Semiconductor Pricing Strategy in USB Market: A Market Leader’s Dilemma

Abstract

The semiconductor market has become more competitive than ever before with new players joining the industry. There is pressure for innovation and differentiation in this industry to maintain leadership. The resultant innovative products have wide application but are sold in hypercompetitive market. The industry requires price management at transaction level to achieve efficiency and excellence with each of the diverse customers. 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. This research looks holistically at the pricing issues especially faced by market leader with focus on Universal Serial Bus (USB) customers. The market leader traditionally does premium pricing in semiconductor industry. We question that—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.