New industrial service pricing strategies and their antecedents: empirical evidence from two industrial sectors

New industrial service pricing strategies and their antecedents: empirical evidence from two... Purpose – The purpose of this paper is to investigate the conditions that led to the adoption of the three new industrial service‐pricing strategies, namely skimming pricing (i.e. a high initial price), penetration pricing (i.e. a low initial price), and pricing similar to competitive prices. Design/methodology/approach – In order to achieve the study's research objectives, data were collected through a mail survey from 129 transportation and 48 information technology companies. Moreover, 20 in‐depth personal interviews were conducted in the initial phase of the research. Findings – Analyzing data from two industrial sectors, the study concludes that skimming pricing and penetration pricing relate to the company's corporate and marketing strategy and the service characteristics, while market conditions influence the adoption of pricing similar to competitive prices. Research limitations/implications – Given the limited number of the sectors investigated in the current study, the research results may not be easily applicable to other industrial service contexts. Practical implications – The findings reflect the complexity and multidimensionality of new industrial service pricing. Thus, a single mode for pricing decisions does not seem to exist. Given the uncertainty facing industrial firms when making price decisions, especially with reference to new services, a balanced approach paying attention to both inward‐ and outward‐looking determinants can ensure the effective price determination. Originality/value – The originality of the paper lies in the fact that it constitutes the first attempt to examine empirically the aforementioned conditions in an industrial service context. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Business & Industrial Marketing Emerald Publishing

New industrial service pricing strategies and their antecedents: empirical evidence from two industrial sectors

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Publisher
Emerald Publishing
Copyright
Copyright © 2011 Emerald Group Publishing Limited. All rights reserved.
ISSN
0885-8624
DOI
10.1108/08858621111097184
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this paper is to investigate the conditions that led to the adoption of the three new industrial service‐pricing strategies, namely skimming pricing (i.e. a high initial price), penetration pricing (i.e. a low initial price), and pricing similar to competitive prices. Design/methodology/approach – In order to achieve the study's research objectives, data were collected through a mail survey from 129 transportation and 48 information technology companies. Moreover, 20 in‐depth personal interviews were conducted in the initial phase of the research. Findings – Analyzing data from two industrial sectors, the study concludes that skimming pricing and penetration pricing relate to the company's corporate and marketing strategy and the service characteristics, while market conditions influence the adoption of pricing similar to competitive prices. Research limitations/implications – Given the limited number of the sectors investigated in the current study, the research results may not be easily applicable to other industrial service contexts. Practical implications – The findings reflect the complexity and multidimensionality of new industrial service pricing. Thus, a single mode for pricing decisions does not seem to exist. Given the uncertainty facing industrial firms when making price decisions, especially with reference to new services, a balanced approach paying attention to both inward‐ and outward‐looking determinants can ensure the effective price determination. Originality/value – The originality of the paper lies in the fact that it constitutes the first attempt to examine empirically the aforementioned conditions in an industrial service context.

Journal

Journal of Business & Industrial MarketingEmerald Publishing

Published: Dec 21, 2010

Keywords: Pricing; Pricing policy; Industrial services

References

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