The relationship between customer value and pricing strategies: an empirical test

Abstract

PurposeThe paper seeks to fill a research gap that concerns empirical studies on value‐based pricing in durable consumer goods. It aims to analyse the relationship between value for the customer and market prices in the washing machines market.Design/methodology/approachThe customer value of a sample of 129 washing machine models is assessed through the conjoint analysis technique. It is then compared through a regression analysis to the market prices of the products.FindingsThe regression analysis reveals that the alignment between price and value for the customer is limited (only one of the two subsamples presents a positive dependence among the variables).Research limitations/implicationsThe study lacks explanatory power about the reasons for the misalignment between price and customer value in the investigated sector. The results, moreover, refer to a specific product category and a specific national market, although their representativeness as a mature durable in a mature market suggests a broader relevance of the implications. The size of the samples of the empirical research is also limited.Practical implicationsThe paper provides an example and guidelines to practitioners on how to implement a customer value assessment. It provides practitioners a deeper understanding of the consequences of misaligned pricing, and of the potential of understanding the actual value sources for the customers.Originality/valueThe study empirically assesses the relationship between value for the customer and market prices of a category of mature durable goods. The results support the claim that value‐based pricing, although believed to be superior to other pricing policies, is still not established as a prominent practice. Moreover, the findings contribute to the discussion on the value of environment‐related attributes and their lifecycle monetary impact on the customers. It also identifies another possible obstacle to the adoption of value‐based pricing, i.e. the structure of the market, to be added to the ones reviewed in the literature.