Search results

While the gap between economic theory and companies’ practice, regarding to the pricing setting, has been extensively explored and explained, the new gap between the marketing normative view and companies’ practice needs further clarification. In this way, the paper aims to investigate whether marketing researchers’ claim that the use of cost-based price approach prevails over the use of value-based price approach is pertinent.

The paper is guided by the following research question: “Does price-setting based on cost plus margin go against the value-based price approach?” The answer to this question is grounded in reflections on results of previous research studies and in a case study conducted in an industrial company. Because of the qualitative focus of the present study, hypotheses are not established, but rather the following proposition: certain companies use the mechanics of cost plus margin in the sale price-setting process, but it does not necessarily mean that these companies set prices based on cost.

The arguments, propositions and the case study findings provide the logical sequence and the support required to conclude that price-setting based on cost plus margin does not always conflict with the value-based price approach. As a result, it may be claimed that the general proposition established is theoretically valid, i.e. using a price formula that contains the elements cost and margin does not necessarily mean that the company sets prices based on cost.

The key contribution of this paper is demonstrating that in certain business environments, such as, B2B, using the price formation mechanics based on cost plus margin is the way found by companies to enable the approach adopted. The approach may be cost-based or value-based price. This is the first study that explicitly reveals how B2B companies may set prices based on value while simultaneously preserving the simplicity of cost plus margin formulas. Researchers have significant misconceptions about these formulas: in previous studies, they classified all price-making companies as those adopting the cost-based price approach simply because they used formulas containing the element cost.

This paper seeks to examine the influence of pricing orientation on the price‐setting process in industrial firms.

The authors designed a qualitative inquiry based on the principles of grounded theory with 44 managers in 15 industrial firms located across ten US states. These managers included CEOs, pricing and marketing professionals, and financial professionals working in three industries (automotive, building products and chemicals).

The study's results reflect similarities and differences in the experiences of managers in industrial firms using all three pricing orientations. It reveals stark contrasts by pricing orientation with respect to how firms organize for pricing, manage the pricing process, make product pricing decisions, manage the transition to more advanced pricing orientations, and develop internal capabilities to face uncertain and ambiguous decisions. The findings also uncover contrasting price‐setting processes by pricing orientation and the balanced used of scientific versus intuitive decision‐making processes.

Pricing is often a neglected element of the industrial marketing mix. This study offers a variety of organizational practices by pricing orientation. The results highlight how best‐in‐class companies that adopted modern pricing practices to derive product prices are organized and how they reach pricing decisions.

This study studies the commonly accepted pricing orientations and links them to organizational structure and decision‐making theory. This study contributes to bridging pricing and organizational theories.

This article aims to address the relationship between price strategies and price‐setting practices. The first derive from a normative tradition in the pricing literature and the latter from a descriptive tradition. Price strategies are visible in the market, whereas price‐setting practices are hidden behind the boundaries of an organization.

The study deals with the relationship between price strategies and price‐setting practices that refer to the use of customer value, competition, and cost information. Hypotheses are tested on survey data on 95 small and medium‐sized manufacturing and service firms in The Netherlands.

The results show that price strategies and price‐setting practices are related because strategies are implemented through price‐setting practices. However, some firms do not pursue any of the strategies indicated by pricing theory, some firms engage in practices for no clear strategic reasons, and some firms insufficiently engage in appropriate practices to implement their strategic choices.

The results are limited to small companies. Researchers should examine why firms may not pursue any price strategy that is offered by pricing theory. They may also focus on organizational learning and pricing capabilities.

Managers need greater awareness about the price strategies they can use, should be cautious about a potential mismatch between price strategies and price‐setting practices, and should reassess whether their firms are capable of engaging in the appropriate practices.

Linking price strategies to price‐setting practices reduces conceptual confusion in the pricing literature and may help to specify the gap between pricing theory and practice.

This study aims to investigate how and why retailers and resellers in sample firms of the informal economy set prices and the performance implications for the firm’s pricing efforts.

The author generated their insights through an inductive qualitative study of four organizations operating within the informal economy in the Nigerian retailing sector.

