Retail Value-Based Pricing Strategies: New Times, New Technologies, New Consumers

doi:10.1016/j.jretai.2011.12.001

Journal of Retailing

Volume 88, Issue 1, March 2012, Pages 1-6

https://doi.org/10.1016/j.jretai.2011.12.001 Get rights and content

Abstract

The global marketplace is continually shaped by changing realities, including the recent economic downturn and ever-increasing adoption of new technologies. The results of these changing realities affect every element of consumers’ shopping behavior, as well as their value perceptions. This article examines how recent changes in the environment and technology have spurred changes in how consumers perceive value, as well as in how retailers communicate their value offers. Furthermore, this introductory article highlights how the 14 contributions in this special issue of the Journal of Retailing on pricing relate to these areas of change.

Section snippets

Organizing framework and research issues

This article is organized around three major components: changes in consumer behavior, driven by environmental changes and technological changes. We focus on how the two drivers initiate different consumer perceptions of value, as well as the growth of newer forms of value-based pricing models (see Fig. 1).

In discussing each of these areas, we draw from current trends, highlight how the articles in this special issue relate, and identify opportunities for further research. The fourteen

Conclusion

The genesis of this special issue involved stimulating additional research on pricing, across all dimensions and various methodologies. We are delighted that this special issue reflects our original vision. We greatly appreciate the valuable feedback and support from the reviewers, whose names are listed in Table 1. The resulting collection of articles in this special issue provides a rich overview of the role of the economy and technological advances and the changes they are inducing in

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Temporal Price Reframing: When is it Beneficial?
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Differential Effects of Value Consciousness and Coupon Proneness on Consumers’ Persuasion Knowledge of Pricing Tactics

