IDEAS home Printed from https://ideas.repec.org/a/pal/jorapm/v22y2023i1d10.1057_s41272-022-00372-z.html
   My bibliography  Save this article

Strategic pricing decision using the analytic hierarchy process

Author

Listed:
  • Ram Kumar Dhurkari

    (Indian Institute of Management Sirmaur)

Abstract

Among all the elements of the marketing mix, price is the only element that brings revenues to a firm. Pricing-related research is broadly carried out in two different disciplines, namely economics and marketing. The research in economics domain is primarily theoretical. The research in marketing is multi-disciplinary and uses principles of game theory, behavioral decision theory, psychology, and social dimensions to address various pricing-related managerial decision problems. Scholars have proposed multiple theories explaining the pricing-related decision-making processes of firms. However, most of the work is descriptive in nature and does not give adequate directions to operationalize the decisions related to pricing strategy. This paper is normative in nature and provides useful insides to practitioners on how pricing strategy decisions can be made. This paper proposes a decision hierarchy that can be used to operationalize decisions related to the pricing strategy of a firm. Since the inherent components of the problem structure closely resemble the axiomatic requirements of the Analytic Hierarchy Process (AHP) which is a popular multi-criteria decision-making method, this paper also demonstrates how the AHP method can be used to solve a strategic pricing decision problem.

