price war by a business is to increase the quality of the product and setting reasonable price and also by
offering discounts and offers.
 Understand what your customer value which mean Consumer preference on quality or price [22].
Summary of the Result
 The data analysis reveals that, among the young entrepreneurs who participated in this research, 21% of them were men and
79% were women.
 23.8% of the respondents were between the age group of below 18 years, followed by 56.9% between the age of 18-
21 years, and 19.3% are of the age of above 21 years.
 It was discovered that 22.8% of the respondents have education qualification of high school, 51.4% are under graduation
25.9% are Post graduation.
 The responses of the young aspiring entrepreneur are shown in Table-2 above. In response to the question, "Is it difficult to
choose a pricing strategy?" 5.25% of young budding entrepreneurs strongly disagree, 4.5% disagree, 10.7% are neutral,
47.2% agree, and 32.4% strongly agree. When asked if a penetration pricing approach is used to gain a substantial market
share, 5.25% of young aspiring entrepreneurs strongly disagreed, 3.8% disagreed, 9.3% neutralized, 49.3% agreed, and
32.4% very agreed. Similarly, 5.5% of young aspiring entrepreneurs strongly disagree, while 7.9% disagree. 20.7
percentage points for neutral 43.1 percent of people agree 22.8% highly support a price strategy that discourages
competitors from entering the market. 5.2% of aspiring young entrepreneurs strongly disagree. 6.2% are opposed. For
Penetration, 19% are neutral, 43.4% agree, and 26.2% strongly agree. Price strategy promotes market expansion. Pricing
strategy is based on demand and supply; 5.9% of young aspiring entrepreneurs strongly disagree. 5.9% of people disagree
12.4% were neutral, 43.1% agreed, and 32.8% strongly agreed. Skimming pricing is the setting of a high premium price;
4.5% of young aspiring entrepreneurs strongly disagree. 5.9% of people disagree 13.8% in favour of neutral 45.5% for
agreement 30.3% of people strongly agree. Pricing strategy contributes to quality leadership, with 4.8% of young aspiring
entrepreneurs strongly disagreeing. 5.9% of people disagree 21.4 percent for neutral 39.0 4% agree 29.0% of people
30

strongly agree. Skimming leads to expansion; 4.1% of young aspiring entrepreneurs strongly disagree. 5.2% of people
disagree. 21.7% agree, 41.4% disagree 27.6% of people strongly agree. Price strategy depends on increased sales- 4.5% of
young aspiring entrepreneurs strongly disagree. 6.9% of people disagree. 17.2% for the neutral 46.9% of people agree
24.5% of people strongly disagree. The young budding entrepreneur's 4.5% for highly disagree 4.8% for disagree 11.7% for
neutral 42.8% for agree and 36.2% for strongly agree.
 The analytical findings show, 73.8% of young entrepreneurs agreed that setting high starting prices does not attract
additional competitors to the market, while 26.2% disagreed.
 From the analysis results that 89.7% of the young entrepreneurs agreed that market demand has an impact on pricing
strategies for goods and services, whereas 10.3% of students disagreed.
 The analysis results are, 90.3% of the young entrepreneurs said yes to the impact of pricing strategy on organizational
growth and successful expansion and 9.7% said no.
 Reliability refers to the likelihood of getting the same result if a measurement is repeated. A researcher can develop a scale
of those dimensions to measure the factor study as a whole using Cronbach's alpha for internal reliability of a series of
questions after finding the dimensions underlying a factor (scales) Cronbach’s. The young entrepreneurs’ attitude on the
pricing strategy for organisational growth and successful expansion have an alpha value of 0.889. (88.9%). It is a very good
acceptable value level.
 The coefficient of correlation between the impact of pricing strategy and age of the young entrepreneurs is .254 in the table
above. Here, the p value is less than 0.00. The null hypothesis is rejected. It is concluded that there is a substantial
relationship between the pricing strategies and the age of the young entrepreneurs.
 The coefficient correlation between the impact of pricing strategy and gender of the student is .175 here, the p value is 0.00.
The null hypothesis is rejected. It is concluded that there is a substantial relationship between the impact of pricing strategy
and gender of young entrepreneurs.
 The coefficient of the link between the impact of pricing strategy and educational qualification .270. Here, the p value is
less than 0.00. The null hypothesis is rejected. It is concluded that there is a substantial relationship between the impact of
pricing strategy and educational qualification of the young entrepreneurs.
 The coefficient of the link between the skimming pricing is setting of high premium price and pricing strategy works to
quality leadership is .679. Here, the p value is less than 0.00. The null hypothesis is rejected. It is concluded that there is a
substantial relationship between. The skimming pricing is setting of high premium price and pricing strategy works to
quality leadership.
 The coefficient of the link between it’s challenging to select pricing strategy and pricing strategy is done to win large
market share is .775 Here, the p value is less than 0.00. The null hypothesis is rejected. It is concluded that there is a
substantial relationship between it’s challenging to select pricing strategy and pricing strategy is done to win large market
share.
 The R and R square values are provided in this table. The R value measured statistically is .691, indicating a
straightforward correlation with a high degree of correlation. The R square value of.477 suggests that the dependent
variable varies. In this, Dependent variable is skimming leads to expansion, and independent variable is pricing strategy
stimulates market growth. In our research, it is 47.7%, which is a significant percent.
 The Anova data table in the regression model states that the dependent variable in our research study, ‘skimming leads to
expansion’ is significantly related. The regression model's significance is shown in the table. The total regression model is
statistically significant because the p less than 0.05. The coefficient table provides the necessary information and
determines whether the independent variable pricing strategy stimulates market grow this statistically significant and
contributes to the dependent variable, skimming leads to expansion. As a result, the null hypothesis is rejected, and it is
demonstrated that there is a strong association between skimming leads to expansion and pricing strategy stimulates market
growth.
Conclusion
Price strategy is a critical component for any firm in determining the pricing of their products. Many entrepreneurs and businesses
overlook the importance of price. Nonetheless, it is critical for young entrepreneurs because if they are not well-versed in pricing
strategy, they may over-price or under-price their product, resulting in losses or client loss. As a result, many organisations
nowadays establish their rates without considering an appropriate pricing strategy. This type of error forces the company to be
uncompetitive and to unintentionally position itself poorly in the market. Young aspiring entrepreneurs may sometimes calculate
31