The study found that some organizations within the informal economy set prices in different ways i.e. negotiated pricing and fixed pricing. The contracting criteria between the retailers and resellers determine the pricing strategy. Contractual terms based on relational ties between both facilitate negotiated price-setting, while contractual terms based on non-relational ties promote fixed pricing. The type of price-setting arrangement of the sampled retailer relates to the organization’s performance within its industry. Particularly, the study found that retailers that adopted negotiated pricing performed above the industry average for their product category. In contrast, the retailers that adopted fixed pricing performed below the industry average for their product category.

As far as the author knows, this is the first study to investigate pricing methods within the informal economy. This is also the first known study to investigate price-setting arrangements between retailers and resellers within the informal economy. Another unique contribution of this paper is that it is the first study that focuses on pricing interactions among business-to-business firms within the informal economy. The study contributes to the work on relational embeddedness, relational contracting and informal economies.

Empirical studies have found that cost-based pricing remains dominant in pricing practice and suggest that practice conflicts with marketing theory, which recommends value-based prices. However, empirical studies have yet to examine whether cost-plus formulas represent the pricing approach or essence.

This study aims to address the factors that explain price setting whereby the cost-plus formula is not just the pricing approach but also the pricing essence. This examination is grounded in a survey conducted on 380 Brazilian industrial companies.

The results show that, for price-makers, the cost-based pricing essence is positively associated with four factors (two obstacles to deploying value-based pricing, company size and differentiation), but it is negatively related to one factor (premium pricing strategy). For price-takers, the cost-based pricing essence is positively associated with four factors (two obstacles to deploying value-based pricing, coercive isomorphism and use of full costs), but it is negatively related to five factors (one obstacle to deploying value-based pricing, company size, competitors’ ability to copy, normative isomorphism and experience).

The key contribution of this paper is demonstrating that cost-plus formulas do not go against the incorporation of competitors and value information. This study reveals that it is possible to set prices based on either value or competitors’ prices while simultaneously preserving the simplicity of the cost-plus formulas. Via the margin, firms may connect costs to information about competition and value. The authors also demonstrate the drawbacks of not segregating companies into price-makers and price-takers and an excessive focus on the pricing approach at the expense of pricing essence.

The purpose of this paper is to examine the effects of R&D manipulation on stock valuation for periods around IPOs. Insider manipulation is the difference in actual R&D change minus predicted R&D change where a negative difference indicates R&D underinvestment.

This study is designed to build on prior IPO research that has found reduced R&D expenditures when insiders lower their ownership. The paper derives an R&D manipulation variable that measures underinvestment in R&D. This variable is used in a regression methodology to test its influence on: IPO stock valuation at various points in time and post‐IPO price changes relative to the offer price.

The paper discovers that greater underinvestment in R&D is associated with greater values during the IPO stock valuation process. This association is reversed when the paper looks at short‐term valuation based on market prices. Only for bubble period IPOs do the paper finds poorer valuations for the long‐term. Larger insider ownership decreases lead to poorer valuations regardless of the period of occurrence. Greater R&D underinvestment and insider ownership decreases both lead to less underpricing.

Like prior research, the paper assumes that knowledge about the change in R&D is known at the time of the offering. Interpretations for long‐run results can be tenuous due to unexpected changes that occur over time.

Investors should note that managers are able to set higher offer prices when they inflate earnings by underinvesting in R&D. Buying at an inflated offer price with R&D manipulation leads to losses in the aftermarket with these losses associated with IPOs that occur during a bubble period.

Misrepresentation during the IPO valuation process affects those who buy shares at inflated prices. This raises ethical questions about the behavior of those involved in the issuance process.

This study is unique in testing how R&D manipulation and changes in insider ownership proportions impact the: IPO valuation process, post‐IPO valuation, and changes in the stock price over time relative to the offer price.

The purpose of this paper is to examine the influence of the dialogue, access, risk assessment and transparency model of value co-creation processes (dialogue, access, risk and transparency) on new service market performance (NSMP) with the mediating role of value-informed pricing in the context of business-to-business (B2B).

