Research - 17.02.2023 - 08:30
How can the "stepchild" in marketing, pricing, be turned into the marketing instrument that can have the most sustainable positive influence on a company's profit? The two marketing researchers at HSG, Prof. Dr. Sven Reinecke and Dr. Laura Johanna Noll, have investigated this question. In a compact booklet titled “Aktives Preismanagement”, they present the most important framework conditions and basic principles of price management. In doing so, they pick out those aspects that have proven to be essential for corporate practice in the context of further education at the University of St.Gallen.
In economics textbooks, the price (P) is always shown on the Y-axis – it is therefore a dependent variable that results from the quantity offered in the market (Q). "Even though this may make sense for the market as a whole, it is nonsense for individual companies," emphasises Sven Reinecke. Price should rather be an active variable that the offering company can and should set itself. "Based on this decision and the value of the overall offer as perceived by customers, price is the quantity that a company can sell on the market," explains Laura Noll. Price is the customer's return for the other three value-creating marketing instruments: the product (functional value), communication (emotional value) and distribution (availability).
Sven Reinecke and Laura Noll recommend in their freely available online handbook "Active Price Management", Sven Reinecke and Laura Noll recommend five principles for successful pricing:
"Responsible managers should not lower the price just to gain market share or an image-important customer," emphasises Sven Reinecke. Benson P. Shapiro, for example, formulated a clear call to action for professional management a long time ago at Harvard Business School: "Be a price maker, not a price taker”.
Prof. Dr. Sven Reinecke is Managing Director of the Institute for Marketing & Customer Insight and Titular Professor of Business Administration at the University of St.Gallen.
Dr. Laura Johanna Noll (1990) is a postdoctoral researcher at the Institute for Marketing & Customer Insight as well as Head of the Competence Center for Art+ at the University of St.Gallen.
Image: Unsplash / Campaign Creators
More articles from the same category
This could also be of interest to you
Discover our special topics