The Organizational Design For Pricing And Its Consequences On Relative Firm Performance

Despite strong evidence of substantial impact on the bottom line, most companies counter-intuitively neglect the pricing function--as do most scholars. Only 2% of all articles published in major marketing journals focus on pricing and scholars have long begged the question of how organizational and behavioral characteristics of firms affect the link between pricing practices and firm performance. To address these practical and theoretical deficits we surveyed 748 professionals involved in pricing at firms from around the world to measure the influence of five organizational factors on pricing orientation and firm performance identified in a prior qualitative phase of our research. The five factors were: 1) Championing behaviors, 2) pricing capabilities, 3) organizational confidence, 4) organizational change capacity, and 5) center-led pricing management. Results demonstrate that all five factors positively and significantly influence relative performance, suggesting that pricing champions able to design organizations and allocate resources in a way that maximizes pricing capability can achieve superior financial outcomes. In aggregate, the five factors promote competitive advantage and comparative firm performance

Pricing as a driver of profitable growth: An agenda for CEOs and senior executives

Most CEOs take a narrow, tactical view of pricing and delegate pricing to lower levels of the organization. This myopic approach is costly, as it prevents companies from realizing their potential. In the hands of the best-run companies, pricing is not a battlefield tactic to win a particular competitive skirmish but a transformative long-term strategy for sustained competitive advantage. We present an agenda of six specific action items that defines how to unlock the power of pricing. CEOs and senior executives, our research suggests, should not set prices, but instead, they should create the context, the capabilities, the behaviors, the infrastructure, and the aspirations that enable their organization to excel in pricing

Strategic B2B pricing

n/

Pricing Orientation in Industrial Markets: The Organizational Transformation To Value-Based Pricing

Of three main orientations to pricing in industrial markets cost-based, competition-based and customer value-based most marketing and pricing scholars consider the latter superior but few firms use it. The literature is silent about how organizational and behavioral characteristics of industrial firms may affect pricing orientation and, more specifically, value-based pricing. Semi-structured interviews with 44 managers of small to medium size U.S. industrial firms yielded insights into firm pricing orientations, processes and decision making patterns. We identified five organizational characteristics common to firms implementing value-based pricing: ability to effect deep transformational change, presence of a champion, skill in diffusing organizational capabilities, organizational confidence, and center-led pricing process specialization. Our data demonstrates that value-based pricing is not simply adopted but internalized through a long, tenuous and deep transformation process supported by an experiential and transformative learning environment