STRATEGIC MARKETING (PBP 60143)

PRICING STRATEGYRESEARCH ARTICLE REVIEW

LIST OF JOURNALS

• Interactions between price and price deal - Kunal SwaniLencore Acoustics Corp., Woodbury, New York, USA, and Boonghee Yoo, Department of Marketing and International Business, Frank G. Zarb School of Business, Hofstra University, Hempstead, New York, USA

• Brand image and customers’ willingness to pay a price premium for food brands - Johan Anselmsson, Niklas Vestman Bondesson and Ulf Johansson, School of Economics and Management, Lund University, Lund, Sweden

• Pricing myopia: do leading companies capture the full value of their pricing strategies? - Manu Carricano EADA Business School, Barcelona, Spain

• Organizational design and pricing capabilities for superior firm performance - Stephan Liozu Weatherhead School of Management, Case Western Reserve University, Cleveland, Ohio, USA, Andreas Hinterhuber Hinterhuber & Partners, Innsbruck, Austria, and Toni Somers Department of MIS, Wayne State University, Detroit, Michigan, USA

• An Empirical Analysis of Determinants of Retailer Pricing Strategy - Venkatesh Shankar Robert H. Smith School of Business, University of Maryland, College Park Maryland, Ruth N. Bolton Owen Graduate School of Management, Vanderbilt University, Nashville, Tennessee

Article 1

Title Interactions between price and price deal

Objective The purpose of this study is to examine the interactive effect of price and price deal. Specifically, it desires to measure how consumers’ behavioural intentions toward the brand are affected for a high-priced brand and a low-priced brand when a price deal is offered.

Problem Statement Many studies found a negative effect of price deals and a positive effect of price on consumers’ behavioural intentions, but few has examined the interactive effect of price and price deals. It would be very important to study how price and price deals interact to affect behavioural intentions in providing insight into how to use price deals.

Research Question 1. How will the positive effect of price interact with the negative effect of price deals?2. Does price level interact with the presence versus absence of a price promotion?

Significance of Research The results help brand managers to recognise the importance of incorporating price premium and to develop a better understanding of what drives price premium in addition to more traditional dimensions as quality and loyalty.

Theoretical & Conceptual Framework

1. Yoo (2000) on Brand equity and Brand loyalty 2. Chen (1998) on Purchase intention, Likelihood of permanent price reduction, Likelihood of regular price inflation2. Grewal (1998) on Perceived quality, Perceived value, Internal reference price 4. Ratneshwar (2001) on Personal purchase goals

Research Design Quantitative using experimental design

Methodology Survey ; Study 1 : real, existing brand PRADA and MOSSIMO female handbag - 80 college female students consists of undergraduate and graduate-level business classes participated. Study 2 : fictitious brand, Unisex G316W Sunglasses - 119 undergraduate and graduate business students (60 females and 59 males).

Main Finding The analysis confirmed a strong interactive effect between price and price deal: price deals do not have a uniform effect across brands but a different effect depending on the price level of the brand. For a high-priced brand, a negative effect of price deals on behavioural intentions (brand equity, brand loyalty, and purchase intention). For a low-priced brand, a positive effect of price deals on each of the same behavioural intention variables was found.

Contribution to The Body of Knowledge

This study expands understanding of consumer behaviour toward a brand when consumers have to process the information of price and price deals simultaneously. A significant behavioural difference when there a price deal exists in comparison to no-price deal is found, however, the direction of the behaviour was reverse depending on the level of price.

Contribution to Industry A managerial implication is that high-priced brands should avoid price deals, whereas low-priced brands could benefit from price deals.

Suggestion Marketers have to rethink the promotional strategies for their brands high-priced brands (typically, luxury brands) target those who see image as their goal of purchase. For low-priced brands, the opposite is the case. The goal of the consumer is the pursuit of value for the money, which can be much more successful with price deals, consequently increasing the behavioural intentions.

Limitation The study only relied on two product categories (handbag and sunglasses) and one type of sample (undergraduate and graduate business students) and based8 on experiments not reality.

