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Article
Publication date: 1 February 1988

William D. Presutti

Just‐in‐time manufacturing is one of the most important management developments of the last decade and a half. Articles on the subject have virtually flooded the business…

Abstract

Just‐in‐time manufacturing is one of the most important management developments of the last decade and a half. Articles on the subject have virtually flooded the business periodical literature. Yet despite the proliferation of this literature, there are indications that the fundamental implications of this concept as an effective competitive strategy have not been fully grasped by U.S. manufacturers. This article attempts to integrate the manufacturing strategy of just‐in‐time with an important element of the firm's marketing strategy—the price element of the marketing mix. Given the competitive pressures on many U.S. firms, price becomes an increasingly important competitive weapon. Only when the benefits deriving from just‐in‐time show up in a firm's marketing strategy will U.S. firms demonstrate an ability to translate an effective manufacturing strategy into a significant competitive edge.

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Journal of Business & Industrial Marketing, vol. 3 no. 2
Type: Research Article
ISSN: 0885-8624

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Article
Publication date: 27 September 2021

Michael Scholz and Roman-David Kulko

The purpose of this paper is to (1) investigate the effect of freshness on consumers' willingness to pay, (2) derive static and dynamic pricing strategies and (3) compare…

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Abstract

Purpose

The purpose of this paper is to (1) investigate the effect of freshness on consumers' willingness to pay, (2) derive static and dynamic pricing strategies and (3) compare the effect of these pricing strategies on a retailer's revenue and food waste. This investigation helps to reveal the potentials of dynamic pricing strategies for building more sustainable business models.

Design/methodology/approach

The authors conduct an online experiment to measure consumers' willingness to pay for fresh and three-days’ old strawberries. The impact of freshness on willingness to pay is analysed using univariate tests and regression analysis. Pricing strategies are compared using a Monte Carlo simulation.

Findings

The results of this study show that freshness largely determines consumers' willingness to pay and price sensitivity. This renders dynamic pricing a promising strategy from an economic point of view. The results of the simulation study show that food waste can be reduced by up to 53.6% with a dynamic pricing instead of a static pricing strategy in the case that there are as many consumers as strawberry packages in the inventory. Revenue can be increased by up to 10% compared to a static pricing strategy based on fresh strawberries.

Practical implications

This study suggests that food retailers can improve their revenue when switching from static to dynamic pricing. Furthermore, in most cases, food retailers can reduce food waste with a dynamic instead of a static-pricing strategy, which might help to improve their image through a more sustainable business model and attract additional consumers.

Originality/value

This study is the first to analyse the possibility of using food freshness to design a dynamic pricing strategy and to analyse the impact of such a pricing strategy on both, a retailer's revenue and a retailer's food waste.

Details

British Food Journal, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0007-070X

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Book part
Publication date: 19 November 2012

Gerald E. Smith

Advances in technology, operations research, and data driven pricing and marketing are leading pricing strategy into new and untested waters – toward dynamic pricing, and…

Abstract

Advances in technology, operations research, and data driven pricing and marketing are leading pricing strategy into new and untested waters – toward dynamic pricing, and variable pricing strategies, which ultimately require changes in how we view pricing strategy. The dominant view of pricing strategy is that pricing goals, objectives, and strategies should be formulated a priori, and should be consistent with marketing and corporate strategies – deliberate pricing strategy. This chapter argues that firms need to develop new strategic pricing skills that lead to more improvisational, innovative, or adaptive pricing strategies. I call this type of price strategy-making emergent pricing strategy. Innovative pricing strategies that the organization judges, or senses to be effective, are repeated, shared, expanded, and refined into successful pricing patterns that, over time and across situations, become pricing strategy. Thus, rather than specifically designing pricing strategy to achieve a goal, here the organization acts upon a price innovation that seems to make sense for this customer, this market segment, this setting, and this situation, then interprets the outcomes, signals, and reactions that seem to flow from the pricing action, and shares and encourages adoption and adaption by others in the organization. Emergent pricing strategy is particularly useful in unstable, turbulent, and complex product and market environments in which price-sensitive buyers wield significant power and influence.

Details

Visionary Pricing: Reflections and Advances in Honor of Dan Nimer
Type: Book
ISBN: 978-1-78052-996-7

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Article
Publication date: 1 April 2021

Yi Qu, Zhengkui Lin and Xiaonan Zhang

The purpose of this paper is to research the price strategies of online knowledge payment product by considering network externality in the C2C sharing economy.

