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Sales force behaviour and best practice pricing drive a product's return on investment

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  • Timothy Baker
  • David Collier
  • Vaidy Jayaraman

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.

Suggested Citation

  • Timothy Baker & David Collier & Vaidy Jayaraman, 2017. "Sales force behaviour and best practice pricing drive a product's return on investment," International Journal of Services and Operations Management, Inderscience Enterprises Ltd, vol. 28(3), pages 335-358.
    • Handle: RePEc:ids:ijsoma:v:28:y:2017:i:3:p:335-358
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