Ethical issues concerned in price quotation are often debated in society. Services and goods industry justify their stand in quoting the price of their products based on certain criteria. If we look at the price quotation strategy of goods-based products, most of them quote cost plus pricing as a bench mark. Depending on the position of their product in the life cycle and competitive position they enjoy in the market, they go for change in strategy. It can be normal price or super normal price for their product to earn profit.The matter in quoting normal or super normal price for profit has always come up as a social responsibility issue. Many a time it is the conscience of the businessmen or manufacturer which decides the price quotation. As long as the product enjoys the market leader position, price quotation goes for a higher side. Till the competitors arrive with the same product or replaceable product, the higher price will stay in the market.With their arrival, the market leader will be forced to cut the price to remain floating. Studies point out that the time period to remain market leader for a normal variety (not unique to the core) product is very short. In an urgency to do maximum business during this period, they charge exorbitant prices.Who is benefited from this exercise and at what cost? Industry leaders need to undertake a cost benefit analysis to assess the situation for a larger cause. Products which are in the last leg of their life cycle go back to R&D for modification. Normally modification is made peripherally to bring back the product again in the market. Basically fundamental changes are not brought out to give a new product to the customers. This reduces the life span of the market leader and is prone to duplication. Price quotation at a higher level brings fluctuating business and customers have to bear the burden. If they could keep normal price for the product, entry of competitors and product duplication can be curtailed. This will help them to maintain the market leadership position and can cut the unnecessary cost on R & D to a minimum. Service products in air travel are priced with no logic to justify price quotation. A perfect match between demand and supply for service products is impossible, but this should not be an excuse to justify higher pricing policy of air taxi operators. During peak season, supply is made at minimum. This is the result of protectionism approach of the government. How long can govt. shut the door in Indian skies? National carrier Air India has nothing to lose. The decision of its disinvestment was deliberately jeopardized by vested interests three years ago to squeeze the energy of Maharaja in the name of employee love. Now it is taxpayers’ money spent on Air India to keep it flying.The lessons from the international trade for goods-based industry, especially with China, should be taken for introspection. The domestic industries which charged exorbitant prices for their products have vanished from the scene. Foreign players took control. As a result, our trade deficit widened causing a great concern for our balance of payment situation. The danger which awaits service industry is going to be the same unless they change strategy. Let the government bring TRAI, IRDA model to monitor the unethical pricing practices in the industry to enable the customer to get services and goods at affordable prices.(The writer is Management Faculty Member, Kannur University MBA CampusThe views expressed in the article are the author’s own)
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