a strategic pricing framework

A Strategic Pricing Framework Cannon, Hugh M.; Morgan, Fred W. The Journal of Business & Industrial Marketing; Summer/Fall 1991; 6, 3,4; ABI/INFORM Global pg. 59

A STRATEGIC PRICING FRAMEWORK Hugh M. Cannon Fred W. Morgan

This article presents a strategic pricing framework which conceptualizes pricing outcomes or objectives as a function of pricing strategies constrained by environmental factors. The framework is derived from the pricing literature and offers marketers a model to explain and enhance pricing decision-making.

Introduction Pricing decision-making is one of the oldest marketing topics, drawing significantly on the economics literature, which certainly predates most marketing pricing analyses. Other disciplines, including psychology and sociology, have also contributed to the development of strategic pricing material, incorporating both

Hugh M. Cannon is the Adcraft/Simons-Michelson Professor of Advertising at Wayne State. He received his Ph.D. and M.B.A. degrees in marketing from New York University and his A.B. degree from Brigham Young University. He is a frequent contributor to the advertising and marketing literature. His current research interests include methods by which decision makers acquire and utilize marketing knowledge. Fred W. Morgan is a Professor of Marketing at Wayne State University, where he has been a faculty member since 1977. He earned his Ph.D. and M.B.A. degrees in Marketing from Michigan State University and a B.S. in Industrial Management from Purdue University. His primary research interests focus upon assessing the strategic impact of the legal environment, particularly product liability developments, on marketing decision-making.

Vol. 6 No. 3-4 SummerjFalll991

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

59

II

I

THE JOURNAL OF BUSINESS AND INDUSTRIAL MARKETING

descriptive and highly quantitative research. Despite such an extensive research tradition, consensus regarding pricing strategies has not been demonstrated, and therefore pricing frameworks have recently been reviewed.zs,3o

Cost-plus pricing can lead to similar prices across firms with similar cost structures. Many contributions have been made to the area in the past 25 years, although the varied sources and approaches have brought problems with overlapping and inconsistent terminology.37 For example, one author distinguishes among cost-, demand-, and competition-oriented pricing approaches, as well as productline and new product pricing.z Others developed a framework that includes new product, product-line, price change, and price structure models.27 Finally, a typology has been proposed consisting of differential, competitive, and product-line pricing strategies.37 These conceptualizations, as well as others, attempt to provide normative frameworks that suggest conditions under which a particular pricing strategy is appropriate, indeed, necessary. For instance, one strategy seeks to develop a theory in which "A particular pricing strategy is shown to be the only one that can resolve the problem, given the demand, cost, competitive, and legal environment. " 7 This article, like these earlier efforts, offers a strategic pricing framework. This framework, however, is presented in a decision-ready format. That is, it presents an organized set of decision rules suggesting what pricing approaches would be most appropriate under different environmental conditions in order to achieve given objectives. This research uses an adaptation of a framework previously developed which is robust enough to handle problems such as new product, product-line, and differential pricing as special cases of a more general approach.z.z3

First the strategic pricing framework will be briefly described. Then, the alternative pricing methods for achieving the desired outcomes will be presented. Third, the rules for evaluating alternative pricing methods will be developed. Finally, various outcomes or pricing objectives will be discussed.

The Pricing Framework The model suggested here has been formalized in Figure 1. The decision-maker must consider the various rules (R1-R6) in the sequence presented in Figure 1 to arrive at a pricing method (P1-P6). Each terminal branch contains a set of pricing methods or approaches. Where the set contains more than one alternative, the actual selection would depend upon how the company prioritizes the five possible pricing objectives (01-05).

Pricing Methods or Approaches A number of pricing methods have been suggested:z3 (1) target-profit, (2) cost-plus, (3) perceived-value, (4)going-rate, (5) sealed-bid, and ( 6) negotiated pricing. These six methods can be viewed as controllable decisions from the firm's standpoint.

