Marketing Review St.Gallen 1 | 2022 "Pricing – Capturing Value"

In economics textbooks, the price (P) is always shown on the Y-axis – it is therefore a dependent variable that results from the quantity offered in the market (Q). Even though this may make sense for the market as a whole, for the individual
it is nonsense for the individual company. Instead, the price must be an active variable that the offering company can and should set itself. This decision, as well as the value of the total offer as perceived by customers, determines the quantity that a company can sell in the market.

Benson P. Shapiro formulated it very aptly a long time ago at the Harvard Business School as a call to action for professional management: “Be a price maker, not a price taker. It should not be the case that responsible managers lower the price just to gain market share or an image-boosting customer. After all, price is the customer’s consideration for the other three value-creating marketing instruments: the product (functional value), communication (emotional value) and distribution (availability). Shapiro defined numerous requirements to become a “price maker”, in particular: 1) Offer real added value to customers based on differentiated services. 2) Customer segmentation: Focus on those customers who actually reward the added value. 3) Keep it simple: Avoid becoming your own biggest competitor with complex and confusing pricing structures. 4) Value pricing: Link the price to the value drivers, not to the product. 5) Be reliable and consistent – even if it means having to say “no”.

These principles are still valid today. In this issue of the Marketing Review St. Gallen, the authors from science and practice show how it is possible to develop the “stepchild” in marketing, pricing, into the marketing instrument that has the most sustainable positive influence on the company’s profit. Conclusion: It’s all about active price management.

Enjoy reading – and thank you for your constructive feedback!

This text is the editorial of the current issue of Marketing Review St.Gallen with the topic “Pricing – Capturing Value”. Interested parties can now find the magazine in our shop.