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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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63

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.

Details

Kybernetes, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0368-492X

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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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1070

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: 8 February 2013

Paul T.M. Ingenbleek and Ivo A. van der Lans

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…

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21471

Abstract

Purpose

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.

Design/methodology/approach

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.

Findings

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.

Research limitations/implications

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.

Practical implications

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.

Originality/value

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.

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Article
Publication date: 18 July 2019

Mingchun Chen, Zhiying Liu and Chaoliang Ma

Crowdfunding, especially reward-based crowdfunding, has quickly evolved into a commonly used vehicle for innovating entrepreneurs to develop their products. Many…

Abstract

Purpose

Crowdfunding, especially reward-based crowdfunding, has quickly evolved into a commonly used vehicle for innovating entrepreneurs to develop their products. Many crowdfunding platforms allow creators maximum flexibility in terms of the prices and rewards offered in a project to gain sufficient capital. However, creators need to understand how to design project rewards and how to select a pricing strategy, in addition to whether the creator should spend resources on designing multiple rewards of varying quality. The purpose of this paper is to address these issues by answering whether and why there are significant differences in the application of early-bird and versioning pricing strategies in crowdfunding.

Design/methodology/approach

This paper develops a two-stage dynamic game model with incomplete information, proposes a corollary calculated by analyzing a perfect Bayesian equilibrium, and then tests Corollary 1 by empirical analysis.

Findings

Contrary to the findings of other studies, the results show that an early-bird pricing strategy is likely better than a versioning pricing strategy for earning greater revenue in a crowdfunding context, on average. This finding means that creators do not have to spend as much in designing rewards of various qualities; rather, they should only provide multiple price options for high-quality rewards. However, if the heterogeneity of target backers’ valuations and the quality difference between two types of products are adequately high, a versioning pricing strategy may be a good choice for creators.

Practical implications

This paper provides a reference for creators regarding the selection of pricing strategies and the design of reward quality when launching crowdfunding projects.

Originality/value

This paper explains an interesting and practical issue in the design of reward quality and the selection of a pricing strategy after fully considering the role of the crowdfunding all-or-nothing mechanism and special backer behavior.

Details

Asia Pacific Journal of Marketing and Logistics, vol. 32 no. 3
Type: Research Article
ISSN: 1355-5855

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Article
Publication date: 15 March 2013

Jaekwon Chung and Dong Li

The purpose of this study is to compare the impact of multi‐period pricing, as an example of more dynamic pricing and discounting strategy with that of a present less…

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1956

Abstract

Purpose

The purpose of this study is to compare the impact of multi‐period pricing, as an example of more dynamic pricing and discounting strategy with that of a present less dynamic alternative on customer satisfaction and consumers' willingness to make trade‐offs between price and remaining shelf‐life.

Design/methodology/approach

The authors conducted interviews with three food retail managers in South Korea to gather practical information about the management of perishable foods, which informed the design of a survey in which consumers in South Korea were questioned about their perceptions of the two strategies, with respect to nine perishable food products in three categories. The data collected were analysed by one‐way ANOVA and the t‐test.

Findings

The findings of this research present an improved understanding of the impact of a multi‐period pricing strategy on consumer satisfaction and customer behaviour for perishable foods. The conclusions have the potential to significantly assist food retailers to understand the consumers' perspective on the benefits of a more dynamic pricing strategy.

Practical implications

The findings suggest that food retailers can enhance customer satisfaction by offering an earlier but lower discount, and increasing it as perishable food items approach their expiry date, rather than a higher discount when the expiry date is imminent.

Originality/value

The findings in this study are significant since they serve as the first step in measuring the value of dynamic pricing approaches that provide better trade‐off options between price and remaining shelf‐life from consumers' perspectives.

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Book part
Publication date: 24 October 2015

Katharina Maria Hofer, Lisa Maria Niehoff and Gerhard A. Wuehrer

In this paper, we examine the elements of pricing approaches in export businesses and their performance in an international environment. The elements of pricing approaches…

Abstract

Purpose

In this paper, we examine the elements of pricing approaches in export businesses and their performance in an international environment. The elements of pricing approaches consist of cost-based, competitor-based, and value-based decisions made by different levels of management. By providing an integrated, holistic view, we investigate how different types of export-pricing strategies influence export performance, and which elements strengthen or attenuate the outcomes of strategic actions.

Methodology/approach

Using data from a survey of 172 export managers, we test our hypotheses in a two-step approach. First, we use an unsupervised approach to group the export companies and to validate the cluster solution internally and externally. Second, we test our hypotheses regarding export performance.

Findings

The results show that the types of export-pricing strategies are unequally distributed, and the elements of the strategies have different complexities. Export performance varies significantly by type of pricing orientation used.

Details

International Marketing in the Fast Changing World
Type: Book
ISBN: 978-1-78560-233-7

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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 February 2002

Matthew B. Myers, S. Tamer Cavusgil and Adamantios Diamantopoulos

The export‐pricing literature is characterized by a distinct lack of sound theoretical and empirical works. Of the marketing decision variables, pricing has received the…

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5238

Abstract

The export‐pricing literature is characterized by a distinct lack of sound theoretical and empirical works. Of the marketing decision variables, pricing has received the least attention in research despite the continued identification of this issue as an important problem area for firms engaged in export marketing. Businesses competing internationally must develop an effective pricing strategy, as this is a critical factor in their operation. Globalization also requires that management coordinate prices across multiple export markets. Research is thus needed on the empirical relationship between an export‐pricing strategy (EPS) and the factors that influence this strategy, as well as the relationship between EPS and the performance of the export venture. A multidimensional conceptualization of export‐pricing strategy is proposed in order to integrate the various components of an EPS and link it with its antecedents. Theoretical insights and empirical findings from the general pricing literature, as well as executive insights from qualitative interviews, are connected with the conventional export‐pricing and strategy literature into an integrated model, and specific research propositions are offered for future cross‐industry empirical studies.

Details

European Journal of Marketing, vol. 36 no. 1/2
Type: Research Article
ISSN: 0309-0566

Keywords

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