Demand-Based Pricing Versus Past-Price Dependence: A Cost-Benefit Analysis  

Oleh:

Srinivasan, Shuba ; Pauwels, Koen ; Nijs, Vincent

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: Journal of Marketing (EBSCO) vol. 72 no. 2 (Mar. 2008), page 15-27.
Topik: Demand-Based Pricing; Past-Price Dependence; Retail-Price Drivers; Time-Series Models; generalized Forecast Error Variance Decomposition

Ketersediaan

Perpustakaan Pusat (Semanggi) Nomor Panggil: JJ94.13 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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Isi artikel

The authors develop a conceptual framework of the factors that motivate a retailer's decision to rely on demand conditions and past prices in setting current and future prices. Specifically, they examine the circumstances under which retailers choose demand-based pricing versus past-price dependence for different brands and categories. Given scarce resources and costs of price adjustments, demand-based pricing is more likely when the customer-driven and firm-driven costs of adjusting pricing patterns are low or when the benefits of such adjustments are high. First, the customer-driven benefits of demand-based pricing are expected to be greater in categories with higher penetration and for brands with higher markets share and higher demand sensitivity to price. Second, the firm-driven benefits are greater for categories with higher private-label share. Finally, the customer-driven costs are greater for expensive categoruies, whereas the firm-driven costs are greater for categories with many stockkeeping units. The results also contribute to the ongoing debate in economics and marketing on the rationality of observed past-price dependence. Whereas previous research points to the negative impact on gross margins of this practice, the authors find that retailers weigh the costs and benefits of demand-based pricing rather than adhere to past-pricing patterns.

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