A Market Leaders Dilemma in Pricing Strategy

What is it about?

The pricing in the semiconductor industry is done more scientifically as compared to other industries like FMCG, consumer durables, and health care. Pricing software aid managers in determining the appropriate price.However, the price charged for each customer in semiconductor industry is different depending upon the quantity of purchase, schedule of delivery, the location of buyer, customization, type of customer, etc.. This research looks holistically at the pricing issues especially faced by the market leader with a focus on Universal Serial Bus (USB) customers. The market leader traditionally does premium pricing in the semiconductor industry. We question that approach —Should a market leader always charge price premium in all its product lines? Which pricing strategy is better - skimming pricing strategy or penetrative pricing strategy? The objective of the research is to find appropriate pricing strategy for the specific product category. A right price would lead to enhanced revenue besides better customer conversion ratio.

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Why is it important?

It highlights nuances in transactional pricing (for each customer) and right pricing approach to be followed by the semiconductor manufacturers and marketers.

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