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

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Author Info

  • Mark Bergen

    (University of Minnesota)

  • Mark Ritson

    (London Business School)

  • Shantanu Dutta

    (University of Sourthern California)

  • Daniel Levy

    (Bar-Ilan University)

  • Mark Zbaracki

    (University of Pennsylvania)

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.

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File URL: http://128.118.178.162/eps/othr/papers/0505/0505006.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Others with number 0505006.

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Length: 22 pages
Date of creation: 12 May 2005
Date of revision:
Handle: RePEc:wpa:wuwpot:0505006

Note: Type of Document - pdf; pages: 22
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Web page: http://128.118.178.162

Related research

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;

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Cited by:
  1. Vermeulen, Philip & Gautier, Erwan & Stahl, Harald & Dossche, Maarten & Sabbatini, Roberto & Dias, Daniel & Hernando, Ignacio, 2007. "Price setting in the euro area: some stylised facts from individual producer price data," Discussion Paper Series 1: Economic Studies 2007,03, Deutsche Bundesbank, Research Centre.

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