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Article
Publication date: 1 August 1998

Sarah Maxwell

In the affluent 1960s and 1970s, consumers tended to be price insensitive. Business consequently placed a low priority on pricing, and marketing educators in the USA…

Abstract

In the affluent 1960s and 1970s, consumers tended to be price insensitive. Business consequently placed a low priority on pricing, and marketing educators in the USA responded by stressing the non‐price elements of the marketing mix. As a result, when consumers became more price sensitive in the 1980s and 1990s, and business became more concerned about pricing, marketing was not involved. Now, however, marketing educators are beginning to respond to the renewed emphasis on price as a key component in consumers’ perceived value. A new study shows an increase from 4 to 13 percent of US marketing education programs now including a course in pricing; another 22 percent are interested in adding one within two years.

Details

Journal of Product & Brand Management, vol. 7 no. 4
Type: Research Article
ISSN: 1061-0421

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Book part
Publication date: 1 November 2008

Andreas Hinterhuber

After pioneering, but insular, work on the conceptualization and measurement of customer value in business markets undertaken in the 80s and 90s, interest in this topic is…

Abstract

After pioneering, but insular, work on the conceptualization and measurement of customer value in business markets undertaken in the 80s and 90s, interest in this topic is substantial since the beginning of this decade. Despite this recent interest, marketing scholars concur that value in business markets is still an under-researched subject. This contribution to the debate is threefold. The paper first proposes an own model of customer value conceptualization in business markets; based on several rounds of testing this theoretically grounded model in managerial practice indications exist to conclude that this model may offer benefits over current models.

Secondly, the paper provides a comprehensive survey of pricing approaches in industrial markets. The paper integrates this literature overview with own empirical findings. Concurrently the paper summarizes extant research on the link between pricing approach and profitability in industrial markets. The paper thirdly proposes a framework for value delivery and value-based pricing strategies in industrial markets. Proposing such a framework is both useful as well as necessary. Useful, since this framework guides new product development and pricing decisions and assists in the implementation of price-repositioning strategies for existing products; necessary, since the theoretical and practical adoption of value-based delivery and pricing strategies may have suffered from the lack of a unifying conceptual framework. Two case studies, one involving the pricing decision for a major product launch at a global chemical company, the other involving value delivery at an industrial equipment manufacturer, illustrate the practical applicability of the proposed framework.

Details

Creating and managing superior customer value
Type: Book
ISBN: 978-1-84855-173-2

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Article
Publication date: 1 February 1973

R.S. Mason

Customer location is a market‐limiting factor for the great majority of manufacturers. Under any full‐cost pricing system, companies are at their most competitive on their…

Abstract

Customer location is a market‐limiting factor for the great majority of manufacturers. Under any full‐cost pricing system, companies are at their most competitive on their own doorstep and their appeal to the consumer diminishes as both the buyer's distance from the plant and the delivered price of products increase. For heavy industrial goods with a low value to weight ratio this is particularly true. The geography of actual and potential markets determines to a great extent the delivered price at which a firm is able to offer its products for sale and, as a consequence, the degree to which any particular market is exploitable.

Details

International Journal of Physical Distribution, vol. 3 no. 5
Type: Research Article
ISSN: 0020-7527

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Article
Publication date: 1 March 1982

In this paper the main objectives of transfer pricing are discussed as well as methods that have been suggested for each objective to be achieved. Also investigated are…

Abstract

In this paper the main objectives of transfer pricing are discussed as well as methods that have been suggested for each objective to be achieved. Also investigated are the interrelationships among transfer pricing objectives, methods, and circumstances under which companies operate

Details

Managerial Finance, vol. 8 no. 3/4
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 5 August 2014

Kostis Indounas

The purpose of this research paper is to examine the impact of a number of variables on the adoption of strategic pricing by industrial service firms, and the effect of…

Abstract

Purpose

The purpose of this research paper is to examine the impact of a number of variables on the adoption of strategic pricing by industrial service firms, and the effect of this adoption on company performance.

Design/methodology/approach

Data were collected from 301 industrial service firms operating in seven different service sectors through a mail survey. Moreover, qualitative research through 35 in-depth interviews was conducted.

Findings

The findings reveal that market orientation and market growth boost the development of strategic pricing. On the other hand, technological and market turbulence hinder this development, while the overall impact of turbulence is reduced in market-oriented firms. Finally, strategic pricing has a positive impact on company performance in both quantitative and qualitative terms.

Research limitations/implications

The adoption of strategic pricing requires attention to a variety of company- and market-related factors, while this adoption can improve various aspects of company performance. The addition of other moderating and mediating effects could certainly provide additional insights.

