An Integrated Approach for Defining Pricing Strategies in Competitive Markets

Quality function deployment (QFD) is a customer-oriented decision support tool with cross-functional team members reaching a consensus in developing a new or improved product to increase customer satisfaction. In this paper, we concentrate on showing the strong effect of QFD methodology on customer satisfaction and on the price determination of a product. The end-users demand to the newly developed or existing products depends not only on the quality level and the price of that producer, but also upon those of its competitors. Our proposed pricing model applies game theory as its mathematical base. The equilibrium point of the game gives the best pricing strategy for the producers. We use the QFD methodology to obtain end-user preferences and quality levels of the competitors. Besides, QFD enables the producer to determine on which product technical requirements to concentrate in order to get more market share.