Pricing decisions require a balance between competing forces. Prices must be high enough to yield a profit yet low enough to give buyers sufficient incentive to buy. According to the authors, many companies let one or the other of these concerns dominate pricing decisions, resulting in tactical, short-term decisions that are not connected to marketing strategy. Here they suggest a profit-driven approach to pricing that focuses on profit contribution and defines the market response necessary to achieve incremental profitability.
1. T.T. Nagle, The Strategy and Tactics of Pricing: A Guide to Profitable Decision Making (Englewood Cliffs, New Jersey: Prentice Hall, 1987).
2. P.E. Green and V. Srinivasan, “Conjoint Analysis in Marketing Research: New Developments and Directions,” Journal of Marketing 54 (1990): 3–19; and
P.E. Green and V. Srinivasan, “Conjoint Analysis in Consumer Research: Issues and Outlook,” Journal of Consumer Research 5 (1978): 103–122.
3. J.K. Johansson and I. Nonaka, “Market Research the Japanese Way,” Harvard Business Review, May–June 1987, pp. 16–22.
4. L.M. Fuld, Competitor Intelligence: How to Get It — How to Use It(New York: John Wiley & Sons, 1985).
5. M. Porter, Competitive Strategy (New York: Free Press, 1982).
6. A. Dixit and B. Nalebuff, Thinking Strategically: A Competitive Edge in Business, Politics, and Everyday Life (New York: Norton, 1991); and
T.T. Nagle, “Managing Price Competition,” Marketing Management 2 (1993): 36–45.
7. M.M. Lele, Creating Strategic Leverage (New York: Wiley, 1992).