Swiss companies neglect customer-oriented pricing methods

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65.0% of the surveyed Swiss companies do not rely on customer-oriented pricing methods, but rather focus on cost- or competition-based pricing , indicate preliminary results from our pricing benchmarking study carried out this summer in Switzerland. Hence, only 35.0% of the surveyed companies base their pricing decisions on customer information. Hereof, 68.0% prefer to elicit consumer’s willingness to pay (WTP) directly, 59.0% base their decisions on the analysis of market data and only 9.0% of the interviewed Swiss firms rely on conjoint-analysis.

These findings are interesting for two reasons:

1. From the practical point of view, it is astonishing that firms tend to neglect customer-oriented information when pricing new and existing products. Of course, costs serve as a baseline for pricing decisions within the firm and companies can not set their prices without considering their competitors’ prices. Nevertheless, customer information (i.e., the knowledge of customer`s willingness to pay) can help firms discover so far unrealized pricing potenial.

2. From an academic perspective, our findings contradict the supremacy of research on conjoint-analyis, an indirect method to measure customer´s willingness to pay. As most companies prefer to use direct measurement methods future research should also focus on the appropriate design and validity of the direct measurement approach.

During our pricing benchmarking study in Switzerland, we carried out several expert interviews with senior management in various industries such as FMCG, financial services and insurance, industrial goods and services, construction industry and telecomunications. Based on these qualitative findings, we conducted a large scale quantiative study in order to generalize the results from our qualitative interviews.

The entire study by Michaela Eisele, Prof. Dr. Harley Krohmer, Reto Hofstetter and myself will be published in 2008.

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About the author: Klaus Miller is PHD candidate and working as research assistant at the Institute of Marketing of the University of Bern

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