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

European Management Journal, December 2003

22 Pages Posted: 9 Feb 2004  

Mark E. Bergen

University of Minnesota - Carlson School of Management

Shantanu Dutta

University of Southern California - Marshall School of Business

Daniel Levy

Bar-Ilan University - Department of Economics; Emory University - Department of Economics; Rimini Center for Economic Analysis

Mark Ritson

London Business School

Mark Zbaracki

University of Western Ontario - General Management Area Group

Multiple version iconThere are 2 versions of this paper

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.

Keywords: Pricing, price setting, price adjustment, cost of price adjustment, price change management, investment in pricing processes, supply chains, customer costs of price adjustment

JEL Classification: M31, M10, M20, L11, L16, E31, D40, D20

Suggested Citation

Bergen, Mark E. and Dutta, Shantanu and Levy, Daniel and Ritson, Mark and Zbaracki, Mark, Shattering the Myth of Costless Price Changes: Emerging Perspectives on Dynamic Pricing. European Management Journal, December 2003. Available at SSRN: https://ssrn.com/abstract=472641

Mark E. Bergen

University of Minnesota - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States
612-624-1821 (Phone)

Shantanu Dutta

University of Southern California - Marshall School of Business ( email )

Hoffman Hall 701
Los Angeles, CA 90089-1427
United States
213-740-5038 (Phone)
213-740-7828 (Fax)

Daniel Levy

Bar-Ilan University - Department of Economics ( email )

Ramat-Gan, 5290002
Israel
+972 3 531-8345 (Phone)
+972 3 738-4034 (Fax)

HOME PAGE: http://econ.biu.ac.il/en/levy

Emory University - Department of Economics ( email )

1602 Fishburne Drive, Suite 306
Rich Building
Atlanta, GA 30322-0001
United States

HOME PAGE: http://economics.emory.edu/home/people/faculty/Levydaniel.html

Rimini Center for Economic Analysis ( email )

Via Patara, 3
Rimini (RN), RN 47900
Italy

HOME PAGE: http://www.rcfea.org/

Mark Ritson (Contact Author)

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

Mark Zbaracki

University of Western Ontario - General Management Area Group ( email )

London, Ontario
Canada

Paper statistics

Downloads
419
Rank
32,764
Abstract Views
4,144