Dynamic pricing for inventories with reference price effects

Chenavaz, Régis; Paraschiv, Corina

doi:10.5018/economics-ejournal.ja.2018-64

Cited by 11 publications

(5 citation statements)

References 24 publications

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“…Hence, the general necessity and suitability based on a company's realistic market circumstances in any industry have not been researched yet, and a model was missing for business practitioners. This is consistent with Chenavez & Paraschiv's (2018) findings of the lack of a dynamic pricing model. However, while this research study has identified the overarching significance of the two factors brand advantage and delivered product benefits, Halttunen (2016) has rather discussed newly emerging factors like ease of use, access to the service, consumer's technological skills and others that may be added to the factors price and variety of choices.…”

Section: Discussionsupporting

confidence: 92%

The Value-Based Pricing Determination Matrix for Pricing Method Selection

Steinbrenner¹,

Turčínková²

2021

CEBR

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Several researchers suggest that value-based pricing (VBP) is one of the most profitable pricing methods for companies competing in today's business environment. Interestingly, the implementation rates of VBP are, however, rather low. Numerous barriers to the implementation of value-based pricing have been found by researchers already. Although, a theoretical model for determining whether value-based pricing may be a suitable pricing method for a business is yet to be found in the literature. This study aims to introduce a theoretical model to aid pricing executives in their pricing method selection. For this purpose, 20 semi-structured in-depth expert interviews with German pricing experts were conducted as part of qualitative data analysis. The experts were selected using a purposive selection method. Pricing experts were asked to describe the most important factors for determining whether a company may implement value-based pricing. We identified two main factors as being necessities for using VBP. The first factor named by the authors was the brand advantage (BA), and the second factor was represented by the delivered product benefits (DB) as perceived by the customer. Based on these two factors, a two-dimensional, quadrant-based theoretical model was developed and was named the VBP Determination Matrix. The matrix now evaluates a company's position within the matrix based on the factors BA and DB. It leads to direct calls-to-action for properly choosing the most suitable pricing method. This study's theoretical contribution was the development of a so far non-existing twodimensional model for the determination of the suitability of value-based pricing. Business practitioners are now provided with an easy-to-use and highly applicable model to determine the initial suitability of implementing VBP. Senior management is given direct calls-to-action, whether an investment to implement VBP shall be made and whether to allocate resources. Implications for Central European audience: The VBP Determination Matrix is a highly applicable model recommended especially for business practitioners in pricing, marketing and management. Central European companies are recommended to utilise the model to benefit from its strategic recommendations to properly select the most suitable pricing method for profit maximisation and competitiveness optimisation.

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Section: Discussionsupporting

confidence: 92%

The Value-Based Pricing Determination Matrix for Pricing Method Selection

Steinbrenner¹,

Turčínková²

2021

CEBR

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“…Interested customers that visit the market place over time also observe the current market situation for a product and compare the offers of different sellers. The consumers' purchase decisions are typically based on their individual willingness-to-pay as well as on common reference prices, see, e.g., Popescu and Wu (2007) and Chenavaz and Paraschiv (2018). Reference prices can be based on prices of similar products or, in particular, on prices that have been observed in the past (cf.…”

Section: Dynamic Pricing Competition On Online Marketplacesmentioning

confidence: 99%

“…Dynamic pricing models that include reference price effects are studied by, e.g., Wu and Wu (2015), Popescu and Wu (2007), and Chenavaz and Paraschiv (2018). Dynamic pricing models in the presence of strategic customer behavior are analyzed by Levin et al (2009), Liu andZhang (2013), andSchlosser (2019).…”

Section: Related Workmentioning

confidence: 99%

Dynamic pricing under competition with data-driven price anticipations and endogenous reference price effects

Schlößer

Richly

2019

J Revenue Pricing Manag

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Online markets have become highly dynamic and competitive. Many sellers use automated data-driven strategies to estimate demand and to update prices frequently. Further, notification services offered by marketplaces allow to continuously track markets and to react to competitors' price adjustments instantaneously. To derive successful automated repricing strategies is challenging as competitors' strategies are typically not known. In this paper, we analyze automated repricing strategies with data-driven price anticipations under duopoly competition. In addition, we account for reference price effects in demand, which are affected by the price adjustments of both competitors. We show how to derive optimized self-adaptive pricing strategies that anticipate price reactions of the competitor and take the evolution of the reference price into account. We verify that the results of our adaptive learning strategy tend to optimal solutions, which can be derived for scenarios with full information. Finally, we analyze the case in which our learning strategy is played against itself. We find that our selfadaptive strategies can be used to approximate equilibria in mixed strategies.

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“…The term -dynamic pricing‖ refers to a pricing model that entails altering the price of goods or services based on supply and demand or the characteristics of the customer (Wang, Tang, Zhang, Sun & Ziong, 2020). This model is growing in popularity within a wide variety of different industries due to its expected impact on revenues and corporate valuations (Brent & Gross, 2017;Chenavaz & Paraschiv, 2018;Cohen & Neubert, 2019;Drea & Narlik, 2016;Halkias, Neubert, Thurman, Adendorff & Abadir, 2020;Neubert, 2017;Wahyuda & Santosa, 2015;Xiong, Niyato, Wang, Han & Zhang, 2019). Throughout the course of the present paper, a systematic literature review relating to this form of pricing will be carried out.…”

Section: Introductionmentioning

confidence: 99%

A Systematic Literature Review of Dynamic Pricing Strategies

Neubert¹

2022

IBR

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Due to its success and acceptance in the airline and hospitality industry and the growing availability of behavioral, engagement, and attitudinal consumer data, dynamic pricing strategies are gaining popularity. The purpose of this systematic literature review is to answer the research question about how do dynamic pricing strategies affect customer perceptions and behaviors to avoid negative consumer reactions. The synthesis of over 50 articles revealed eight different research streams like for example the factors moderating the impact of dynamic pricing on customer behavior, strategic purchasing behavior in response to dynamic pricing, effect of dynamic pricing on customer perception of fairness, personalized dynamic pricing (PDP) and channel differentiated pricing. To advance future research, this systematic literature review identified the six propositions for further research like for example the assessment of the efficacy of different types of communication by firms seeking to mitigate the negative impacts of dynamic pricing and the assessment of the role and relevant importance of consumers’ personal characteristics upon their perceptions of price changes. The findings of this study have a practical impact for managers and scholars. Scholars may use them to update their research agendas and managers to optimize their pricing strategies to increase revenues.

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Dynamic pricing for inventories with reference price effects

Cited by 11 publications

References 24 publications

The Value-Based Pricing Determination Matrix for Pricing Method Selection

The Value-Based Pricing Determination Matrix for Pricing Method Selection

Dynamic pricing under competition with data-driven price anticipations and endogenous reference price effects

A Systematic Literature Review of Dynamic Pricing Strategies

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