Zuhroh, Diana ORCID: https://orcid.org/0000-0002-5659-283X and Sunardi, Sunardi (2017) Implementation of Strategic Pricing Model in Fashion-Based Creative Industry. In: The 5th Gadjah Mada International Conference on Economics and Business, 14-15 September 2017, Fakultas Ekonomi dan Bisnis Universitas Gadjah Mada, Yogyakarta..

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Abstract

This study aims to obtain empirical evidence of cost structure and implementation of competitive strategy in order to determine the selling price using strategic pricing model for fashion-based creative industry. The research method used was a survey using questionnaires with respondents from practitioners of Small and Medium Enterprises (SME) in East Java. Questions in the questionnaire are: cost structures along the downstream, upstream, and production costs, as well as policies related
to the implementation of competitive strategies; tend to low cost or differentiation. Data analysis is descriptive quantitative, and for the separation of SMEs which is implement Low Cost or Differentiation strategy using model developed by Jermias and Ghani (2005). A total of 78 questionnaires returned and were eligible for further process. The results of this study show that most of SMEs (60%) have been exporting their products, and they consider the products from China is the main competitors. SMEs that
have used social media for promotion and sales are 57%. The downstream cost structure of most SMEs are design and model development cost. Production costs includes the cost of raw materials, labor costs and other costs. While, upstream costs includes: marketing costs, product returns, and compensation costs. A 40% of SMEs implement competitive strategy tend to differentiation, and the rest uses strategy tend to Low Cost. With this results, the using the traditional model to set the selling price that has been
applied by SMEs based on fashion need to be improved. It is suggested to use strategic price model, especially for SMEs which are implementing differentiation strategy. This means, the selling price strategy implemented by SMEs have to consider the strategy and its position in the product life cycle
(Blocher et al, 2010: 566). This because theoretically, strategic pricing model is considered more appropriate for companies which are implementing differentiation strategies. While, SMEs which are implementing Low Cost strategy, using traditional selling price model is still considered appropriate. The results of this study is useful for development of pricing theory, in particular for SMEs. This result is also useful for the development of SMEs in order to improve competitive advantage from the aspect of price, so, the SME’s product will be able to compete with imported products.

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