Shattering the Myth of Costless Price Changes: Emerging Perspectives on Dynamic Pricing

Mark Bergen, Mark Ritson, Shantanu Dutta, Daniel Levy () and Mark Zbaracki
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Mark Bergen: University of Minnesota
Mark Ritson: London Business School
Shantanu Dutta: University of Sourthern California
Mark Zbaracki: University of Pennsylvania

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Abstract: In this paper we argue that pricing is all about price changes, and that the costs of price changes are often simultaneously subtle and substantial. We discuss a framework to deal with the dynamics of changing prices. This framework incorporates customer interpretations of price changes, an awareness of the organizational costs of price changes, investments in future pricing processes, and an understanding of the role that supply chains play in price change strategy. The framework can be used at the tactical level to improve the specific price changes chosen and made, at the managerial level to decide whether or not to make a particular price change at all, and at the strategic level to determine what price adjustment processes should be invested in to improve pricing effectiveness in the future.

Keywords: Menu Cost; Myth; Costly Price Change; Cost of Price Adjustment; Dynamic Pricing; Customer Cost of Price Adjustment; Organizational Cost of Price Adjustment; Managerial Cost of Price Adjustment; Supply Chain; Investment in Pricing Processes; Price Change Tactic; Price Change Strategy; Pricing Tactics; Pricing Strategy; Pricing Effectiveness (search for similar items in EconPapers)
JEL-codes: D20 D40 E31 L11 L16 M10 M20 M31 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2005-05-12
New Economics Papers: this item is included in nep-bec and nep-ind
Note: Type of Document - pdf; pages: 22
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https://econwpa.ub.uni-muenchen.de/econ-wp/othr/papers/0505/0505006.pdf (application/pdf)

Related works:
Working Paper: Shattering the Myth of Costless Price Changes: Emerging Perspectives on Dynamic Pricing (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpot:0505006

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