Target-Profit Pricing(Pl) Here the price required to achieve profit objectives is determined on the basis of sales volume forecasts.34 This is the prototypical cost-oriented approach to pricing wherein the firm attempts to establish a price that will yield a so-called desired return. While the development of several different analyses based on various assumptions regarding price elasticity seems to be wise, 23 it can be quite difficult to estimate.36 One of the major advantages of target-profit pricing is that it requires no estimate of price elasticity beyond the notion that demand will be relatively inelastic for the range of prices being considered. Cost-Plus Pricing (P2) This term has been used to signify several pricing approaches. Many of the variations

60

---------------------------------------~------------


A STRATEGIC PRICING FRAMEWORK

Figure 1 A Stategic Pricing Decision Model Does the custamer merit individual consideration?

Does the custamer know monetary value?

Does the price influence custamer demand

Does the firm have demandrelated 'information?

Are there close substitutes against which price is compared?

R4

R5

R3

Rt

R2

Will customers favor competitors for nonprice/quality reasons? R6

yes-P5

P5,P6 ,... yes

no-P5,P6 P2, P3, P4 P2, P3, P4 -yes P2, P3, P4 ,-.yes

[yes P2,P4, no

[yes

P2,P4

no Pl, P2, P3,P4

~yes no Pl, P3, P4 --no Pl, P2, P3,P4

no

P2, P3, P4 P2,P3

[yes

[yes no

no P2,P4

P2, P4, ...-yes

[yes no [yes no

'-nO Pl, P2, P4

Pl, P2, P4

~yes "-no Pl, P4

Pl: P2: P3: P4: P5: P6:

Target-profit pricing Cost-plus pricing Perceived-value pricing Going-rate pricing Sealed-bid pricing Negotiated pricing

no P2,P4

01: 02: 03: 04: 05:

P2 Pl, P2, P3,P4 Pl, P2, P3 P2,P4 P2 P2, P4 P2

no

Pl, P2 P4 Pl, P2

[yes

P2,P4

[yes

no

P2

Profit Consumer satisfaction Competitive vulnerability Strategic consistency Simplicity

61


II I


grow out of the accounting issues inherent in the profit equation. Cost-plus also refers to government contracting and regulated utilities' pricing, essentially the same as target-profit pricing.

A firm that practices target-profit pricing might gouge consumers who have inelastic demand in order to meet profit objectives during times of slack. Here cost-plus pricing refers to the use of a standard mark-up on unit costs, based on company or industry norms. This approach differs from target-profit pricing in that the profit objective is expressed in terms of unit costs.27 While these are not necessarily variable costs, they are generally treated as such and are relatively stable for planning purposes. Cost of goods might, for instance, include fixed costs, but the transfer price charged to marketing does not fluctuate dramatically according to variations in volume. Cost-plus pricing can lead to similar prices across firms with similar cost structures.

Perceived-Value Pricing (P3) This approach involves pricing on the basis of the monetary value a product has for target customers. It is a demand-oriented method which assumes that a firm can determine what people are willing to pay for a product and its various forms. The company then designs the so-called optimal formulation of the product,ts if consumers' trade-offs between price and quality can be described.to,zs Another approach takes the product as given, hence estimating demand and profit resulting from several different price levels.zo Whereas the former approach assumes that all target customers perceive a given product to have the same value, this latter method assumes a distribution of perceived values resulting in elasticity of demand.

Going-Rate Pricing (P4) With this method the firm charges basically the same price as key competitors, depending upon relative market strength. Thus a firm's internal cost structure is secondary to industry practices. A highly differentiated company will charge a price above the going-rate, while a price-oriented firm will sell for less than the going-rate. 33 The differences are established by implicit industry norms that presumably reflect "the collective wisdom of the industry as to the price that would yield a fair return and not disturb industrial harmony. "23 Sealed-Bid Pricing CPS) Sealed-bid pricing results in a price selected on the basis of cost considerations and expectations about what competitors will do.z.26 This approach is based on the expected profit likely to be generated from a particular bidding strategy.3z The sealed-bid model is unique in that the buyer rather than the seller determines the approach. It is considered a pricing strategy because a company might (1) seek out customers who request sealed bids or (2) encourage its customers to take a sealed-bid approach. Negotiated Pricing (P6) Here the price is established through price/service negotiations with an individual customer. This is a profit-oriented method whereby the negotiation process presumably seeks to work out an optimal price for both buyer and seller on a case-by-case basis.3s Other Pricing Approaches These pricing alternatives are by no means the only ones available in the literature. Several different frameworks give special consideration to new product, product-line, and differential pricing. New Product Pricing

New product pricing generally focuses on skimming versus penetration strategies.Z,37 These can be viewed, however, as special cases of target-return and perceived-value pricing

62



respectively. The former method "assumes relatively inelastic demand at the initial stages of a new product's life cycle .... They attempt to recover fixed costs in a hurry, with prices lowered later as the production costs decline."z The whole notion of target-return is to determine what price the company will have to charge, given the implicit assumption of inelastic demand, to meet profit objectives within a given period of time for a projected level of demand.

