Pricing capabilities: the design, development, and validation of a scale

Abstract

Purpose

The literature has paid increased attention to pricing capabilities as a set of distinctive, complex activities, routines, and processes that drive company performance. Despite this emphasis, little research has addressed the pricing-capabilities construct itself, and no accepted measure of pricing capabilities exists. The purpose of this paper, therefore, is to document the design, development, and validation of a dedicated pricing-capabilities scale, PRICECAP.

Design/methodology/approach

Qualitative plus three quantitative surveys.

Findings

The present research describes the development of a ten-item measure, PRICECAP, that can be used to assess organizational capabilities related to pricing.

Research limitations/implications

The reliability and validity of the scales were assessed through three separate quantitative studies using exploratory and confirmatory analysis. The PRICECAP scale has a variety of potential applications and can serve as a framework for future empirical research in marketing theory as well as an instrument to assess, compare, and develop pricing capabilities in marketing practice.

Originality/value

Empirical research has provided scales to measure value creation but a scale to measure value capture – i.e. pricing – capabilites is lacking. This study covers this gap and provides a new, parsimonious, ten-item construct to measure pricing capabilities.

Citation

Liozu, S. and Hinterhuber, A. (2014), "Pricing capabilities: the design, development, and validation of a scale", Management Decision, Vol. 52 No. 1, pp. 144-158. https://doi.org/10.1108/MD-09-2012-0683