Abstract

Purpose

The purpose of this paper is to research the price strategies of online knowledge payment product by considering network externality in the C2C sharing economy.

Design/methodology/approach

Considering the characteristics of online knowledge goods and the social network externality of consumers, this study establishes a consumer utility function. On this basis, a multistage game pricing model of online knowledge products is established based on three kinds of network price strategies under a completely competitive market structure. It also analyzes the influence of consumer social network structure and consumer utility on online knowledge product pricing and producer profit, as well as the influence of consumer quantity and discount rate on pricing strategy.

Findings

The consumer social network and consumer utility affect the pricing of online knowledge product under different price strategies. In the growth period of the platform, adopting the price discrimination strategy, the profit of producers is significantly higher than that of other price strategies, and producers should choose effective price strategies for reasonable pricing in combination with their own sales objectives.

Originality/value

This study enriches the literature on the pricing model of online knowledge payment product and owns a practical significance to guide the knowledge producers’ marketing strategies to increase profit.

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Article
Publication date: 15 January 2018

Qingyun Xu, Bing Xu, Ping Wang and Yi He

This paper aims to address the following problems: What are the firms’ optimal pricing and quality policies under three scenarios (no bundling, pure bundling and mixed…

Abstract

Purpose

This paper aims to address the following problems: What are the firms’ optimal pricing and quality policies under three scenarios (no bundling, pure bundling and mixed bundling)? In what condition will one bundling strategy dominate the others? How does the degree of complementarity affect the firms’ decision?

Design/methodology/approach

Using the game theory, this study first establishes three models of bundling strategies: no bundling, pure bundling and mixed bundling and then obtains the optimal prices and quality decisions. This study uses numerical analysis to explore the relationships between the prices (demands and profits) and some key parameters and to obtain some valuable management complications.

Findings

Some interesting and valuable management implications are established: regardless of the degree of complementarity, adopting a pure bundling or mixed bundling strategy is better than separately selling an individual product; a high degree of complementarity leads to reduced profit in the no bundling and mixed bundling scenarios, whereas the condition in the pure bundling strategy is the opposite; and when the degree of complementarity is adequately large, choosing pure bundling strategy is more profitable.

Research limitations/implications

On the one hand, this study does not calculate the profit sharing ratio, and hence, the equilibrium profit sharing ratio can be explored in future work. On the other hand, marketing efforts (e.g. advertising and promotion) can be included in the study.

Practical implications

This study derives the necessary conditions for the most effective bundling strategy that maximizes firm’s profits, and these conclusions can provide a decision reference to the bundling decisions of firms.

Originality/value

First, the optimal bundling strategies in a horizontal supply chain consisting of two firms is considered. Under the pure and mixed bundling strategies, the two firms sell the bundled product by building a cooperative program. Second, both the pricing policies and quality decisions of supply chain members under the different bundling strategies are studied.

Details

Kybernetes, vol. 47 no. 6
Type: Research Article
ISSN: 0368-492X

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Article
Publication date: 1 October 2006

Genessa M. Fratto, Michelle R. Jones and Nancy L. Cassill

The aim of this paper is to investigate competitive pricing strategies of apparel brands and retailers.

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13737

Abstract

Purpose

The aim of this paper is to investigate competitive pricing strategies of apparel brands and retailers.

Design/methodology/approach

The paper begins with a broad discussion of competition by examining Porter's five forces model, and narrows by examining price competition within price tiers in the retail apparel industry according to store format and brands. Included are case studies of apparel retailers and brands incorporating concepts of pricing strategies, brand positioning, and price competition, with a focus on retail channel relationships. The paper analyzes the impact of price competition on apparel retailers and brands, and further examines price tiers as a competitive strategy.

Findings

The study reveals that the concept of price tiers is applicable to apparel retailers and brands. Price tiering is a vehicle for market positioning for the retail apparel industry. Retailers are enacting a price tier strategy by branding their retail store formats or engaging store brands as a vehicle of differentiation for a tier. Retailers and brands can be successful with a price tier strategy, unless they fail to differentiate between tiers on factors other than on price alone.

Research limitations/implications

The lack of relevant price competition literature, relating to the retailer apparel industry, forced the exploration of price competition literature from grocery and automotive sectors.

Originality/value

The paper provides useful information on the impact of price competition on apparel retailers and brands, and also price tiers as a competitive strategy.