The data were collected through a cross-sectional survey of 230 managers of the telecommunications industry in Malaysia and analyzed through structural equation modeling using SmartPLS v.3.3.3 software.

This study found that dialogue and transparency are predictors of NSMP. The findings indicate that value-informed pricing plays a mediating role in the relationship between dialogue and transparency with NSMP.

Disclosing pricing related information, providing up to date information to the customers, making clear to the customers about new offerings would certainly influence value-informed pricing. Thus, managers can enhance customer engagement in the interaction processes to better understand customer expectations of new services and how the new services should be priced.

The link between value co-creation and value-informed pricing has been only conceptualized in literature. This study has opened a new stream of research, examining the relationship of interactional-based value co-creation process with value-informed pricing and NSMP in the context of B2B relationship from providers’ perspective.

Empirical researchers should recognize that opening and closing prices are not simple reflections of underlying fundamental values, as studies of stock price behavior have documented a U‐shaped intra‐day volatility pattern that is a manifestation of noise. While implicit transaction costs and the tactical trading of informed participants are contributing factors, they do not provide a sufficient explanation. The purpose of this paper is to focus on an additional factor – price discovery and present a formulation which allows investors with divergent expectations to respond rationally to each other's valuations, and which implies elevated volatility even when information is common knowledge.

This is a conceptual paper with empirical implications for the dynamic process of price formation in an equity market. The work is motivated by the well‐documented finding that intra‐day stock prices are excessively volatile, especially at market openings and closings. The paper's theoretical construct shows that the volality accentuation can be attributed to the dynamic process of price discovery.

The paper's chief finding is that price discovery is a protracted, path‐dependent process in an environment characterized by divergent expectations and adaptive valuations. The protracted, path‐dependent process of price discovery can account for the observed elevation of intra‐day price volatility.

This is an original research paper. The formulation is a novel and innovative treatement of a divergent expectations, adaptive valuations paradigm.

The purpose of this paper is to investigate the influence of price attribute framing and factors such as urgency and perceived price fairness on customer willingness to pay (WTP) in automated retail settings.

The authors conducted two sets of quasi-experimental scenarios surrounding vending-machine purchase decisions. The first set was analyzed with MANOVA, the second set with choice-based conjoint (CBC) analysis.

When prices are framed positively (as a discount), customer WTP is higher at high published price levels than it is for unframed or negatively framed prices. The effect on WTP holds whether the reference price range is broad (few large increments) or narrow (numerous small increments). In the CBC scenarios, immediate availability of the product was most influential on choice, followed by price and brand effects. These findings held under conditions invoking both urgency and price fairness. Providing an explanation for higher prices increases perceived price fairness.

Further study might assess the presence or absence of interaction effects in the conjoint scenarios.

Managers should consider transparency in dynamic pricing, particularly when the price change is outside the control of the firm. The conjoint scenario results also offer evidence that dynamic pricing will not impact other marketing-mix decisions for fast-moving consumer goods (FMCG) dramatically (availability at point of purchase and presence in the consumer consideration set remain strong influences on choice).

Understanding these effects on WTP could help managers manage perceptions of unfairness and optimize WTP.

A theoretical contribution from this study is that the immediate loss/gain consideration under theories of decision making under uncertainty outweigh considerations such as scarcity urgency or perceived unfairness. Use of conjoint analysis in WTP research, study of dynamic pricing in FMCG setting.

The purpose of this paper is to measure the extent to which selected contextual variables have an impact on the adoption of strategic pricing by industrial service firms, and determine the effect of the adoption of strategic pricing on company performance.

Data were collected from 154 industrial service firms operating in four different service sectors through a mail survey. Moreover, qualitative research through 20 in-depth interviews was carried out.

The study’s main findings indicate that market orientation along with a leading position in the market 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, a positive impact of strategic pricing on company performance was found.

The adoption of strategic pricing requires attention to a variety of factors, while this adoption can improve both qualitative and quantitative aspects of the company’s performance. The significance of these findings notwithstanding, the context of the study does limit generalization of its findings to other industrial service sectors and national contexts.

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