Archives posted in: Pricing

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Equifinality and Organizational Design for Improving Pricing Decisions

By Tim J. Smith, PhD December 3, 2013

What decisions should the pricing function be making? Where should a corporation position the pricing function? How should the pricing function be structured? We have been asking this question for past two decades but still don’t have a definitive answer nor a standard template. Why? What is so odd about pricing decisions that makes organizational design choices regarding the pricing function difficult?

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Pricing for Consumption Economics

By Tim J. Smith, PhD November 4, 2013

SaaS, DaaS, IaaS, and other “X-as-a-Service” business models are proven market disruptors in information technology industries. Executives at enterprise IT solution providers are creating, adapting, or adjusting to competitors’ XaaS business models. But successfully implementing an XaaS business model requires a new approach to both pricing and revenue capture for IT services. What is that new approach?

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The Art of Price Discrimination – can Ayn Rand teach us a lesson in pricing?

By Anirban Sengupta November 4, 2013

In traditional sense “discrimination” is a word with a negative connotation.  However, in the pricing context, by discrimination I mean that I will make some customers pay more and some customers pay less for the same product.  However that is pure discrimination and by no means an art.  Discrimination becomes an art only when all the subjects concerned accept the price they pay without a grudge.

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Redbox Experiments with Price Promotions. Shareholders Recoil from Outerwall.

By Tim J. Smith, PhD October 2, 2013

Outerwall Inc. the owner of the Redbox downgraded their performance guidance tipping off a 13% decline in market capitalization. Did investors overreact? And what caused the poor performance in the first place?

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When is Price Discrimination Effective?

By Mary DeBoni October 2, 2013

“Discrimination” is a charged and highly sensitive word in the English language, but is it really that bad when it comes to pricing?

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Value-Based Pricing 101

By Anirban Sengupta October 2, 2013

Despite abundance of available and accessible literature, value-based pricing (VBP) as a concept remains mystified. The key reason is the difficulty of implementation. This article’s aim is to provide the reader a concise review of the ‘do’s and ‘don’t’s of VBP.

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Who Should Control Pricing? Sales, Marketing, or Finance?

By Tim J. Smith, PhD September 9, 2013

Who should oversee pricing decisions? Marketing? Sales? Finance? Research by Homburg, Jensen, and Hahn showed it was none of them, all of them, and it depends.

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Discount the Parts or the Whole?

By Tianyang Zhang & Tim Smith September 9, 2013

When selling things that go together, should the company offer discounts on the individual parts or the whole shebang? Sourav Ray, Charles A. Wood, and Paul R. Messinger examined these questions across 650,000 daily price listings and through customer and manager surveys in a recent Journal of Marketing article. Their results have broad price-management implications.

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Kimberly-Clark and Weber Grills vs. Ailawadi and Farris: Stupid or Smart Pricing?

By Tim J. Smith, PhD August 2, 2013

Kimberly-Clark Corp. (KMB) is “desheeting” its products to improve profitability. Weber Stephen Products LLC avoids price promotions and markdowns on their grills, and yet maintains a dominant market position. These are two rather disjointed activities but they both appear to fall afoul of the suggestions given in a recent Wall Street Journal article by Professor Ailawadi of Tuck and Professor Farris of Darden. Are Ailawad and Farris wrong, are the companies wrong, or can both pairs be right?

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Business Markets, Response Modes, and Price Performance

By Tim J. Smith, PhD July 9, 2013

Having a long list of prospective buyers may be comforting for a salesperson, but a highly applied sales methodology for business markets suggests salespeople should only pursue prospects that fall within two out of four response modes. What are these response modes? How do they affect price performance? And why should salespeople only pursue two of them?

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