Suggested Citation

  • Ram Kumar Dhurkari, 2023. "Strategic pricing decision using the analytic hierarchy process," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 22(1), pages 85-100, February.
    • Handle: RePEc:pal:jorapm:v:22:y:2023:i:1:d:10.1057_s41272-022-00372-z
    DOI: 10.1057/s41272-022-00372-z
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1057/s41272-022-00372-z
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1057/s41272-022-00372-z?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Linden Pohland & Muhammet Kesgin, 2018. "Pricing determinants in hotels: The case of luxury, upscale, and mid-scale price segments," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 17(4), pages 218-230, August.
    2. Arsić, Sanela & Nikolić, Djordje & Živković, Živan, 2017. "Hybrid SWOT - ANP - FANP model for prioritization strategies of sustainable development of ecotourism in National Park Djerdap, Serbia," Forest Policy and Economics, Elsevier, vol. 80(C), pages 11-26.
    3. Stephen A. Smith, 1986. "New Product Pricing in Quality Sensitive Markets," Marketing Science, INFORMS, vol. 5(1), pages 70-87.
    4. Hamalainen, Raimo P. & Seppalainen, Timo O., 1986. "The analytic network process in energy policy planning," Socio-Economic Planning Sciences, Elsevier, vol. 20(6), pages 399-405.
    5. Denguir-Rekik, Afef & Montmain, Jacky & Mauris, Gilles, 2009. "A possibilistic-valued multi-criteria decision-making support for marketing activities in e-commerce: Feedback Based Diagnosis System," European Journal of Operational Research, Elsevier, vol. 195(3), pages 876-888, June.
    6. Indounas, Kostis, 2006. "Making effective pricing decisions," Business Horizons, Elsevier, vol. 49(5), pages 415-424.
    7. Nenggui Zhao & Qiang Wang & Ping Cao & Jie Wu, 2019. "Dynamic pricing with reference price effect and price-matching policy in the presence of strategic consumers," Journal of the Operational Research Society, Taylor & Francis Journals, vol. 70(12), pages 2069-2083, December.
    8. Wu, Desheng (Dash) & Lee, Chi-Guhn, 2010. "Stochastic DEA with ordinal data applied to a multi-attribute pricing problem," European Journal of Operational Research, Elsevier, vol. 207(3), pages 1679-1688, December.
    9. Kehong Chen & Yong Zha & Layth C. Alwan & Lu Zhang, 2020. "Dynamic pricing in the presence of reference price effect and consumer strategic behaviour," International Journal of Production Research, Taylor & Francis Journals, vol. 58(2), pages 546-561, January.
    10. Lorenzo Masiero & Juan L. Nicolau, 2012. "Price Sensitivity to Tourism Activities: Looking for Determinant Factors," Tourism Economics, , vol. 18(4), pages 675-689, August.
    11. Vadde, Srikanth & Zeid, Abe & Kamarthi, Sagar V., 2011. "Pricing decisions in a multi-criteria setting for product recovery facilities," Omega, Elsevier, vol. 39(2), pages 186-193, April.
    12. Grewal, Dhruv & Janakiraman, Ramkumar & Kalyanam, Kirthi & Kannan, P.K. & Ratchford, Brian & Song, Reo & Tolerico, Stephen, 2010. "Strategic Online and Offline Retail Pricing: A Review and Research Agenda," Journal of Interactive Marketing, Elsevier, vol. 24(2), pages 138-154.
    13. Wu, Cheng-Shiung & Lin, Chin-Tsai & Lee, Chuan, 2010. "Optimal marketing strategy: A decision-making with ANP and TOPSIS," International Journal of Production Economics, Elsevier, vol. 127(1), pages 190-196, September.
    14. R. L. Hall & C. J. Hitch, 1939. "Price Theory And Business Behaviour," Oxford Economic Papers, Oxford University Press, vol. 0(1), pages 12-45.
    15. Mohamad H. Gholami & Mirmehdi Seyyed-Esfahani, 2019. "An integrated analytical framework based on fuzzy DEMATEL and fuzzy ANP for competitive market strategy selection," International Journal of Industrial and Systems Engineering, Inderscience Enterprises Ltd, vol. 31(2), pages 137-167.
    16. Shipley, David D, 1981. "Pricing Objectives in British Manufacturing Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 29(4), pages 429-443, June.
    17. Thomas L. Saaty, 1994. "How to Make a Decision: The Analytic Hierarchy Process," Interfaces, INFORMS, vol. 24(6), pages 19-43, December.
    18. Haijun Wang & Shanling Li & Jianwen Luo, 2018. "Optimal markdown pricing for holiday basket with customer valuation," International Journal of Production Research, Taylor & Francis Journals, vol. 56(18), pages 5982-5996, September.
    19. Gaurav Khatwani & Praveen Ranjan Srivastava, 2015. "Identifying Organization Preferences of Internet Marketing Channels using Hybrid Fuzzy MCDM Theories," Journal of Electronic Commerce in Organizations (JECO), IGI Global, vol. 13(4), pages 26-54, October.
    20. Saaty, Thomas L., 1990. "How to make a decision: The analytic hierarchy process," European Journal of Operational Research, Elsevier, vol. 48(1), pages 9-26, September.
    21. Peter M. Noble & Thomas S. Gruca, 1999. "Industrial Pricing: Theory and Managerial Practice," Marketing Science, INFORMS, vol. 18(3), pages 435-454.
    22. Z. John Lu & William S. Comanor, 1998. "Strategic Pricing Of New Pharmaceuticals," The Review of Economics and Statistics, MIT Press, vol. 80(1), pages 108-118, February.
