راهبرد ها و سطوح قیمت گذاری و تاثیر آن بر روی سودآوری شرکتی Pricing strategies and levels and their impact on corporate profitability

Introduction Price is one of the most flexible elements of the marketing mix, which interferes directly and in a short term over the profitability and cost effectiveness of a company (Simon, Bilstein, & Luby, 2008). Despite the importance a price has on the performance of businesses, itseemsthatsuch element has not received the proper attention by many academics and marketing professionals (Avlonitis & Indounas, 2006). Typically, in marketing, the main focus is placed on the development of new products, distribution channels and communication strategies, and according to Lancioni (2005) this could lead to precipitated pricing decisions without properly evaluating market and cost factors. Thus, pricing is treated as the simplest strategy within marketing, perhaps because many companies determine their prices based on intuition and the manager’s market experience (Simon, 1992). In addition, only few managers strategically think about pricing while proactively administrating their prices in order to create favorable conditionsthat lead to profits(Nagle & Holden, 2003).Considering this, Liozu and Hinterhuber(2012) highlight the need for more research regarding the pricing preferences and practices because, according to the authors, less than 2% of all published articles in marketing journals are focused on pricing. Strategic pricing requires a stronger relationship between marketing and the othersectors of a company.In orderto enhance companies’ economic and financial performance, the pricing policies should be defined by their internal capacities and on the basic systematical understanding of needs and wishes of their customers, in addition to market conditions such as, economic conditions and degree of competition (Besanko, Dranove, Shanley, & Schaefer, 2012; De Toni & Mazzon, 2013b). In this context, this study’s objective was to propose and test a theoretical model that indicates the impacts of pricing policies on company’s profit. On this regard, the theoretical assumptions consider as pricing policies the definitions that comprise the pricing strategies and the price levels used by companies in their respective markets. In this study, the considered pricing strategies are based on Nagle and Holden (2003) studies, namely value-based, competition-based and cost-based pricing strategies; whereas the pricing levels are classified as high and low prices (Urdan & Osaku, 2005). Besides identifying the direct effects of these elements over profitability, this research also analyzed the impacts of moderating effects considering some independent variables on the business profitability (dependent variable). It is important to mention that this study was performed on 150 metal-mechanic companies situated in the Northeast of Rio Grande do Sul State, Brazil, also call region of Serra Gaúcha, along with the people responsible for their companies’ pricing process. By using a hierarchical regression analysis, we were able to test the main model and the interaction models against our proposed hypothesis, which will be presented throughout this project. Theoretical background Pricing strategies According to Monroe (2003), price decisions are one of the most important decisions of management because it affects profitability and the companies’ return along with their market competitiveness. Thus, the task of developing and defining prices is complex and challenging, because the managers involved in this process must understand how their customers perceive the prices, how to develop the perceived value, what are the intrinsic and relevant costs to comply with this necessity, as well as consider the pricing objectives of the company and their competitive position in the market (De Toni & Mazzon, 2013a,b; Hinterhuber & Liozu, 2014; Monroe, 2003). In this way, Nagle and Hogan (2007) argue that companies which do not manage their prices lose control over them, impairing their profitability and cost effectiveness mainly due to the customers will on paying a determinate price, which not only does it depend on the perceived value, but also depends on the prices set by the leading competitors. Consequently, mistaken or inexistent pricing policies could lead buyers to increase the volume of information while allowing themto augment their bargaining powerthusforcing price reductions and discounts. The difference between conventional price setting and strategic pricing consists on setting prices by reacting to the market conditions or managing them proactively, being their sole purpose to exert the most profitable pricing by generating more value for customers without the obligation of increasing the business’ sales volume (Nagle & Holden, 2003) Logically, there is not a uniqueway for defining prices.Before setting a price, the company must decide what is going to be the strategy for the product in addition to what will be the proposed objectives, since the clearer these decisions, the easier it will be to establish prices (Hinterhuber & Liozu, 2013). According to Hinterhuber (2008), prices have a high impact on companies’ profitability, and pricing strategies vary considerably between sectors and market situations. Nonetheless, researchers mostly agree that pricing strategies can be categorized in three big groups: cost-based pricing, competition-based pricing and customer value-based pricing (Nagle & Holden, 2003). Nagle and Holden (2003) argue that there must be a balanced consideration of information, perception and intrinsic behavior of the 3C’s of this process(Cost, Competition and Customers) as a way to reach the optimal price. The management ofsuch information is a crucial factor for the success of the pricing definition strategy and the price settlement. In some cases, these practices have also been designated as pricing methods (Avlonitis, Indounas, & Gounaris, 2005).