Perceived-Value Pricing is demandoriented. Penetration can be seen as a special case of perceived-value pricing. The company seeks to preempt competition by charging a price that is low enough to allow a profit only if the item sells a relatively high volume. Expecting a high volume in response to a low price assumes a knowledge of how people will respond to a price cue.3 7,42 This is the requirement for one type of perceived-value pricing. Product-Line Pricing

Product-line pricing is concerned with implications of pricing factor interactions among products within a product line.z.z7,37 While these concerns are important for the relative prices of products within a line, the relative pricing decision can be seen as a set of adjustments to a broader pricing decision regarding the entire line.39 The lowest and highest priced products in the line are usually most significant in determining the overall price of the line.3t These must be established through other (nonproduct-line pricing) methods,z7 such as those suggested in this article. Differential Pricing

Differential pricing,z6,37 or price discrimination,z.z7 is a method whereby the marketer charges a different price to different segments of the market. The problem, however, is not so much one of pricing as it is how to administer the differential scheme without alienating customerst7 or violating legal restrictions.4o The

approach to establishing an ideal pricing strategy for each segment is no different from a more general pricing problem.27

Rules for Evaluating Strategic Pricing Alternatives The uncontrollable factors or states of nature provide a basis for developing rules to establish which pricing strategies are feasible in a given situation. Six fundamental rules are integral to the present framework and are discussed in the context of Figure 1.

Scale Rule (R 1) Are purchases large enough to merit pricing separately for individual customers?z7 If order quantities are relatively small, alternatives P5 and P6 can be eliminated from the feasible set, since both involve special pricing for each customer. For example, IBM may be unwilling to accept a solicitation for bids from a small company wanting to purchase a single PC for a secretary. Consumer Knowledge Rule (R2) Are customers able, or can they be enabled through promotion, to evaluate the monetary value of a product?zt If not, alternative P3 can be eliminated from the feasible set because it requires customers to recognize differences in value for different price levels. Customers will usually have some sense of value in that there may be a very large range throughout which they do not want to be overcharged. But they may have no real idea how to value a product.zz,z9 For example, a co-author may not know how to price his or her services to revise a textbook. Demand Rule (R3) Does price play an important role in consumers' purchase decisions?t6 If so, alternative Pl can be eliminated from the feasible set since it assumes demand as a given, regardless of the price. a For example, GM may not be able to use target-profit pricing if it leads to an increase in automobile prices, causing con63


1

1

I


sumers to postpone purchases, and hence driving down volume and resulting in GM's not meeting its profit objectives.z7

Information Rule (R4) Are company executives able, or can they be enabled through market research, to accurately determine price/value evaluations and levels of demand?? If not, then alternatives P1 and P3 can be eliminated because P1 requires a precise estimate of demand and P3 requires an estimate of how consumers will respond to different price-product combinations. Competitive Substitute Rule (R5) Are there other products or brands in the category that provide relatively close substitutes against which prices may be compared?t5,41 If not, then alternative P4 can be eliminated from the feasible set because it depends upon competitive prices as benchmarks against which to compare prices. For example, a public utility gas company may not be able to utilize going-rate pricing when no direct substitutes exist for its services. Patronage Rule (R6) Will customers favor competitors for nonquality or nonprice reasons such as interpersonal ties, reciprocal agreements, or firm size and reputation?4 This rule applies specifically to situations where prices are developed for individual customers. 3 If customers show preferences for other suppliers for patronage reasons, alternative P6 can be eliminated since the company is not likely to receive a fair hearing. For example, a new company might have trouble breaking into the established network of an industry even though its products represent a superior price/quality value to customers. Note that this rule is weaker than the others in that a firm might try to change the states of nature rather than the pricing method. Instead of avoiding negotiated pricing, a company may seek to address the specific issues that preclude it from patronage by prospecting for industry contacts, making aggressive sales presentations, or following up sales with thor-

ough post-sale customer service.

