Sales force behaviour and best practice pricing drive a product's return on investment. (2017)

• Record Type: Journal Article
• Authors: Baker, Timothy; Collier, David; Jayaraman, Vaidy
• Is Part Of: International journal of services and operations management. Volume 28:Number 3(2018)
• Page Start: 335
• Page End: 358
• Publication Date: 2017
• Subjects: pricing -- benchmarking -- quality management -- structural equation modelling -- performance measurement and management -- logit and multiple regression methods -- survey research; Production management -- Periodicals; 658.5005
• Languages: English
• ISSNs: 1744-2370

Abstract

A causal model is proposed that defines the relationships between safes force behaviour and effectiveness, current pricing compared to a new way of setting pricing benchmarks, and a product's return on investment (ROI). The purpose of this paper is to investigate what drives consistent pricing decisions and financial performance, and introduce a new benchmarking metric. Sales agents and pricing executives for business-to-business (B2B) manufacturers in the durable goods industry were surveyed. A price adherence fraction (PAF) is defined that measures current pricing decisions against the best (i.e., highest logit probability out of ten pricing situations) pricing decision for that particular product-firm-market pricing situation. The structural equation model that tested if the actual survey data fit the hypothesised causal model was reasonably acceptable while a more parsimonious multiple regression model was statistically valid in all respects at predicting a product's return of investment.