Cost-based pricing in global markets: Practices of New Zealand firms

A. Tansu Barker, Erdener Kaynak

Research output: Chapter in Book/Report/Conference proceedingChapter

Abstract

Business practitioners and academicians alike have long acknowledged the importance of price as an important decision-making tool regardless of their specific functional or disciplinary backgrounds and the industry within which they operate. For instance, the price objectives of suppliers now include impact on organizational image, the effects of prices charged on investment, market share, and profit maximization. Pricing tactics, rather than other cost-related concerns, are used to gain market share, hence the need for understanding price structure and pricing behaviour of domestic as well as international competitors (Wagner 1987). The difficulty of determining specific prices for individual brands and a group of products, their impacts on profits and the complexity of the interrelationships (synergy) with the other elements of the marketing mix are all familiar views. Lest the reader conceive of pricing decision-making as a simplistic or quantitative procedure, much of what has been written in the pricing field invariably seems to allude to the qualitative aspects of pricing. For example, pricing has been referred to as agonizing and baffling (Cateora, 1983), highly intuitive, and routine (Oxenfeldt 1973; Darden 1976), economically integrated and psychologically driven (Nystrom 1970), mystery-laden (Hess and Cateora 1966), risk-aversive (Guiltinan 1976), and as a scientific art (Burck 1972). Many of the current pricing strategies and the related product decisions have their origins in cost considerations, and, in general, ignore demand factors. Among these strategies are: (a) dropping high-volume, 296low-margin products, (b) increasing the emphasis on cost-plus pricing, (c) delaying price quotations until after the order is completed, (d) increasing prices ‘across-the-border’ on a firm wide average increase in costs, (e) minimizing new product additions, and adopting skimming of high price policies for new products. (Monroe 1979:10).

Original languageEnglish (US)
Title of host publicationGlobal Business
Subtitle of host publicationAsia-Pacific Dimensions
PublisherTaylor and Francis
Pages295-317
Number of pages23
ISBN (Electronic)9780429772306
ISBN (Print)9781138366619
DOIs
StatePublished - Jan 1 2018

All Science Journal Classification (ASJC) codes

  • Social Sciences(all)

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