Using the Pricing Model by Applying Pricing Objectives or Outcomes As can be seen in Figure 1, the pricing model helps decision-makers to focus on certain pricing methods, depending upon how they answer the six rule-evoking questions. In many cases, however, the model admits multiple solutions for a given pricing problem. The decision-makers must decide how to rank the feasible pricing methods implied by the model. The classical economic argument is that the ultimate outcome of pricing decisions is maximum attainable profits. However, the marketing concept implies that a single-minded focus on profits, in addition to being difficult to operationalize,B,13,14 could be self-defeating in a dynamic market. Therefore, perhaps process or intermediate objectives should be considered.19 Analyses of the pricing objectives that firms admit to using lead to several classes of objectives, including (1) profit, (2) consumer satisfaction, (3) competitive vulnerability, (4) strategic consistency, and (5) simplicity.t.z4

Profit (01) Profit is the direct financial consequence of the pricing decision, either in the long or short term. The basic underlying model is the profit equation, shown in simple form as follows: Profit = Q (P - VC) - TFC, where P = price VC = variable costs per unit Q = quantity TFC = total fixed costs This model oversimplifies the cost variables, because in practice VC will often include fixed costs per expected unit of production and exclude variable marketing and administrative costs. At other times, VC will incorporate direct costs per unit including all fixed and variable costs that are directly attributable to an item, averaged over the expected number of

64

-----------------~-


I

I


units of production. For example, if the marketer offers special deals or discounts from regular market prices, assumptions must be made about the length of the deal period and the holding cost per unit.6 Corporate internal accounting practices thus affect the details of the profit equation.

New product pricing generally focuses on skimming versus penetration strategies. If profit maximization is the objective, a firm would rank the decision rules as follows: P3, P4, Pl, and P2. Perceived-value pricing (P3) enables a company to select an optimal price/volume combination. Going-rate pricing (P4) is simply an approximating method for estimating consumer demand needed to implement perceived-value pricing. Target-profit pricing (Pl) maximizes profit only if the profit objective is well defined. Cost-plus pricing (P2) is a form of target-profit pricing but is insensitive to variations in fixed costs.

For customized pricing situations, profit maximization would depend on the relative strength of the company. If a firm has a strong and loyal customer base, it can negotiate (P6) prices rather than limit itself to sealed-bidding (P5). However, if the firm has a weak market position, it might have to make price concessions during negotiations that would not be necessary in sealed-bidding.

Consumer Satisfaction (02) Economic theory implies that consumers' satisfaction levels will be reflected in terms of their demand levels, the Q variable in the profit equation. Thus, consumer satisfaction should be incorporated into profit-oriented pricing approaches. But the realities of demand and consumer satisfaction might be in conflict. In a simple sense, satisfaction depends on expectations, while demand depends upon desires. The consumer satisfaction criterion might signal that a price indicates that a product is a "good deal." But peo-

ple might purchase a product for other reasons and resent the price they had to pay.3B A company in a highly competitive industry might emphasize consumer satisfaction over profit, reasoning that this approach will pay off in terms of long-run customer loyalty. The priorities are similar: P3, P4, P2, Pl. In situations where perceived-value (P3) is in the feasiblE set, a company delivers satisfaction by giving target market members a price that represents their own assessment of a product's value. Going-rate (P4) pricing is similar in that it gives consumers a price that they can compare to that of competing products. Differences in prices come to symbolize corresponding differences in relative value. Cost-plus pricing (P2) works in a like manner, thus taking priority over target-profit pricing. As long as firms adhere to a strict policy regarding margins, they can be sure that prices are in line with costs. While they are not privy to competitors' margin policies, they can recognize and come to count on the pricing patterns others follow. A firm that practices target-profit pricing (Pl) might gouge consumers who have inelastic demand in order to meet profit objectives during times of slack demand.

