Pricing Strategy Theory

2.0 Introduction

This section deals with review of related literature. It consists of introduction, theoretical review, and endogenous growth strategy theory, pricing strategy theory, the gap model service delivery strategy and Ansoff growth strategy: product/market Matrix. It also covers empirical review and conceptual framework.

2.1 Theoretical Review

This is the section that scholars say is the guide of the study. According to Maxwell (2005), “the point is not to summarize what has already been done in the field. Instead, it is to ground your proposed study in the relevant previous work; and to give the reader a clear sense of your theoretical approach to the phenomena that you propose to study”. He goes further to say that a conceptual

2.1.2 Pricing Strategy Theory

Griffin (2015) emphasises that price is the only element in the marketing mix that produces revenues while all others represent costs; and choosing the right price for a product, helps send the correct price-quality signal. She further explains that price-signaling occurs when the cost of something reflects the product’s perceived quality and that whether or not a product is the best quality for the best price, the pricing strategy aims to convince the buyer that is the case.

The theory of pricing strategy revolves around three main points: cost and profit objectives, consumer demand and competition. Consideration of customers and the demand for a product should be used to determine the maximum selling price. With the attainment of a price range, profit objectives and information about competition are used to choose the best price

A complete theory of the transition process requires an interdisciplinary theory that integrates service management and human decision making. They Most products or services can be differentiated from those of competitors through enhanced features, functionality, reliability, and suitability to the current and latent needs of the customers. This is called product or service quality. That means quality includes the degree of suitability to the current and latent needs, features, functionality and reliability. Referring to the gap model (Parasuraman, Zeithamel, Berry, 1985), it is assumed that it is not possible for managers to have direct access to the factors defining attractiveness. Zeithamel et al (1990) argue that the difference between customer expectations and actual service provided cannot be managed directly but only through other “gaps”, or discrepancies, between expectations and performance that occur in organizations. They argue that there is always a discrepancy between attractiveness and perceived attractiveness. But nevertheless, the attractiveness has a positive impact on the perceived