    23. Venkatesh Shankar & Ruth N. Bolton, 2004. "An Empirical Analysis of Determinants of Retailer Pricing Strategy," Marketing Science, INFORMS, vol. 23(1), pages 28-49, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Alireza Taheri-Moghaddam & Ata Allah Taleizadeh & Park Thaichon, 2025. "Price dynamics and quality collaborations: a game theory exploration of cooperative advertising and contract design in manufacturer–retailer supply chains," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 24(1), pages 80-98, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kumar, V. & Sunder, Sarang & Sharma, Amalesh, 2015. "Leveraging Distribution to Maximize Firm Performance in Emerging Markets," Journal of Retailing, Elsevier, vol. 91(4), pages 627-643.
    2. Carayannis, Elias G. & Goletsis, Yorgos & Grigoroudis, Evangelos, 2018. "Composite innovation metrics: MCDA and the Quadruple Innovation Helix framework," Technological Forecasting and Social Change, Elsevier, vol. 131(C), pages 4-17.
    3. Rimvydas Labanauskis & Aurelija Kasparavičiūtė & Vida Davidavičienė & Dovilė Deltuvienė, 2018. "Towards quality assurance of the study process using the Multi-Criteria Decision-Making Method," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 6(2), pages 799-819, December.
    4. Mirza Sikalo & Almira Arnaut-Berilo & Adela Delalic, 2023. "A Combined AHP-PROMETHEE Approach for Portfolio Performance Comparison," IJFS, MDPI, vol. 11(1), pages 1-15, March.
    5. Yu-Yu Ma & Chia-Liang Lin & Hung-Lung Lin, 2023. "Ranking of Service Quality Index and Solutions for Online English Teaching in the Post-COVID-19 Crisis," Mathematics, MDPI, vol. 11(18), pages 1-24, September.
    6. Hongxun Xiang & Xia Heng & Boleng Zhai & Lichen Yang, 2024. "Digital and Culture: Towards More Resilient Urban Community Governance," Land, MDPI, vol. 13(6), pages 1-18, May.
    7. Pillai, Kishore Gopalakrishna & Kumar, V., 2012. "Differential Effects of Value Consciousness and Coupon Proneness on Consumers’ Persuasion Knowledge of Pricing Tactics," Journal of Retailing, Elsevier, vol. 88(1), pages 20-33.
    8. Gerda Ana Melnik-Leroy & Gintautas Dzemyda, 2021. "How to Influence the Results of MCDM?—Evidence of the Impact of Cognitive Biases," Mathematics, MDPI, vol. 9(2), pages 1-25, January.
    9. Kadriye Burcu Yavuz Kumlu & Şule Tüdeş, 2019. "Determination of earthquake-risky areas in Yalova City Center (Marmara region, Turkey) using GIS-based multicriteria decision-making techniques (analytical hierarchy process and technique for order pr," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 96(3), pages 999-1018, April.
    10. Giovanni Dosi, 2024. "Why is economics the only discipline with so many curves going up and down? There is an alternative," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 14(1), pages 1-34, March.
    11. Chia-Liang Lin & Jwu-Jenq Chen & Yu-Yu Ma, 2023. "Ranking of Service Quality Solution for Blended Design Teaching Using Fuzzy ANP and TOPSIS in the Post-COVID-19 Era," Mathematics, MDPI, vol. 11(5), pages 1-28, March.
    12. Ivan Ligardo-Herrera & Tomás Gómez-Navarro & Hannia Gonzalez-Urango, 2019. "Application of the ANP to the prioritization of project stakeholders in the context of responsible research and innovation," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 27(3), pages 679-701, September.
    13. Chaab, Jafar & Zaccour, Georges, 2024. "Dynamic pricing in the presence of social externalities and reference-price effect," Omega, Elsevier, vol. 122(C).
    14. Sung-Lin Hsueh, 2012. "A Fuzzy Utility-Based Multi-Criteria Model for Evaluating Households’ Energy Conservation Performance: A Taiwanese Case Study," Energies, MDPI, vol. 5(8), pages 1-17, August.
    15. Derya Gul & Ahmet Serhat Uludag, 2016. "Determination of the Most Charismatic Leader Using Analytic Hierarchy Process and Fuzzy TOPSIS: An Application in Turkey," International Business Research, Canadian Center of Science and Education, vol. 9(7), pages 80-97, July.
    16. Ergu, Daji & Kou, Gang & Peng, Yi & Shi, Yong, 2011. "A simple method to improve the consistency ratio of the pair-wise comparison matrix in ANP," European Journal of Operational Research, Elsevier, vol. 213(1), pages 246-259, August.
    17. Madhusudhan Adhikari & Laxman Prasad Ghimire & Yeonbae Kim & Prakash Aryal & Sundar Bahadur Khadka, 2020. "Identification and Analysis of Barriers against Electric Vehicle Use," Sustainability, MDPI, vol. 12(12), pages 1-20, June.
    18. Kuang-Sheng Liu & Sung-Lin Hsueh & Wen-Chen Wu & Yu-Lung Chen, 2012. "A DFuzzy-DAHP Decision-Making Model for Evaluating Energy-Saving Design Strategies for Residential Buildings," Energies, MDPI, vol. 5(11), pages 1-19, November.
    19. Kurek, Katarzyna A. & Heijman, Wim & van Ophem, Johan & Gędek, Stanisław & Strojny, Jacek, 2020. "The impact of geothermal resources on the competitiveness of municipalities: evidence from Poland," Renewable Energy, Elsevier, vol. 151(C), pages 1230-1239.
    20. Coccia, Mario, 2016. "The relation between price setting in markets and asymmetries of systems of measurement of goods," The Journal of Economic Asymmetries, Elsevier, vol. 14(PB), pages 168-178.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:jorapm:v:22:y:2023:i:1:d:10.1057_s41272-022-00372-z. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.