If a firm has a strong and loyal customer base, it can negotiate. For custom-pricing situations, the customer decides whether to use sealed-bid pricing. Therefore customer satisfaction is a questionable criterion. It could be hypothesized, however, that the personal participation involved in price negotiations (P6) would yield a higher level of satisfaction, thus encouraging companies who value customer satisfaction to seek negotiation over sealed-bid (P5) pricing situations.

Competitive Vulnerability (03) Different pricing approaches will leave companies vulnerable to varying levels of competitive attack. 12 This vulnerability could be a function of the nature of the industry, that is,

65


II

I


number of firms, degree of concentration, technology, and so on. In addition, competitive intensity and marketing sophistication could also affect vulnerability. Firms wanting to avoid direct competition will probably undertake a less aggressive pricing strategy than a company that is the industry leader in low-cost (cost-leader) or high-quality (differentiation) technology. 33

For custom pricing situations, the competitive vulnerability rule would again depend upon the nature of the firm. A strong company will be less vulnerable by cultivating patronage relationships through negotiated pricing (P6), while a weak company will be less vulnerable by eliminating patronage considerations through sealed-bid pricing (P5).

Strategic Consistency (04)

Consumer satisfaction should be incorporated into profit-oriented pricing approaches. If avoiding competitive vulnerability were the objective in a highly competitive industry, the prioritization would likely be the same as for consumer satisfaction (P3, P4, P2, Pl), at least in the long-run. A firm is vulnerable when customers are not being satisfied-when their price expectations are not being met. The model may not hold in the short-run.

While perceived-value pricing (P3) should be optimal, a competitor can always cut prices to achieve a market-share advantage, especially if the perceived-value pricing is yielding abnormally high profits. In the long-run, perceived value will fall as consumers come to accept the new pricing structure. Nevertheless, a company can avoid competitive vulnerability by eschewing abnormally high profits in the first place, thus reducing the price-cutting incentive. The new priority system would be P4, P2, Pl, P3, assuming that all four were in the feasible set. Going-rate pricing (P2) relies on industry norms to discourage price competition, promising firms a normal return if they maintain the status quo. Cost-plus pricing (P2) is similar except that the norms are less obvious, since the pricing cues are cost-driven and less apparent to decision makers outside the firm. This is even truer of target-profit pricing (Pl), since the outside observer must recognize the effect of sales variations as well as cost variations when determining how much profit a competitor is earning as a result of its pricing policies.

This article refers to the degree to which individual pricing decisions are consistent with the company's overall strategy. A differentiation strategy at the corporate level may preclude a cost-leader strategy at the divisional level. The extent to which strategic business units of the firm are jointly managed may also affect pricing decisions.9,1s Strategic consistency is most likely to be an issue in large firms that are organized by strategic business units where internal strategy consistency is extremely important. When strategic consistency is the key objective, the way decision alternatives are prioritized will depend upon the way pricing decisions have been made for the business unit's other products.

Simplicity (05) All other factors being approximately offsetting, a firm would rather use a simple decision rule than a complex one. A cost-plus approach, for example, is understandable and easy to administer in comparison with the notion of competitive vulnerability.

Satisfaction depends on expectations, while demand depends upon desires. Decision-makers begin addressing problems by first looking for easy solutions, progressing to more radical ones as needed to avoid mistakes. For example, managers do not automatically seek information about markets until stimulated to do so by fear of failure. 11 In relatively noncompetitive industries, a firm might

66

1.--.----~~~-

- - - - - - - - - -------


I

I


settle for the simplest approach. The choices would be, in order of increasing difficulty, P2, P4, P1, and P3, for noncustomized pricing problems. The use of standard cost-plus margins (P2) should be the simplest approach, since the only requirement is standard accounting data that are readily available within the firm. Going-rate pricing (P4) is slightly more difficult to implement because it utilizes information on competitors' prices. This information should, however, be relatively easy to obtain in the marketplace. Target-profit pricing (P1) is more complicated, because it is based on an accurate sales forecast. Finally, perceived-value pricing (P3) is the most difficult of all to operationalize since information is required regarding consumer demand and price sensitivity. Thus, sophisticated market research is generally necessary.

