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Industrial product pricing: a value‐based approach

Industrial product pricing: a value‐based approach Purpose – This paper seeks to examine the influence of pricing orientation on the price‐setting process in industrial firms. Design/methodology/approach – 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). Findings – 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. Practical implications – 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. Originality/value – 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. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Business Strategy Emerald Publishing

Industrial product pricing: a value‐based approach

Stephan M. Liozu; Andreas Hinterhuber
Journal of Business Strategy , Volume 33 (4): 12 – Jul 13, 2012
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References (46)

Publisher
Emerald Publishing
Copyright
Copyright © 2012 Emerald Group Publishing Limited. All rights reserved.
ISSN
0275-6668
DOI
10.1108/02756661211242681
Publisher site
See Article on Publisher Site

Abstract

Purpose – This paper seeks to examine the influence of pricing orientation on the price‐setting process in industrial firms. Design/methodology/approach – 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). Findings – 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. Practical implications – 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. Originality/value – 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.

Journal

Journal of Business Strategy – Emerald Publishing

Published: Jul 13, 2012

Keywords: Industrial pricing; Price setting process; Pricing orientation; Pricing decision; Pricing policy; Product costs

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