How "Under Pricing" the product help the management for Business Development? How far this strategy can be recommended?

for SHORT TERM  0r ONE TIME BUSINESS DEAL......... ITS GOOD BUT IF YOU ARE SERIUOS IN BUSINESS AND WANT TO MAKE AN IMPACT ON MARKET/ INDUSTRY =======  FORGET THIS NEGATIVE IDEA=========== GOOD DAY

Under pricing is a very bad strategy.  The best thing to do is correct and fair pricing.  Organizations could do price cuts for a special occasion or during a season or a feast but to cut down prices to kill the competition or for any other reason I see as a weak startegy that will eventually kill the business. 

Under pricing means 'below the market price'. Everybody does that for business development.

However, if someone understands this as below cost price, even then it is a good strategy as long the price is not below the marginal cost. A fine example of this strategy is 'Texas Instruments'. They always used to price products below 'total cost' but above 'marginal cost'. And they used to make profit by achieving large volumes through this strategy.  They also used to keep the competition out through this strategy. The costs taken here are historical costs and not the projected costs.

What is under pricing?

Under pricing is just keeping the price low in against the other similar product. 

Now for management, I would like to mention that no management or company will sell their products on loss. They always mention the viable profit levels. 

Under pricing for liquidating excess stocks and for dead stocks can be helpful. Under normal circumstances, under pricing is a negative deterrant for developing business.

What i Get from your question is penetration pricing which meaning start with low price to gain deep market penetration.

but this will depend on elasticity of demand which is avery huge subject as per the following

1- it is depend on the product

    A- normal or inferior

    B- competitors

    C- Substitutes or complements

so the under pricing can help company if the product is  price elasticity of demand if the relation between pric and demand is elasticity and we have high competition environment it will help us to get high market % so if we can control our cost will be have advantage in the market.

so in your question is not clear about the market situation to recommended or no

If the product is your research it is a premium product has have a premium price. then you have the liberty of a leader price which is higher than the competitor.However to offer price cuts gainst large volumes of business is one of the strategies for short term financial gains taking cognizance of large stock inventories you might be having.But Adhere to right pricing considering the market and other players around.

pricing products correctly is very important , I disagree any with other strategies

It depends on the market segmentation, target customers, and determining whether market is price-sensitive. Depending on these various factors, management can decide whether to go or not for under-pricing. Its not a viable option for all customer base and markets.

A timeless question & an exemplary one for a business forum, Mr. Vrindavan. 

Under-pricing is typically an adopted (temporary) pricing strategy in cases of:

1. A startup company
2. Large volume selling
3. A new market entry/penetration
4. A new product launch in existing market
5. A competitive price-war in a saturated market

Under-pricing is generally regarded as an inescapably & undeniably bad pricing strategy that will backfire and turn bad for your company, products and image. And I generally agree with this opinion for the following reasons only:

1. Customers (whether B2B or B2C) often derive quality & value from (high) price (often ignored fact).
2. A low pricing is very bad for branding and building a strong brand-equity. It is associated with low self-confidence and low-quality
3. If the final product has reached it maximum value with low possibilities of product development or service imrpovements, the low-price will stick with it and it will be very difficult to increase it again.

But I also disagree in labeling under-pricing as an all-time bad strategy. If we look closely and more critically, under-pricing takes place all the time around us and can indeed be the very reason for some companies to thrive and even become more profitable than companies that price their products high. How so?

CASE-STUDY

Have you heard of Aldi Supermarkets, the famous German supermarket chain? It is one of the world's biggest privately owned companies, with9000 stores spread over18 countries with global annual revenues of €50bn. It is what you call a CHEAP super market chain. Yet, it is very successful and popular with a good quality image at the same time, to the extent that it is often said that you can even trust buying a PC at Aldi (they sell German-brands, in low-priced offers). How does this coincide with under-pricing being ruled out as bad?

In my opinion the problem with under-pricing arises only when it uses only two elements in determining the price: cost + margin, while leaving out "intrinsic product value". The final selling price, using such logic, should cover the cost while generating a pre-determined margin, while pricing should always be more than that, in order for it to reflect the true intrinsic value of a product or a service, while still respecting Customers, Competition and Cost. Companies that succeed in identifying, quantifying, and translating the real intrinsic value of their offering to customers in realistic pricing will always have successful sales, regardless of how low or high their price is.

Aldi, as an example, did this by presenting itself as "no-frills supermarket", by cutting costs that were deemed "an unnecessary price-tax" by customers like fancy shelves, advertisement, signboards, price tags, lots of employees, and by offering wide set of "house-brand" products of very comparable quality. They present the merchandise as it is, sometime unpacked and with only2-3 cashiers per supermarket. The customers loved it and rewarded it!  

For another good example, look up the curious case of how Easy-Jet transformed pricing and service offering in the passenger's aviation industry, enjoying very succesful years.

Under pricing strategy must not be absolute but must be in response of change of one of the3 Cs which control the price ( cost , competitor and customer) for ex we should use this way if the cost is decreases or competitor price decreased or the customer appeal about the product is less than before to maintain or even increase our relative market share and increase sales revenue

also one useful way to use the underpricing is to get rid of the competitor in case of you are sure that cut your prices will give no chance for other competitor whose have  low profit margin to survive more in the industry so they can not respond the same as you  especially for low differentiation markets where no big difference regarding the products or services , and after getting rid of the competitor , you can control the market again , as your production facilities will be increased so you could even retain your previous profit margin with the new price