Future Research Future research needs to study different types of products and samples to enhance the external validity of the findings. Real market data that recorded price changes and price deal offerings over time need to be examined to confirm the findings of the study.

Article 2

Title Brand Image And Customers’ Willingness To Pay A Price Premium For Food Brands

Objective The aim is to understand customers’ willingness, or unwillingness, to pay a price premium in the market for consumer packaged food and what kind of brand images can be used in order to achieve a price premium in Sweden.

Problem Statement Perceived quality alone cannot explain the price premium differences between manufacturer brands and store brands

Research Question What are other price premium determinants beside quality? How significance the determinants to price premium?

Significance of Research The results help brand managers to recognise the importance of incorporating price premium and to develop a better understanding of what drives price premium in addition to more traditional dimensions as quality and loyalty.

Theoretical & Conceptual Framework

1. Aaker (1996), Anselmsson et al. (2007), Yoo and Donthu (2001) on Brand awareness , Anselmsson et al. (2007); Netmeyer et al. (2004); Yoo and Donthu (2001); Trijp (1995); Kalogeras et al. (2009); Khan and Mahmood (2012); Sethuraman (2000) on Perceived quality, Anselmsson et al. (2007); Brunsø et al. (2002); Oude Ophuis and Van Trijp (1995) on CSR, Anselmsson et al. (2007); Ahmed et al. (2004); Arnoult et al. (2010); Unahanandh and Assarut (2013) on Home country origin, Anselmsson et al. (2007); Tikkanen and Va¨ a¨ riskoski (2010); Lassar et al. (1995); Hall (2008) on Social image , Anselmsson et al. (2007); Netemeyer et al. (2004); Kalra and Goodstein (1998) on Uniqueness

2. Qualitative, explorative and conceptual study by Anselmsson et al. (2007) on the five dimensions of price premium determinants: awareness, perceived quality, loyalty, uniqueness and non-product-related brand associations including associations to corporate social responsibility (CSR), social image and origin is used in measuring customers’ willingness to pay for food brands.

Research Design Quantitative survey of brand images

Methodology Survey; 354 respondents age between 20 and 74 years old randomly chosen nationwide

Main Finding The survey shows that quality is a significant determinant of price premium, but adding other image dimensions doubles the predictability and understanding about price premium. The strongest determinants of price premium are social image, uniqueness and home country origin. Other significant determinants are corporate social responsibility (CSR) and awareness.

Contribution to The Body of Knowledge

The study shows that the images that drive loyalty not necessarily are the same as those that drive price premium. This suggests the importance of the need to distinguish between brand associations that drive price premium and others that drive loyalty. Researchers and managers need to be more precise on what the objective of building a strong image should be, to obtain a price premium, loyalty or both.

Contribution to Industry The results help brand managers to recognise the importance of incorporating price premium and to develop a better understanding of what drives price premium in addition to more traditional dimensions as quality and loyalty.

Limitation/ Suggestion This study is limited to the top brands in each category, A second limitation and possibility for future research is to delve further into the asymmetry of brand image elements and a future study could take the investigation further down the line and study determinants of actual price premiums, margins and purchase behaviours.

Future Research Future research could go further into understanding determinants of price premium, perhaps into more status or high-involvement related categories such as olive oil, cheese or marmalade, or perhaps by using other more unconventional research methods in order to gain even better understanding.

Article 3

Title Pricing Myopia: Do Leading Companies Capture The Full Value Of Their Pricing Strategies?

Objective The purpose of this paper is to report an investigation of pricing determinants in large companies manufacturing capital goods in France.

Problem Statement What kind of available variables could be use by pricing managers in identifying pricing opportunities through linking price strategies to the firm’s environment, i.e. pricing determinants?

Research Question 1. How to use the information already available in a firms’ environment in order to identify key variables influencing pricing strategic choices?2. What are ways pricing decision makers rely on environmental determinants when making their pricing decisions?3. How to provide a more realistic description of pricing practices that embrace the complexity of observed pricing decision making

Significance of Research To propose a model that uses variables already available to pricing managers in order to identify pricing opportunities by linking pricing strategies to the firm’s environment, i.e. pricing determinants.

