The Right Price – At WhatCost? : A Multi-industry Approach in the Context ofTechnological Advancement

• Main Author: LEIJON, ANNA
• Format: Others
• Language: Swedish
• Published: KTH, Hållbarhet och industriell dynamik 2017
• Subjects: Pricing strategy; Strategic management; Data-driven; Intuition-driven; Strategic decision making; Digitalization; Retail; Customer Value-based pricing; Costbased pricing; Competition-based pricing; Engineering and Technology; Teknik och teknologier
• Online Access: http://urn.kb.se/resolve?urn=urn:nbn:se:kth:diva-214969

he business climate is undergoing a transformation and managers are faced with several challenges, notthe least of which is related to pricing strategy. With an increased transparency in the market as well as anincreased competitive pressure, and with more sophisticated and well-informed consumers, retailbusinesses find it hard to navigate the pricing jungle. At the same time, the conventional wisdom in thefield of pricing and the theoretical models on the topic, originate from a time long before thedigitalization. Old models are not a problem in itself, but when there are new forces in the pricingecosystem, driven by technological advancement, an assessment of the incumbent models is in the bestinterest of both businesses and academia. The reason for this is that, the use of old models that rely oninaccurate assumptions may impact businesses’ prioritizing of resources or their overall business strategy.In addition, researchers might be distracted and the research field disrupted. Thus, the purpose of thisstudy is to discuss whether or not there are additional dimensions in pricing strategy that are not coveredby the incumbent pricing models. Here, dimensions refer to the key components of businesses’ strategicdecision making in regards to pricing.This thesis examines pricing models in today’s business context in order to answer the research question:“Are there additional dimensions of the empirical reality of pricing strategy that are not covered by theincumbent pricing models?” The research question has been studied qualitatively through a literaturereview, a pilot study and twelve case studies, where the pilot study had the purpose of exploring thedepth, whereas the multiple case studies focused on the breadth, of pricing strategies. The case studiescover businesses in different retail industries and of different sizes, namely the industries of Clothing &Accessories, Daily Goods, Furniture and Toys & Tools, and of the following sizes: micro, small, mediumand large. The empirical data has mainly been gathered by conducting interviews with production, salesand management personnel at the case businesses. The data has been structured, reduced and analysedwith the help of a framework of analysis that has been developed throughout the pilot study.The results of this study lean on previous research and a main divider in pricing strategies has beenidentified as businesses use either a data-driven or an intuition-driven approach in their strategic workwith pricing. As such, it is proposed that the division of pricing strategies need to be acknowledged, sincethe separate methodological approaches may lead to different results, while implying different costs,resources and required knowledge. Furthermore, the division may form a basis for competitive advantage,be extended to other areas of strategic management and become clearer, since the adoption of technologyand its impact will increase in the future. As a result, in the future of pricing, they key is going to be toaccount for both the strategic perspectives and the methodological approaches in the strategic decisionmaking process of pricing.