Marketing Strategy + Effective Communication = Business Growth

Marketing Managers are faced with one of the Hardest Jobs: Pricing.

Pricing Strategy and Game Theory

References

Abstract

This paper describes the key issues management should consider when developing a pricing strategy. An effective manager should take both a value based and market based approach to pricing their products and services. This entails analyzing customers' value, the market structure and competition, market demand, and customers' price sensitivity. Through presenting a literature review, I will show that game theory is an economic tool that can help management make better decisions regarding pricing strategies as it offers a framework that enhances managements' ability to understand competitors', customers', suppliers', substitutors' and complementors' actions and reactions to changes in price. This conclusion is made on the basis that several academic scholars ranging from biologists to economists, rely heavily on game theory to forecast the possible outcome of competitive behavior, and enables managers to exploit advantages and acknowledge threats and weaknesses.

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