Theoretical & Conceptual Framework

1. Noble and Gruca’s (1999) on pricing strategies, Ingenbleek et al.’s (2003) on contingent approach to pricing strategies, Forman and Hunt’s (2005) on international pricing practices , Bang-Ning Hwang et al. (2011), Farres (2012), Gale and Swire (2012), Jobber and Shipley (2012), Johansson and Andersson (2012), Smith (2012), Ingenbleek and van der Lans (2013) on practical pricing research

2. Conceptual framework were identified in the literature on pricing practices and more precisely by operating a distinction between environmental variables (determinants), decision making (pricing strategy and price and product-line structures) and its consequence in terms of price level. A process-based approach of decision making (pricing strategy and price and product-line structures) is adopted

Research Design Quantitative and using a conceptual framework - a process-based approach of decision making

Methodology Questionnaire survey; 98 respondents (Directors of Marketing, Sales Managers, Product Managers and Pricing Managers, depending on who was in charge of pricing within the firm) from firms which among the largest manufacturing companies in France.

Main Finding The results show that firms rely on environmental determinants as indicators of their pricing flexibility. These indicators operate as pricing levers: a good position on these variables gives firms more pricing power. But in the vast majority of the cases, companies extensively relied on competitive conditions instead of taking advantage of a favourable position, described as pricing myopia.

Contribution to The Body of Knowledge

The conceptual framework facilitates an integration of separate constructs (normative insights vs descriptions), extends previous studies considering the structure of pricing determinants, and preserves the process nature of pricing decision making through a more realistic representation.

Contribution to Industry For managers, this approach should allow inter-firm comparisons. Pricing is always thought of as firm-specific. Reducing this complex process to a set of key sequences, and identifying contingencies that affect the choice of a particular decision or strategy is highly relevant for pricing managers.

Suggestion/ Limitation/ Future Research

Managers usually use quite simple procedures, or routines, to set their prices. More complex methods, such as non-linear pricing, or bundling, are not really used inpractice. If traditional methods still prevail, like cost-plus for example, managers in big companies in France seem to rely heavily on neutral pricing, to match competitors’prices. This finding potential attribute to price rigidity, i.e. the fear of taking the price leadership in a low market growth rate context, or of starting a price war.

Article 4

Title An Empirical Analysis Of Determinants Of Retailer Pricing Strategy

Objective The purpose of this study is to investigate the following focal research question: How are retailers’ pricing strategies customized for different brands, categories, stores, chains, markets, customers, and competitive situations?

Problem Statement Retailers face a complex task in formulating pricing strategies and tactics for multiple products in today’s competitive environment.

Research Question 1. How are competitors’ marketing efforts—particularly price and deal decisions—related to retailer pricing? 2. What factors are most important in retailer pricing decisions: category, brand, and market characteristics—or competitor mktg efforts?3. What is the role of brand characteristics, such as brand advertising and brand equity, in pricing strategy? 4. How do category factors, such as storability and necessity, affect pricing strategies? 5. How do characteristics of the store, such as outlet size and category assortment, influence retailers’ pricing decisions?6. How do pricing strategies vary across chains and markets? 7. What is the effect of consumer sensitivity to price changes or deals on retailer pricing for each brand at a store?

Significance of Research

This study enable readers to understanding the relative importance of customer, competitor, and other factors in determining retailer pricing strategies, and characterize how retailers make pricing decisions under different conditions.

Theoretical & Framework

1. Hoch (1994) on price consistency 2. Alba (1994), Tellis and Zufryden (1995) on price-promotion intensity2. Fader and Lodish (1990), Inman and McAlister (1993) on Price-Promotion Coordination 3.Hoch (1994) , Bolton (1989) on Relative Brand Price

Research Design Quantitative analysis

Methodology Test on six categories of consumer-packaged goods in five U.S. markets; consist of 17 chains and 212 stores—obtained from ACNielsen and Co. and Info Resources, Inc.

Main Finding Competitor factors explain the most variance in retailer pricing strategy. Only in the cases of price-promotion coordination and relative brand price do category and chain factors explain much variance in retailer pricing.