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Configuring and pricing smart coproductive services
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Citation Excerpt :
Both the provider and customer know the functional forms of the outcome variables of each other. This is in-line with the observation of customer behaviour in the information economy (Grewal et al., 2012). One of the implications is that both provider and customer know their mutual assessment of value.
Coproductive services involve the active participation of customers by exerting physical/mental effort as a part of the service process to co-create value. While the demand for coproduction models is surging, there are complaints about customer experience and service system design. Owing to these dissatisfaction issues, providers are now shifting away from self-service models, towards the notion of smart service; where service tasks are efficiently divided between the provider and the customer. This study addresses the business problem of the configuration and pricing of such a smart coproduction service channel targeted at a segment within an incumbent provider's captive customer base. We analyze the relative preference of the popular uniform pricing policy against a new proposed policy that accounts for the strategic behaviour of customers. This study uses a suite of analytical modelling tools to address this problem. We analyze the applicability of the alternate pricing regimes when providers are pursuing certain prevalent marketing strategies. We also analyze the influence of relative co-creation productivity between the provider and customer on the choice of pricing regime. We find that the popularity of the uniform pricing model can be explained with its simplicity in configuration and applicability. On the other hand, we find that the proposed strategic pricing regime not only induces customers to adopt coproduction channels but also enables providers to charge a price premium where possible. Furthermore, our analysis explains several observations in practice w.r.t. uptake and proliferation of coproduction channels. We also present useful guidelines to managers for configuring and pricing coproduction service channels.
Zooming in the impacts of merchants’ participation in transformation from online flash sale to mixed sale e-commerce platform
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This study investigates the performance implications of participation in the strategic transformation of the e-commerce platform by using data from VIP.com, the largest flash sale e-commerce platform in China. By integrating online flagship stores with its existing flash sale, VIP.com has transformed from the flash sale model targeting a niche market to the mixed sale model serving the mass market. Using a PSM-DID approach, we find that participation in such strategic transformation boosted sales for merchants and also resulted in greater post-sales product returns for merchants selling seasonal products. Implications for theory and practice are discussed as well.
“Curated subscription commerce: A theoretical conceptualization”
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Subscription commerce emerged as an up-and-coming phenomenon in retailing that enables shoppers to automatically receive recurring deliveries of consumer goods. One important dimension along which subscription services differ is the degree to which the content of each delivery is surprising. This paper focuses on two archetypes at opposite ends of this dimension, namely predefined and curated surprise subscriptions, and juxtaposes them to conceptualize surprise as a retail mechanism. It is hypothesized that curated surprise subscriptions carry an inherent risk to receive unappealing products, as consumers outsource the decision-making process to the subscription provider, which can influence consumers' choices and attitudes. Three studies explore the role of risk perception in consumers’ evaluation of consumer goods subscriptions. First, it was found that consumers prefer shorter delivery intervals for predefined subscriptions and longer delivery intervals for curated surprise subscriptions, in line with Prospect Theory. Second, empirical evidence for perceived risk as a mediating variable in this relation is provided. Finally, it is shown how retailers can manipulate associated risk through the introduction of a free-return option. The article is concluded by introducing a new typology of subscription services and discussing implications for managerial practice as well as avenues for future research.
Manufacturer adoption of a unilateral pricing policy in a multi-channel setting to combat customer showrooming
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Unilateral pricing policy (UPP), in which the manufacturer mandates a minimum retail price for all retailers, has become increasingly popular. Manufacturers employ this pricing policy to encourage brick-and-mortar retailers to offer a high level of service in their stores and to support brick-and-mortar retailers that provide presales services for customers in the presence of showrooming—a phenomenon in which a customer visits an offline retailer to learn about the product but purchases from an online retailer for a lower price. Our proposed analytical model identifies the motivations of a UPP and helps determine the approach to setting a UPP-based price under various conditions. The UPP price depends on key factors such as the extent of showrooming in the market, customer price sensitivity, and the salience of presales service in their valuation. We compare the outcomes of a UPP with those under the conventional policy, in which the retailers determine prices independently.
Pricing in consumer digital markets: A dynamic framework
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Supplier firms are increasingly seeking new ways to personalize their offers and differentiate their products, especially in contested digital markets. One approach that shows promise involves encouraging customers to participate in pricing decisions using schemes such as “pay-what-you-want” where the customer has an input into determining the price. These approaches can benefit both the customer in terms of paying a reasonable price and reducing risk, and the supplier in terms of increasing sales and generating deep customer insights that can assist in relationship development. However, extant research shows limitations associated with these pricing approaches and, despite some qualified successes, there has not been widespread adoption in businesses. This study extends consideration of existing participative pricing schemes and proposes a new conceptual framework, termed FairPay. This framework overcomes many of the limitations of previous approaches, while addressing important challenges, especially those faced by many digital product suppliers. The framework offers an attractive pricing solution for both customers and suppliers, ensuring an equitable exchange that is based on value-in-use. We discuss the application of this framework in the context of digital products, where the approach has special promise.
供应商越来越多地寻求新的方式来个性化和差异化他们的产品, 特别是在竞争激烈的数字市场. 其中一种具有前景的方法是鼓励客户使用 “随你付” (pay-what-you-want) 等方案参与定价决策, 在这种方案中, 客户参与决定价格. 这些方法在支付合理的价格和降低风险方面对客户有利, 在增加销售和产生有助于关系发展的深刻客户洞察方面对供应商有利. 然而, 现有的研究表明, 这些定价方法存在局限性, 尽管取得了一些成功, 但还没有在企业中得到广泛采用. 这项研究扩展了对现有参与式定价方案的考虑, 并提出了一个新的概念框架, 称为 FairPay. 这个框架克服了以前方法的许多限制, 同时解决了重要的挑战, 特别是许多数字产品供应商所面临的挑战. 该框架为客户和供应商提供了一个有吸引力的定价解决方案, 确保基于使用价值的公平交换. 我们讨论了这个框架在数字产品中的应用, 这种方法在数字产品中有特殊的前景.

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^☆: The authors appreciate support from Babson College and Clarkson University in sponsoring this initiative.

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EditorialRetail Value-Based Pricing Strategies: New Times, New Technologies, New Consumers☆

Abstract

Section snippets

Organizing framework and research issues

Conclusion

Journal of Retailing

Journal of Retailing

Journal of Retailing

Journal of Retailing

Journal of Retailing

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Journal of Retailing

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Journal of Retailing

Journal of Retailing

Editorial
Retail Value-Based Pricing Strategies: New Times, New Technologies, New Consumers☆