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2023 | Buch

Active Price Management: Fundamentals and Challenges Kapitel lesen Erstes Kapitel lesen

Active Price Management

Be a Price Maker, Not a Price Taker!

verfasst von: Sven Reinecke, Laura Johanna Noll

Verlag: Springer Nature Switzerland

Buchreihe : Business Guides on the Go

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

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Über dieses Buch

This book demonstrates how to transform pricing, often considered the neglected aspect of marketing, into the most influential marketing tool that positively impacts the company's profits in a sustainable manner. Ultimately, every aspect of marketing is reflected in the price, as it represents the customer's value exchange for the other three value-creating marketing instruments: the product (functional value), communication (emotional value), and distribution (availability). The authors present the essential framework conditions and fundamental principles of active price management. They specifically emphasize those aspects that have proven particularly relevant to business practice through the Executive Education program at the University of St. Gallen (HSG).

Inhaltsverzeichnis

Frontmatter
1. Active Price Management: Fundamentals and Challenges
Abstract
Active price management is a central and strategic marketing instrument. It involves actively designing, steering, and developing prices. Price changes have an immediate effect and are immediately reflected in the company’s demand, sales, and profit. While the other instrumental areas create value (value creation), price captures the value of a product or service (value capture).
Sven Reinecke, Laura Johanna Noll
2. Conditions of Price Management
Abstract
Price management focuses on three central determinants: costs, competition, and customer benefits (three Cs). Accordingly, a distinction is traditionally made between cost- and company-oriented, competition-oriented, and customer-oriented determinants and procedures of price management (Hinterhuber 2008; Hinterhuber and Liozu 2012; Indounas 2009).
Sven Reinecke, Laura Johanna Noll
3. Goals of Price Management
Abstract
In principle, the goals of price management should be known to everyone in the company involved in price decision-making and implementation (Monroe 2003, pp. 433). They must be considered in the context of overall marketing and oriented to a company’s marketing or positioning strategy. Common positioning strategies are higher price through better performance (or benefits) and non-price instruments or lower price through lower costs for the same performance (similar in Simon and Fassnacht 2016, pp. 47). In addition, different price targets must be considered for different offerings and customer groups (for more details, see Diller et al. 2021, pp. 130). All price targets are interdependent and must be understood as a target system. Overall, quantitative and qualitative price targets are distinguished (Reinecke and Hahn 2003, pp. 341).
Sven Reinecke, Laura Johanna Noll
4. Price Management Strategies
Abstract
Generally, static and dynamic price management strategies are distinguished.
Sven Reinecke, Laura Johanna Noll
5. Price Management for Innovations
Abstract
When companies launch innovations, they are confronted with different challenges: They may not yet have a clear idea of the target audience and the target application or function of the new offering. The go-to-market strategy may not yet be defined, and marketing and sales personnel may not yet be in place. Most importantly, a pricing model may not have been established, and the price-sales function for the company’s innovative offering may be unknown. Then, it is essential to estimate the perceived value of the innovation from the customer’s perspective.
Sven Reinecke, Laura Johanna Noll
6. Auctions
Abstract
Auctions are a standard method for determining and skimming willingness to pay (Diller and Hermann 2003). The prevalence of auctions has increased with digitalization (Skiera and Spann 2003, p. 625). Well-known examples of online and offline auctions are offered by Google, eBay, Ricardo.ch, Christie’s, Sotheby’s, United Charity, and MyHammer. Auctions increase transparency and intensify competition through spatial and temporal compression of the market.
Sven Reinecke, Laura Johanna Noll
7. Price Management for Business-to-Business Services
Abstract
In business-to-business markets, active price management is central to increasing profits (Homburg and Totzek 2011). More so, since hardware is currently losing relevance and value creation is shifting toward services. While the monthly wage of a worker has increased from CHF 1200 to 6000 between 1977 and 2019, the price of a drilling machine remained stable at CHF 700 (Hilti 2019, internal presentation). Furthermore, decreasing product or hardware margins requires commercializing services. Thus, the need to charge for rising expensive service expenses increases (see Fig. 7.1).
Sven Reinecke, Laura Johanna Noll
8. Conclusion on Active Price Management
Abstract
Price management is a central, strategic, and long-term marketing tool. It is neither tactical nor short-term or operational. It involves actively shaping, steering, and developing (Bleicher 2011, p. 46) prices. The price is more than the number of monetary units a customer must provide to purchase a product. On the one hand, the price must always be considered in the individually perceived price/performance ratio or value. On the other hand, price is the third determinant of profit alongside costs and sales volume. It has considerable entrepreneurial significance (Reinecke and Hahn 2003, p. 2).
Sven Reinecke, Laura Johanna Noll
Backmatter
Metadaten
Titel
Active Price Management
verfasst von
Sven Reinecke
Laura Johanna Noll
Copyright-Jahr
2023
Electronic ISBN
978-3-031-42049-8
Print ISBN
978-3-031-42048-1
DOI
https://doi.org/10.1007/978-3-031-42049-8