About Driving Future Success: Why Strategic Pricing Research is the Heart of Business Sustainability in International Journal of Strategic Management and Decision Support Systems in Strategic Management.
In today's era of dynamic geopolitical shifts and rapidly changing market conditions, the ability to make data-driven decisions is no longer a luxury, it is a necessity for achieving long-term economic and social goals.
At our faculty, we are committed to research that provides businesses with the tools needed to secure their future success and sustainability. One of the most critical, yet often underutilized, areas of this research is price and revenue management.
Price management: More Than Just a Number
While many companies rely on traditional cost-based pricing, our researchers argue that this approach often fails to achieve top-line revenue growth. Instead, our latest studies focus on value-based pricing, which defines the price based on the utility and satisfaction a consumer gains from a product. Research indicates a strong positive relationship between value-based pricing and overall company performance, making it a cornerstone of a sustainable business model.
Spotlight on Research: The "Chocolate Bar" Study
A recent compelling study conducted at the University of Economics in Bratislava investigated how to strategically price a new food product entering a saturated market. Researchers focused on a milk chocolate bar - a product with a rich history in Slovakia but facing a recent decline in per capita consumption. To identify the "sweet spot" for pricing, the team utilized the van Westendorp price sensitivity test. This method allows researchers to identify:
- The Range of Acceptable Prices: The boundaries within which consumers are willing to buy without doubting quality or feeling exploited.
- The Optimal Price Point: The specific level where consumer perception of "cheap" and "expensive" reaches an equilibrium
Key Insights: The Power of Experience
One of the most interesting findings from this research activity was the impact of sensory experience on price perception. By using a non-parametric Mann-Whitney U test, researchers confirmed that product tasting significantly increases a customer's willingness to pay a higher price. Specifically, respondents who tasted the chocolate were willing to pay statistically higher prices across several categories compared to those who did not.
Why This Matters for Managers
The research highlights that price management serves as a vital supportive tool for strategic decisions. By understanding factors like internal reference prices (what customers paid in the past) and external frames of reference (tasting or seeing competitors), managers can set appropriate strategies that ensure higher revenues and profit.
Ultimately, our faculty’s dedication to mastering these analytical tools ensures that businesses can navigate saturated markets and maintain profitability, proving that effective revenue management is the bedrock of business sustainability.
Authors: Kintler, J., Remenova, K., & Barteková, M. K. (2023). Price sensitivity testing as a basic tool for strategic pricing decisions. Strategic Management-International Journal of Strategic Management and Decision Support Systems in Strategic Management, 28(1).
