IDEAS home Printed from https://ideas.repec.org/a/ids/ijores/v29y2017i3p295-316.html
   My bibliography  Save this article

A new pricing strategy evaluation model

Author

Listed:
  • Timothy Baker
  • David Collier
  • Vaidy Jayaraman

Abstract

Academics and practitioners agree that better pricing strategies are important drivers of return on investment (ROI), yet this premise has not been fully tested. We develop a new pricing adherence fraction (PAF) and then investigate whether it is related to changes in return on investment for a firm's products. We test this PAF-ROI performance relationship using ten pricing strategies defined and quantified by Noble and Gruca (1999) using logit modelling and regression analyses. Survey results of 385 durable capital goods manufacturers in business-to-business (B2B) markets provide the data for this research. A statistically significant PAF-ROI relationship is found between using the best pricing strategy for a given pricing situation and an increased return on an investment. Confidence interval analysis reveals that pricing mistakes can cost firms up to a 10% decrease in ROI. The PAF methods and procedures for a particular pricing situation allow a current pricing strategy to be compared systematically to the best pricing strategy among ten possible pricing strategies.

Suggested Citation

  • Timothy Baker & David Collier & Vaidy Jayaraman, 2017. "A new pricing strategy evaluation model," International Journal of Operational Research, Inderscience Enterprises Ltd, vol. 29(3), pages 295-316.
    • Handle: RePEc:ids:ijores:v:29:y:2017:i:3:p:295-316
    as

    Download full text from publisher

    File URL: http://www.inderscience.com/link.php?id=84357
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ids:ijores:v:29:y:2017:i:3:p:295-316. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sarah Parker (email available below). General contact details of provider: http://www.inderscience.com/browse/index.php?journalID=170 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.