Ineffective pricing strategy of the prepared food category at the Alpha JSC

Abstract

Nowadays, price is a key element for any business and can be critical to the business's survival. If the price is not set in accordance with the target market, it could have a negative impact on the company's market share and profitability. As such, pricing can be considered as an important aspect affecting the success of a business or an organization. However, setting up a pricing strategy is becoming a difficult task for managers. An effective pricing strategy will help the company increase its revenue and profitability. Therefore, developing the right pricing strategy is both important and complex. And, the price determination is likely to succeed if the business has good management of the factors of the pricing strategy. Therefore, if the firms do not fully understand the impact of their pricing decisions, that will often lead to missed opportunities and ultimately reduced profits and sales. However, this happened with particular Prepared food category of The Alpha company, they have been experienced lost orders as well as low sales for several years due to ineffective pricing strategy. By using different literature reviews and conducting in-depth interviews among employees in the Processing business unit of The Alpha, this research has defined what the main problem is, why it is the main problem, how important it is and how it affects to business performance in their Prepared food category. Furthermore, the findings show that a company's pricing strategy includes plans for price positioning, price segmentation, competitive price reaction, and pricing capability. It is necessary for the firms to define and develop an effective pricing strategy. Nowadays, among the three models: valuebased, market-based and cost-plus pricing, the pricing experts is more preferring to execute value-based pricing, as it has been shown to gain the extra revenues from the „value‟ of products offered to customer. In short, this research will help the managers to find the central problem occurring in the department, what main causes of the problems and how to make the good solutions to solve that problem, to enhance the competitive advantages, increase profits and decrease loss of orders to the competitors.