their price by comparing their prices with their competitors, but this is not correct because it may go wrong, thus the entrepreneur
should have a clear understanding of their product and their goal. Choosing between market share and loyal customers, the
entrepreneur should decide which is more important to him, and then select pricing strategies. The government should also assist
these types of budding entrepreneurs by providing them with good knowledge about the current market scenario through awareness
programmes, workshops, and the formation of committees specifically for budding entrepreneurs. The purpose of this study was to
determine the level of awareness of basic pricing strategies among new entrepreneurs. We discovered that many young
entrepreneurs overlook pricing strategies, and we examined the fundamental pricing strategies used in the market, which are
skimming and penetration pricing. We found that choosing a penetration pricing strategy to gain a significant market share is very
challenging because it necessitates lowering the price of the product to attract customers, but some customers may perceive that as a
low quality and may ignore it, so it is a very difficult task. If a company truly wants to gain a huge market share, it can choose this
option. When it comes to the skimming approach, we discovered that using it results in product quality leadership. In turn, even if
the product's quality is good, some individuals will be hesitant to buy items from young budding entrepreneurs because purchasing a
product for the first time at a premium or high price is debatable for them. We conclude that, while pricing strategy has advantages
and downsides, it is critical to the organization's growth and effective expansion. In order to thrive in company, young entrepreneurs
must be well-versed in pricing strategies. Skimming and penetration pricing are key pricing strategies that have an impact on
organisational growth and expansion.
Reference
[1]. Sammut-Bonnici, Tanya & Channon, Derek, (2015) . “Pricing Strategy”,.10.1002/9781118785317.weom120162.8,

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International Journal of Advance Study and Research Work (2581-5997)/ Volume 6/Issue 1/Jan-Feb-Mar-2023

Skimming and Penetration Pricing: A Dynamic Strategy

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Objectives of the Study

Statement of the Problem

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Statistical Analysis and Interpretation

Table – 1: Frequency Distribution

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Qualification UG 149 51.4

Figure–1: Frequency Distribution of Gender of the Young Entrepreneurs

Figure–2: Frequency Distribution of Age of the Young Entrepreneurs

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Figure–3: Frequency Distribution of Education of the Young Entrepreneurs

Table – 2: Frequency Distribution

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Pricing SDA 17 5.9

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Figure–4: Frequency Distribution of Skimming Strategy Do Not Fetch More Competitors

Source: Primary Data

Table-4: Frequency Distribution of Impact of Market Demand on Pricing Strategy

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Figure–5: Frequency Distribution of Impact of Market Demand on Pricing Strategy

Source: Primary Data

Source: Primary Data

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Table–6: Reliability Statistics

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Source: Primary Data

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strategy done to win large

Table–12: Model Summary

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a. Dependent Variable: Pricing strategy leads to

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[1]. Sammut-Bonnici, Tanya & Channon, Derek, (2015) . “Pricing Strategy”,.10.1002/9781118785317.weom120162.8,

© 2023, IJASRW, All right reserve

© 2023, IJASRW, All right reserve

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