Product Line Pricing Research Articles

Pricing: policies and procedures

The Nature of the Pricing Process - Market Interpretations of Price - Pricing from the Standpoint of Economic Theory - The Role of Costs in Pricing - Cost-Oriented Pricing - Demand and Competition Oriented Pricing - Pricing Decisions by Manufacturers - Product Line Pricing - Pricing Over the Product Life Cycle - Geographic Pricing Practices - Retail Pricing - Pricing and the Legal Issues - The Pricing of Services - Pricing During Inflationary and Shortage Conditions - Pricing in International Markets

The Profit Benefits of Category Management

The practice of category management (i.e., empolying a single decision maker who is responsible for a firm's product line) has been advocated as a superior alternative to brand management (i.e., independent decision makers who act as independent entrepreneurs within the same firm). The author provides an extremely general product line pricing model that calibrates the potential profit benefits of a coordinated category-level pricing strategy as compared with an uncoordinated brand-level pricing strategy. The model can be used to obtain optimal prices and profits for any general pricing “coalition” between brands—brand management or category management.

Quality Perceptions and Asymmetric Switching Between Brands

Rotating indifference curves are used to induce an income effect that favors superior brands at the expense of inferior brands in a discrete choice model. When calibrated on scanner panel data, the model yields an objective measure of brand quality which is related to the rate of rotation. The model also leads to asymmetric responses to price promotions where switching up to high quality brands is more likely than switching down. The model is capable of nesting the standard logit model, and is similar to a nested logit model when there exists clusters of brands of like quality. The model is used to explore a product line pricing decision where profits are maximized subject to the constraint that consumer utility is maintained.

Effect of Product-Line Pricing Characteristics on Product Evaluations

Examining the issue of product-line pricing from a behavioral perspective, this article reports an investigation of the relationship between the price structure of a product line and consumers' evaluations of a product model within the line. A 2 × 2 × 4 factorial design utilizing multiple dependent variables was conducted and replicated to test hypotheses derived from behavioral research. Results indicate that while the price characteristics of a product line influence consumer evaluations of a product model within the line, the price characteristics do not operate independently; rather, they interact. Further, the research suggests that several dependent variables that are usually considered separately in price research are actually dimensions of similar constructs.

Optimal Product Line Pricing: The Influence of Elasticities and Cross-Elasticities

The authors focus on the determination of optimal prices for products in a product line. Most firms offer more than a single brand, and ultimately are concerned with the overall results of the entire line. The most common approach for addressing this concern has been to model the sales response function and optimize the profit function separately by brand. A model is presented which solves for the optimal product line prices simultaneously. The method requires a model which includes cross-elasticity terms and an estimation method which allows for correlated disturbances (seemingly unrelated regression). This approach is compared with results from a model not including the cross-elasticity terms, and an estimation without correlated disturbances. Inferences for optimal prices from the proposed model indicate different results and potential errors in using the more naive models. The authors provide a method for managers to use in evaluating the importance of critical parameters in their product line pricing decisions.

Optimal Product Line Pricing: The Influence of Elasticities and Cross-Elasticities

Optimal Product Line Pricing: The Influence of Elasticities and Cross-Elasticities

Pricing Research in Marketing: The State of the Art

Price is the only marketing mix variable that generates revenues; all others involve expenditures (or possibly investments) of funds. The effects of price changes are more immediate and direct, and appeals based on price are the easiest to communicate to prospective buyers. However, competitors can react more easily to appeals based on price than to those based on product benefits and imagery. It can be argued that the price decision is perhaps the most significant among the decisions of the marketing mix (strategy) for a branded product. Conventional wisdom suggests that the price decision should be made in consonance with those of other elements of marketing strategy. Despite the high importance of price, academic research on pricing issues in marketing has been modest at best. This has been true for various reasons: researchers have emphasized financial and cost analyses used to reach price decisions within a corporation, there has been greater support for and growth of advertising and product research, research in marketing has relied on behavioral science methodologies, data This paper is an attempt to synthesize the recently published research on pricing issues from the viewpoint of marketing science. The review will consider the relevance of selected trends such as the experience curve, individual choice models, and dynamics of evolution of demand over time on the issues of pricing decisions for products. The focus will be on such issues as the static and dynamic models of pricing (particularly for new products over the life cycle), price discounts, behavioral considerations for pricing strategies, interactions of price and other marketing mix variables, product line pricing, and pricing across a marketing channel. The paper will identify some directions for future research in this important area. * I thank Sharon McCarthy for her assistance in this research and Darius Sabavala, Subrata Sen, and an anonymous reviewer for their comments on an earlier draft of this paper. This work was partially supported by the Summer Research Fund of the Graduate School of Business and Public Administration, Cornell University.

Pricing a Product Line

Many firms confront the recurring problem of pricing strategy for a line of products that are partial substitutes for each other. The difficulty of this problem stems from the complex interactions among the pricing decisions on the several products. A low price for one product may siphon demand away from another as customers realize the advantages of substituting one for the other. Or quantity discounts may induce customers to switch products. Confronting the problem in its full complexity, one realizes that all of the prices and terms must be set jointly to take full account simultaneously of the many interactions. In this paper we address a special case of the product-line pricing problem in which the prices of successively higher products can be determined sequentially. Our aims are quite practical. For example, for one class of models an explicit computational procedure has been programmed for a computer so that a pricing manager sitting at an interactive terminal with a visual display can readily explore the implications of a variety of assumptions. Alternatively, market data generated by a current pricing strategy can be used as input to predict ways in which profits might be improved by altering the array of We study the problem of setting prices for a line of products that are partial substitutes for each other. The main innovation is an application of nonlinear pricing to capture the role of price breaks designed to achieve market segmentation. We focus on products interpreted as machines that differ along a single dimension of quality interpreted as marginal operating cost. The pricing problem is, How should the terms of leases be designed to maximize the lessor's total profit? The net price to the customer may be a nonlinear function of the usage rate. Our results show how to compute an optimal price schedule.

Determining your Price Structure at Home and Abroad

It seems to me that there are two main ways in which the economist can contribute to the solution of the problem which I have been invited to introduce for discussion. First, he can help by developing a systematic approach based on a realistic appraisal and analysis of the issues involved. Second, he can develop and test quantitative research methods, designed to produce data on which pricing decisions may be based. I propose to deal with both of them in general terms before I take up the specific issues to which the title of my paper refers and which are basically those of product line pricing and price discrimination.

Measuring Price Thresholds by Psychophysics and Latitudes of Acceptance

This article reports the adaptation of an experimental technique for establishing response scales for product classes. Experimental results further validate the price-limit hypothesis first confirmed in Europe. Implications for demand estimation, new product pricing, and product line pricing are discussed.

Problems of Product-Line Pricing

Problems of Product-Line Pricing

Problems of Product-Line Pricing

Problems of Product-Line Pricing