A company in a highly competitive industry might emphasize consumer satisfaction over profit. For customized pricing decisions, the simplicity rule would favor P6 over P5. Negotiations (P6) are easiest to administer because they involve little uncertainty or external research. The salesperson simply offers the entering price, calculated via one of the other methods, and modifies it according to feedback from the customer. By contrast, effective sealed-bid pricing requires estimates of competing bids and customer utility functions, which are both difficult to obtain.

Conclusion Figure 1 summarizes the strategic model

developed here, which provides direction to managers who need to make pricing decisions. At this point, however, the model needs to be operationalized, perhaps in terms of having managers evoke correspondence rules which link empirical and theoretical constructs. 5 For example, until the manager determines whether customers appreciate price-quality comparisons, the customer knowledge rule (R2) cannot be utilized. Likewise, even though going-rate pricing (P4) may be appropriate, the manager must still develop procedures for implementing this approach.

As long as firms adhere to a strict policy regarding margins, they can be sure that prices are in line. The model presented here can be expanded further. For example, additional rules could be developed for greater detail. Maybe channel members influence pricing decisions or perhaps new product situations could be introduced. Multiple pricing objectives could also be considered. Second-level pricing decisions would also be useful, for example, pricing several lines of related goods. At some point, the model must be validated empirically. One way to do this would be to construct a series of pricing case scenarios based on the model. Pricing decision-makers could then review the scenarios to choose the "correct" pricing approach. These could then be compared with the approaches that result from the application of this strategic pricing model. The model would be valid to the extent that it mirrors the results of the decision-makers.

ENDNOTES 1. Abratt, Russell, and Leyland F. Pitt, "Pricing Practices in Two Industries," Industrial Marketing Management, 14 (November 1985), 301-306. 2. Alpert, Mark 1., Pricing Decisions. Glenview, Ill.: Scott-Foresman, 1971.

67


'I

I


3. Archibald, Robert B., Clyde A. Haulman, and Carlisle E. Moody, Jr., "Quality, Price, Advertising, and Published Quality Ratings," Journal of Consumer Research, 9 (March 1983), 347-356. 4. Arndt, Johan, "Toward a Concept of Domesticated Markets," Journal of Marketing, 43 (Fall 1979), 69-75. 5. Bagozzi, Richard P., "A Prospectus for Theory Construction in Marketing," Journal of Marketing, 48 (Winter 1984), 11-29. 6. Blattberg, Robert C., Gary D. Eppen, and Joshua Lieberman, "A Theoretical and Empirical Evaluation of Price Deals for Consumer Nondurables," Journal of Marketing, 45 (Winter 1981), 116-129. 7. Capon, Noel, and Deanna Kuhn, "Can Consumers Calculate Best Buys?" Journal of Consumer Research, 8 (March 1982), 449-453. 8. Carlson, John A., and Robert J. Gieseke, "Price Search in a Product Market," Journal of Consumer Research, 9 (March 1983), 357-365. 9. Curry, David J., "Measuring Price and Quality Competition," Journal of Marketing, 49 (Spring 1987), 106-117. 10. Curry, David J., and Peter C. Riesz, "Prices and Price/Quality Relationships: A Longitudinal Analysis," Journal of Marketing, 52 (January 1988), 36-51. 11. Cyert, R. M., and J. G. March, (1963),A Behavioral Theory of the Firm. Englewood Cliffs, N.J.: Prentice-Hall, 1963. 12. Dean, Joel, "Pricing Problems for New Products," Harvard Business Review, 28 (NovemberDecember 1950), 45-53. 13. Dolan, Robert J., "Pricing Strategies that Adjust to Inflation," Industrial Marketing Management, 10 (July 1981), 151-156. 14. Dolan, Robert J., and Abel P. Jeuland, "Experience Curves and Dynamic Demand Models: Implications for Optimal Pricing Strategies," Journal of Marketing, 45 (Winter 1981), 52-62. 15. Erickson, Gary M., and Johny K. Johansson, "The Role of Price in Multi-Attribute Product Evaluations," Journal of Consumer Research, 12 (September 1985), 195-199. 16. Etgar, Michael, and Naresh K. Malhotra, "Determinants of Price Dependency: Personal and Perceptual Factors," Journal of Consumer Research, 8 (September 1981), 217-222. 17. Frank, Ronald, and William Massy, "Market Segmentation and the Effectiveness of a Brand's Price and Dealing Policies," Journal of Business, 38 (April 1965), 186-200. 18. Govindarajan, Vijay, "Decentralization, Strategy, and Effectiveness of Strategic Business Units in Multibusiness Organizations," Academy of Management Review, 11 (October 1986), 844-856. 19. Griffin, Clare E., "When Is Price Reduction Profitable," Harvard Business Review, 38 (SeptEMber-October 1960), 125ff. 20. Hawkins, Edward R., "Pricing Policies and Theory," Journal of Marketing, 18 (July 1954), 233-240.

