An Empirically-Validated Framework for Industrial Pricing
Noble, P. M., Gruca, T. S. (1998)
ISBM Report 9-1998, Institute for the Study of Business Markets, The Pennsylvania State University
We propose and test a parsimonious and comprehensive two-level framework for industrial goods pricing which allows for multiple pricing strategies for a single product. We identify a reduced set of cost, product and information conditions determining which strategy type (new product, competitive, product line,cost-based) is optimal. We further identify a set of unique determinants under which a given principal strategy within each type is optimal. For example, the competitive pricing strategy type (leader, parity or low cost supplier) should be used in the later stages of the product life cycle. Leader pricing should be used by firms with high market share whereas parity pricing should be used by firms with high costs....