Originality/value

The current study represents one of the first attempts to empirically examine the above topics in an industrial service context.

Details

Journal of Services Marketing, vol. 28 no. 5
Type: Research Article
ISSN: 0887-6045

Keywords

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Article
Publication date: 1 January 1990

Barbara J. Coe

Examines the shift in priorities of US industrial firms from thoseof securing market share by means of product innovation and aggressivepricing strategy to that of the…

Abstract

Examines the shift in priorities of US industrial firms from those of securing market share by means of product innovation and aggressive pricing strategy to that of the achievement of short‐term objectives such as the satisfaction of financial markets and shareholders. Describes an eight‐year study tracking the use of pricing strategy by industrial firms in the 1980s, situating them in the wider context of Japanese‐led changes to the US market during that period. Concludes that instead of reacting defensively, abandoning pricing as a market strategy or using it for short‐term profitability, US business should concentrate on product innovation/development and the pursuit of long‐term profit goals via marketing and pricing strategies appropriate to the external marketplace.

Details

Journal of Business & Industrial Marketing, vol. 5 no. 1
Type: Research Article
ISSN: 0885-8624

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Article
Publication date: 1 March 1982

An attempt is made in this paper to discriminate among four groups of transfer pricing methods namely: market price, cost, negotiation, and other methods, according to the…

Abstract

An attempt is made in this paper to discriminate among four groups of transfer pricing methods namely: market price, cost, negotiation, and other methods, according to the transfer pricing objectives and other environmental issues (i.e. transfer pricing determinants). Discrimination is attempted on the data collected in the study of UK companies described in the earlier paper “A Survey of UK Transfer Pricing Practice — Some Preliminary Findings”. The aim of the discrimination is to evaluate the relationship between the transfer pricing method and transfer pricing determinants. This evaluation enables the prediction of transfer pricing method for new cases according to the company's perception of the relative importance of the transfer pricing determinants.

Details

Managerial Finance, vol. 8 no. 3/4
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 15 November 2018

Kostis Indounas

The purpose of this paper is to investigate the pricing objectives (e.g. customer-related objectives, sales-related objectives, profit-related objectives) that service…

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.

Details

Journal of Services Marketing, vol. 32 no. 7
Type: Research Article
ISSN: 0887-6045

Keywords

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Article
Publication date: 12 April 2013

Mohammad G. Nejad

This study aims to explore optimal pricing strategies for innovations with direct network externalities – the effect that the number of adopters of an innovation has on…

Abstract

Purpose

This study aims to explore optimal pricing strategies for innovations with direct network externalities – the effect that the number of adopters of an innovation has on the utility of the innovation to other potential adopters. Examples of such innovations are fax machines, e‐mail, cellular phones, and software programs such as word processors. The success of these innovations requires a minimum number of adopters.

Design/methodology/approach

The paper uses agent‐based modeling and simulation.

Findings

The relationship between price and net present value (NPV) of revenue resembles an asymmetric inverse U‐shape. A low‐pricing strategy outperforms high‐pricing, while a moderate‐pricing strategy outperforms both low‐ and high‐pricing strategies. Moreover, heterogeneity of consumer price sensitivity positively affects the NPV of sales.

Practical implications

Pricing durable new products with network externalities is more challenging than other types of innovations. The results indicate that firms can maximize their NPV by adopting a moderate pricing strategy. Moreover, firms must consider heterogeneity of consumer price sensitivity along with the market price elasticity when making pricing decisions. Detailed strategic implications and recommendations are discussed.

Originality/value

Several recent studies have called for examining pricing strategies for new products with network externalities. The study findings challenge the common wisdom that a penetration pricing strategy is an optimal approach for durable products with network externalities. Moreover, while other studies have highlighted the importance of market price elasticity, extensive simulation experiments conducted in this study show that heterogeneity of consumer price sensitivity is an important factor that must be considered. Finally, the study presents an agent‐based modeling approach for exploring optimal pricing of innovations with network externalities.

Details

Journal of Product & Brand Management, vol. 22 no. 2
Type: Research Article
ISSN: 1061-0421

Keywords

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Article
Publication date: 1 May 1980

David Ray, John Gattorna and Mike Allen

Preface The functions of business divide into several areas and the general focus of this book is on one of the most important although least understood of…

Abstract

Preface The functions of business divide into several areas and the general focus of this book is on one of the most important although least understood of these—DISTRIBUTION. The particular focus is on reviewing current practice in distribution costing and on attempting to push the frontiers back a little by suggesting some new approaches to overcome previously defined shortcomings.

Details

International Journal of Physical Distribution & Materials Management, vol. 10 no. 5/6
Type: Research Article
ISSN: 0269-8218

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