Pricing Strategy Analysis and

Recommendation
Group 4 for ABC Cellphone Company
Shailja Dankhara
Akshat Tiwari
Boyu Hou
Tanmay Kumar
Jian Fan
1. Introduction:

● ABC Inc. stands as a beacon of innovation and quality within the technology industry.
● Renowned for its groundbreaking products, the company is poised to disrupt the market once again
with the imminent launch of its latest innovation: an innovative smartphone poised to redefine user
experiences.
● In this case study, we delve into the critical aspect of pricing strategy, recognizing its pivotal role in the
success of this forthcoming product launch.
2. Recommendation after evaluation
● We recommend adopting a value pricing strategy for ABC Inc.'s smartphone.
● This approach aligns with the innovative features and benefits of the smartphone, allowing ABC Inc. to capture the
perceived value effectively.
● By focusing on customer-centric pricing and differentiation, ABC Inc. can establish a competitive edge in the market
while maintaining profitability.
● Additionally, integrating elements of perceptual pricing to enhance brand positioning and appeal to target segments
can further reinforce the success of this strategy.
● It's essential for ABC Inc. to continuously monitor market dynamics and consumer preferences to adjust pricing
strategies accordingly, ensuring sustained success in the competitive smartphone market landscape.
3. Substantiation of choice
● Distinct Attributes of the Smartphone: ABC Inc.'s smartphone offers unparalleled
innovation, functionality, and user experience, making it well-suited for a value-based
pricing approach.
● Broader Technology Market Landscape: In a competitive market where consumers
seek devices that offer tangible benefits and superior performance, value pricing enables
ABC Inc. to effectively communicate the value proposition of its smartphone and
differentiate it from competitors.
● Long-Term Sustainability: By focusing on delivering exceptional value to customers
and fostering brand loyalty, a value pricing strategy ensures sustained success and growth
for ABC Inc. in the dynamic technology market.
4.Strategic Implications:Mitigating Impact on Existing Product
Sales
While launching our new affordable ground-breaking product placed at a price point below market average, we plan
to implement the following strategies to ensure our other products that are placed closer to the market average are
maintaining their position in the market.

● Feature differentiation: Market new product for price-sensitive customers while emphasizing distinct
features of the expensive products.
● Market and Customer Segmentation:Clear segmentation of customers and market to market products to
applicable and lucrative segments.
● Differentiated Marketing Campaign Revamp: Revisit advertisement campaigns for existing products to
emphasize the unique features while marketing new product as high tech option available to applicable
segment as a pocket-friendly option.
● Bundle offers and cross promotions: Offer bundles and promotional offers with both new and older
products to engage customers
● Limited Availability: Position new product as limited time or limited availability to entice customers and
create a sense of urgency.
5. Impact to Market
● Market: Facilitate market penetration and contribute to price stability in market. Cost-based
pricing can make the smartphone more affordable to a broader audience. This penetration would
be particularly effective in capturing currently underserved market segments, thereby expanding
ABC's customer base.
● Competitors: Reassess pricing strategies or innovate in their production processes to reduce
costs and maintain their market position. This strategic pricing could either lead to a more
competitive pricing environment or prompt competitors to differentiate their products more,
affecting the overall competitive dynamics in the smartphone market.
● Customer perception: Communicate value and fairness to consumers, potentially enhancing
brand loyalty and trust. Cost-based pricing strategy attracts a wider customer base with stable
prices and products that offer high value for money. However, it's crucial for to carefully
balance cost-based pricing with product's perceived value that effectively communicates the
smartphone's innovative attributes and maintains a positive customer perception.
6. Value Pricing
● Aligns with product features and customer feedback: Ensures pricing reflects the
quality and innovation customers expect from the product, based on direct feedback.
● Protects sales of existing product portfolio: Avoid cannibalizing the sales of its existing
products. Involves analyzing the price points within the existing portfolio to ensure that
the new product complements rather than competes with them.
● Balances quality perception with competitive pricing: Strives to find a middle ground
where the product is perceived as high quality and worth its price, yet remains
competitively priced in the market.
7. Perceptual Pricing
● Leverages psychological and competitive factors: Utilizes psychological pricing
strategies to create a perception of value, taking into account competitor prices.
● Influences customer behavior and sales dynamics: Designed to affect purchasing
decisions by aligning the price with perceived value, potentially driving higher sales.
● Drawbacks: While perceptual pricing can effectively differentiate a product in a
competitive landscape and potentially drive sales, it also carries risks. If customers
perceive the price to be in mismatch with the value received, it can lead to dissatisfaction
and harm the brand's reputation. This method requires a careful balance of psychological
appeal and real value, necessitating ongoing market research and adjustment to align with
customer expectations and competitor movements. Overall, we would prefer value
pricing over perceptual pricing.
8. Ripple Effects
● Brand Image: The pricing approach that is selected will have a big impact on how the market views ABC Inc.
The brand image can be improved by taking a well-balanced approach that conveys value without sacrificing
quality.
● Customer Loyalty: Pricing strategies can encourage loyalty if they meet customer expectations and provide
value. But if a tactic underwhelms clients in terms of perceived value, they could get disenchanted and stop
being loyal.
● Product Ecosystem: The new smartphone's success or failure could have an impact on the whole product
ecosystem. If the novel product proves to be successful, it might bring in more consumers to ABC Inc.'s brand,
which would boost sales of other products. On the other hand, a mistake in pricing could have a ripple effect
throughout the whole line of products.
● Long-Term Profitability: It is essential to strike a balance between short-term and long-term profitability. A
lower starting price could increase sales, but it shouldn't jeopardize the company's long-term viability. In
contrast, a more expensive approach must be viable over time.
Conclusion
Implementing these strategies ensures a successful introduction of the budget-friendly
cell phone while maintaining a balanced product portfolio and safeguarding existing
product sales.