Contribution to The Body of Knowledge

This paper is the first quantitative study to link both organizational confidence and pricing capabilities to firm performance. The study contribute to the literature of organization theory by suggesting key organizational antecedents of pricing capabilities as well as of organizational confidence.

Cont to Industry These findings are useful to retailers profiling alternative pricing strategies, and to manufacturers customizing the levels of marketing support spending for different retailers

Limitation/ Suggestion/Future Research

i. Empirical analysis did not include trade deal and coupon data because they were not available for all stores and categoriesii. Future research might study managerial perceptions of deal magnitudes and competitor reaction elasticity iii. Based on the implications, a model of optimal retailer pricing that extends the promotion model of Tellis and Zufryden (1995) and new empirical industrial organization

(NEIO) models that include competing retailer decisions would be desirable. iv. The analysis could extend to jointly consider manufacturer pricing decisions. Such as data on manufacturer costs.v. The diversity, it would be desirable to replicate the study on more categories and markets and use nonscanner data (e.g., external measures of brand equityvi. To study retail market competition which is less stable. And to include on retail margins and promotion pass-through aspects in future studies.vii. Study of pricing practices such as price bundling, multiple-unit pricing, price lining, and odd pricing would be fruitful avenues for future research

Article 5

Title Organizational Design And Pricing Capabilities For Superior Firm Performance

Objective The purpose of this paper is to test the relationship between organizational antecedents, pricing capabilities, and firm performance.

Problem Statement Research on the role of pricing capabilities is largely confined to qualitative studies, little is known about the organizational antecedents of pricing capabilities.

Research Question How to increase firm performance via pricing?

Significance of Research

This paper is the first quantitative study to link both organizational confidence and pricing capabilities to firm performance. The study contribute to the literature of organization theory by suggesting key organizational antecedents of pricing capabilities as well as of organizational confidence.

Theoretical & Conceptual Framework

1. Organizational decision-making theory (March, 1994; March et al., 1958) 2. The behavioural theory of the firm (Cyert and March, 1992) 3. The resource-based view (RBV) of the firm (Wernerfelt, 1984).4. Organizational theory on the internal structure and the relationships between its units and departments (Grant, 1996), 5. Organizational structure (Aiken et al., 1980; Hall, 1977; Hall et al., 1967; Miller et al., 1988), 6. Organizational efficacy (Bandura, 2000; Bohn, 2001), 7. Organizational champions (Howell and Shea, 2006; Schon, 1963), 8. Organizational change capacity (Judge and Douglas, 2009).

Research Design Quantitative analysis

Methodology Quantitative survey of 748 managers from mostly large companies globally.

Findings The five key organizational resources (the 5 Cs) – centre-led price management, organizational confidence, championing behaviours, organizational change capacity, and pricing capabilities – positively influence firm performance. Furthermore, centre-led price management, organizational change capacity, and championing behaviours act as important antecedents to pricing capabilities and, except for the former, to organizational confidence.

Contribution to The Body of Knowledge

This study shows, for the first time using a quantitative survey with global respondents, that organizational confidence is directly related to firm performance. And, highlight the role of organizational change capacity for pricing purposes: organizational change capacity positively and directly influences pricing capabilities, organizational confidence, and firm performance. Our study also confirms key findings from earlier studies on the importance of CEO championing.

Contribution to Industry

Pricing managers, can drive firm performance via pricing through the following five factors (the 5 Cs): center-led price management, organizational confidence, championing behaviours, change capacity, and pricing capabilities to increased firm performance.

Limitation/Suggestion

i. Subjective performance measures are widely used in the strategy literature as well as in the marketing literature. Nevertheless, subjective performance measurement is based on perceptions and is thus potentially biased.

ii. The study tried to minimize common method bias through statistical analysis but cannot rule it out entirely.iii. Concern on the sample and response rate.

Future Research Need to know more about the role of center-led pricing management in increasing firm performance, need to examine where and when organizational confidence starts to hurt performance is a potentially very fruitful research endeavour and the question on whether organizational confidence can act as de facto substitute for product differentiation or privileged customer relationships.