Pricing as a strategic capability

Handbook of Pricing Research in Marketing, 2009

This chapter organizes and reviews the literature on new product pricing, with a primary focus on normative models that take a dynamic perspective. Such a perspective is essential in the new product context, given the underlying demand-and supply-side dynamics and the need to take a long-term, strategic, view in setting pricing policy. Along with these dynamics, the high levels of uncertainty (for fi rms and customers alike) make the strategic new product pricing decision particularly complex and challenging. Our review of normative models yields key implications that provide (i) theoretical insights into the drivers of dynamic pricing policy for new products and services, and (ii) directional guidance for new product pricing decisions in practice. However, as abstractions of reality, these normative models are limited as practical tools for new product pricing. On the other hand, the new product pricing tools available are primarily helpful for setting specifi c (myopic) prices rather than a dynamic long-term pricing policy. Our review and discussion suggest several areas that offer opportunities for future research. * Comments and suggestions from Vithala R. Rao, Jehoshua Eliashberg and an anonymous reviewer are gratefully acknowledged. 1 Noble and Gruca's study is not limited to new products. They organize the strategies by the pricing situation for both new and mature products and then, for strategies within each pricing situation, by the conditions expected to favor the choice of a particular strategy. The three new product strategies were chosen by 32 percent of all respondents across all situations (skimming 14 percent, penetration 9 percent, and experience curve pricing 11 percent).

SSRN Electronic Journal, 2000

Of three main orientations to pricing in industrial markets − cost-based, competition-based and customer valuebased − most marketing and pricing scholars consider the latter superior -but few firms use it. The literature is silent about how organizational and behavioral characteristics of industrial firms may affect pricing orientation and, more specifically, value-based pricing. Semi-structured interviews with 44 managers of small to medium size U.S. industrial firms yielded insights into firm pricing orientations, processes and decision making patterns. We identified five organizational characteristics common to firms implementing value-based pricing: ability to effect deep transformational change, presence of a champion, skill in diffusing organizational capabilities, organizational confidence, and center-led pricing process specialization. Our data demonstrates that value-based pricing is not simply adopted but internalized through a long, tenuous and deep transformation process supported by an experiential and transformative learning environment.

Revista de Administração, 2016

Pricing strategies and levels and their impact on corporate profitability Estratégias e níveis de preços e seus impactos sobre a lucratividade das empresas Estrategias y niveles de precios y su impacto en la rentabilidad de las empresas

2008

Price is one of the marketing mix elements which can mean many things to the consumer about a product. These include many concepts such as quality, prestige, performance, and durability. This study examines pricing strategies that can be applied in the market conceptually.

Journal of Product & Brand Management, 2011

Journal of Revenue and Pricing Management, 2011

The current literature is largely silent on how executives interpret the concept of value-based pricing. Although only a minority of companies adopts value-based pricing approaches, little is known about antecedents of alternative pricing approaches. We suggest this may be because of the fact that few professionals possess an understanding of value-based pricing, which is both academically rigorous as well as practically relevant. Our interviews with 44 executives in 15 US industrial firms show that those practicing value-based pricing interpret customer value in ways fully consistent with the current academic literature. Those practicing cost-or competition-based pricing, however, show a poor understanding of value-based pricing, which may explain why their companies practice cost-or competition-based approaches.

Journal of Business Research, 2008

As a result of evolving technology, opportunities for innovative pricing strategies continuously emerge. The authors provide an updated taxonomy to show how such emerging strategies relate to recent technological advances. Specifically, they cite increased availability of information, enhanced reach, and expanded interactivity as three technological advancements and identify six pricing strategies enhanced by these factors. They also discuss the role of utility, prospect, range, and signaling theories for emerging pricing strategies, along with several applications and managerial implications.

European Journal of Marketing, 2015

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Business Horizons, 2001

SSRN Electronic Journal, 2003

In this paper we argue that pricing is all about price changes, and that the costs of price changes are often simultaneously subtle and substantial. We discuss a framework to deal with the dynamics of changing prices. This framework incorporates customer interpretations of price changes, an awareness of the organizational costs of price changes, investments in future pricing processes, and an understanding of the role that supply chains play in price change strategy. The framework can be used at the tactical level to improve the specific price changes chosen and made, at the managerial level to decide whether or not to make a particular price change at all,

Journal of Product & Brand Management, 2007

Purpose -In the face of increased pricing pressure, managerial attention for value-informed pricing (in which a price is based on the customer's value perception) is on the rise. Although value-informed pricing in its organizational context received a great deal of attention, the body of literature is fragmented and insights are often not cumulative. It is the aim of this article to review and integrate the empirical literature on pricing practices in order to pave the road for future research. Design/methodology/approach -Empirical studies on pricing practices are collected and reviewed. Building on the resource-based view of the firm, the findings from these studies are summarized in an integrative framework that includes testable research propositions. Findings -Value-informed pricing is the result of the deployment of informational resources such as market research, relationships and internal knowledge on customers. Firms should not only develop these information sources, but also secure the process by which they are deployed. The latter is among others influenced by the competitive context and organizational information processing that may evolve into a routine. Originality/value -The article integrates the insights from a stream of research that thus far has been highly fragmented. It generates insights that may help firms to establish a value-informed pricing process and it may help to develop a more mature body of research on value-informed pricing.

Business Horizons, 2011

SSRN Electronic Journal

This article demonstrates how various concepts derived from marketing and behavioral economics can be useful to accountants and others whose advice is sought on the setting of prices. In particular, it shows that a one-price policy may not always be ideal. Using price as a strategic tool can increase both profit and customer satisfaction. Pricing strategies discussed include segmented (tier) pricing, pay-what-you-want pricing, pricing digital products, and peak-user pricing. The ethical implications of pricing decisions are also discussed.