68



21. Hisrich, Robert D., and Michael P. Peters, "Increasing Consumer Price Awareness: Implications for Retail Management and Public Policy," Proceedings, Southern Marketing Association, 1985, pp. 115-118. 22. Huber, Joel, Morris B. Holbrook, and Barbara Kahn, "Effects of Competitive Context and of Additional Information on Price Sensitivity," Journal of Marketing Research, 23 (August 1986), 250-260. 23. Kotler, Philip, Marketing Management: Analysis, Planning, and Control, 5th ed. Englewood Cliffs, N.J.: Prentice-Hall, 1984. 24. Lanzillotti, Robert F., "Pricing Objectives in Large Companies," American Economic Review, 48 (December 1958), 921-940. 25. Levin, Irwin P., and Richard D. Johnson, "Estimating Price-Quality Tradeoffs Using Comparative Judgments," Journal of Consumer Research, 11 (June 1984), 593-600. 26. Monroe, Kent B., Pricing: Making Profitable Decisions. New York: McGraw-Hill, 1979. 27. Monroe, Kent B., and Albert J. Della Bitta, "Models for Pricing Decisions," Journal of Marketing Research, 15 (August 1978), 413-428. 28. Nagle, Thomas, "Economic Foundations for Pricing," Journal of Business, 57, no. 1 (1984), S3-S26. 29. Neslin, Scott A., and Robert W. Shoemaker, "A Model for Evaluating the Profitability of Coupon Promotions," Marketing Science, 2 (Fall1983), 361-388. 30. Oren, Schmuel S., "Comments on Pricing Research in Marketing: The State of the Art," Journal of Business, 57, no. 1 (1984), 561-564. 31. Oxenfeldt, Alfred, "Product-Line Pricing," Harvard Business Review, 44 (July-August 1966), 135-143. 32. Paranka, Stephen, "The Pay-Off Concept in Competitive Bidding," Business Horizons, 12 (August 1969), 77-81. 33. Porter, Michael E., "Competitive Advantage." New York: Free Press, 1985. 34. Rich, Stuart U., "Price Leadership in the Paper Industry," Industrial Marketing Management, 12 (April1983), 101-104. 35. Schill, Ronald L., "Managing Risk in Contract Pricing with Multiple Incentives," Industrial Marketing Management, 14 (February 1985), 1-16. 36. Shoemaker, Robert W., "Comment on 'Dynamics of Price Elasticity and Brand Life Cycles: An Empirical Study'" Journal of Marketing Research, 23 (February 1986), 78-82. 37. Tellis, Gerard J., "Beyond the Many Faces of Price: An Integration of Pricing Strategies," Journal of Marketing, 50 (October1986), 146-160. 38. Thaler, Richard, "Mental Accounting and Consumer Choice," Marketing Science, 4 (Summer 1985), 199-214. 39. Urban, Glen, "A Mathematical Modeling Approach to Pricing Decisions," Journal of Marketing Research," 6 (February 1969}, 40-47. 40.

Werner, Ray 0., "Marketing and the United States Supreme Court, 1975-81," Journal of Marketing, 46 (Spring 1982), 73-81.

69


II

I


41. Winer, Russell S. "A Reference Price Model of Brand Choice for Frequently Purchased Products," Journal of Consumer Research, 13 (September 1986), 250-256. 42. Zeithaml, Valarie A., "Consumer Perceptions of Price, Quality, and Value: A Means-End Model and Synthesis of Evidence," Journal of Marketing, 52 (July 1988), 2-22.

70
