Market structure and pricing objectives in the services sector

Abstract

Purpose

The purpose of this paper is to investigate the pricing objectives (e.g. customer-related objectives, sales-related objectives, profit-related objectives) that service companies pursue to set their prices and to examine the impact of market structure on these objectives.

Design/methodology/approach

To achieve the research objectives, data were collected from 184 companies operating in four different service industries, namely, logistics companies, financial services providers, information technology companies and airlines.

Findings

The findings indicate that the companies that were investigated in the current study seem to follow a hierarchy of pricing objectives, in which their main focus is on the maintenance of the existing customers and the attraction of new ones to ensure their long-term survival in their market without, however, disregarding financial issues and objectives. The study also revealed that the market structure, along with the sector of operation, has an impact on the pricing objectives pursued, as different market conditions were found to lead to different pricing objectives.

Practical implications

The above findings indicate that managers responsible for setting prices within their firms should be guided by the unique characteristics of their markets.

Originality/value

Given the lack of similar studies within the existing services sector literature, the originality/value of the paper lies in the fact that it presents one of the first attempts to empirically examine this issue from a marketing point of view.

Citation

Indounas, K. (2018), "Market structure and pricing objectives in the services sector", Journal of Services Marketing, Vol. 32 No. 7, pp. 792-804. https://doi.org/10.1108/JSM-03-2018-0087