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Disruptive framing in value creation and price setting: Transforming value with strategic frames of reference

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  • Smith, Gerald E.

Abstract

Framing in business is frequently found in the digital economy with dramatic and innovative new products and disruptive value propositions. However, framing in business is not an exclusively digital economic strategy. Creating or revising frames of reference, value propositions, and pricing based on either new or newly framed offerings is a basic strategy skill that brings new differential value creation to customers and new price-setting models to firms. In this article, I define framing and explain its influence on managerial cognition as well as its application to value-based marketing and price setting. Using economic value theory and behavioral economics, I propose steps managers and decision makers can take in an effort to achieve framing innovation as a way to leverage the disruptive competitive advantages that flow from strategic frames of reference in the marketplace.

Suggested Citation

  • Smith, Gerald E., 2020. "Disruptive framing in value creation and price setting: Transforming value with strategic frames of reference," Business Horizons, Elsevier, vol. 63(4), pages 481-491.
    • Handle: RePEc:eee:bushor:v:63:y:2020:i:4:p:481-491
    DOI: 10.1016/j.bushor.2020.03.006
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    1. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    2. Daniel Kahneman & Jack L. Knetsch & Richard H. Thaler, 1991. "Anomalies: The Endowment Effect, Loss Aversion, and Status Quo Bias," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 193-206, Winter.
    3. Levin, Irwin P & Gaeth, Gary J, 1988. "How Consumers Are Affected by the Framing of Attribute Information before and after Consuming the Product," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 15(3), pages 374-378, December.
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    Cited by:

    1. Ohlwein, Martin, 2022. "Same but different - The effect of the unit of measure on the valuation of a unit price," Journal of Retailing and Consumer Services, Elsevier, vol. 66(C).
    2. Liozu, Stephan & Hinterhuber, Andreas, 2022. "Pricing as a driver of profitable growth: An agenda for CEOs and senior executives," Business Horizons, Elsevier, vol. 65(4), pages 457-467.

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