Details

Journal of Fashion Marketing and Management: An International Journal, vol. 10 no. 4
Type: Research Article
ISSN: 1361-2026

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Article
Publication date: 1 March 1989

William Giles

In this, the second edition, the experience of actually running amarketing planning process in organisations further updates and revisesthe highly practical emphasis. The…

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1362

Abstract

In this, the second edition, the experience of actually running a marketing planning process in organisations further updates and revises the highly practical emphasis. The need for vision, how to enunciate it, and the interface between various levels of managers are integrated specifically into the process. Further analysis using the SWOT technique is provided together with enhanced insight into maintaining competitive advantage. Essentially a practical manual on running a planning process, the worksheet method has been well tried and tested. The experience of managers who have implemented the process using the first edition is included to enhance the technique′s dynamism and effectiveness.

Details

Marketing Intelligence & Planning, vol. 7 no. 3/4
Type: Research Article
ISSN: 0263-4503

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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…

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1091

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

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Article
Publication date: 6 February 2007

Roger J. Calantone and C. Anthony Di Benedetto

The purpose of this paper is to examine the interaction of pricing strategies with other aspects of launch, in particular, timing, logistics/inventory strategy, and…

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7573

Abstract

Purpose

The purpose of this paper is to examine the interaction of pricing strategies with other aspects of launch, in particular, timing, logistics/inventory strategy, and coordination with support organizations, and the effect on profit and competitive performance.

Design/methodology/approach

The paper presents an empirical study of 215 recent new product launches, focusing on pricing and other strategic and tactical launch decisions and the resulting profitability and competitive performance. Clusters of new product launches are identified and the profitability and competitiveness of each cluster are discussed.

Findings

The paper finds that some clusters are related to greater success than others. The most profitable and competitively successful cluster contained launches supported by solid market research and marked by good timing decisions. By contrast, the least profitable/successful cluster were higher price launches unsupported by adequate research.

Research limitations/implications

The study is limited by the fact that the sampling frame is made up of members of a professional association of product development and management, and may therefore be more representative of “best practice” in new product development (NPD) than of NPD in general. The authors believe the use of the key informant method is justified in this study, however this method has been criticized in the past.

Originality/value

The pricing decision for a new product is sometimes oversimplified as a “high‐low” or “skimming versus penetration” choice. The study finds that the actual effect of pricing on ultimate success is much more complex, and that one must consider not only price level, but also the timing of the launch, the logistics and inventory strategy, the extent of market research, testing, and planning, and so forth.

Details

Journal of Business & Industrial Marketing, vol. 22 no. 1
Type: Research Article
ISSN: 0885-8624

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Article
Publication date: 1 January 2014

Enrique Manzur, Sergio Olavarrieta, Pedro Hidalgo‐Campos and Pablo Farías

The purpose of this paper is to examine two popular price promotion strategiesprice matching guarantees (PMGs) and everyday low prices (EDLP) – and their effects on…

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1236

Abstract

Purpose

The purpose of this paper is to examine two popular price promotion strategiesprice matching guarantees (PMGs) and everyday low prices (EDLP) – and their effects on Chilean consumer behavior in terms of consumer perceptions of low prices, search behavior and purchase intention.

Design/methodology/approach

A quasi experiment with three scenarios was conducted to test price promotion effects. Subjects were instructed to respond a questionnaire that included the dependent variables.

Findings

Results show that EDLP and PMG strategies increase perceptions of low prices and affect purchase intentions. These effects are significantly higher for stores offering EDLP than PMG. However, when consumers are exposed to two or more price promotion strategies (rather than one) they reduce their purchase intentions for a specific store and increase their search intentions.

Research limitations/implications

This is an initial study exploring the effects of price promotion strategies on consumers. Future research could test the hypotheses advanced in the study across different samples and contexts (supermarkets, department stores, convenience stores, and other retailers) and might privilege external validity, using experiments mimicking decisions with real consequences.

Practical implications

Retailers and marketers in Latin America – particularly those companies stressing price or value as their differential advantage – should consider the use of price promotions when designing marketing strategies. On the other hand, retailers should be aware that an intensive use of these of promotions could lead to increases in consumer search behavior.

Originality/value

While findings from the USA suggest that price promotion strategies can be effective in several contexts, there has been a limited number of studies addressing whether such strategies are effective in other countries, particularly in Latin America and emerging nations.

Details

Academia Revista Latinoamericana de Administración, vol. 26 no. 3
Type: Research Article
ISSN: 1012-8255

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