This is one of the first books to combine the current megatrend of digitalization and pricing as the most effective lever for increasing and sustaining profits. The book presents the basics of digital pricing as well as modeling methods and implementation examples. This structure helps in tackling the latest developments and challenges due to digitalization. Readers will gain a detailed insight into using innovative revenue and price models to generate a sustainable competitive advantage for their companies. The author uses his cross-industry experience to draw on several examples of innovative digital pricing approaches which can be applied in industrial sectors such as automotive, industrial goods and machinery, as well as service sectors like telecommunications, transportation and tourism.
Author(s): Frank Frohmann
Series: Management for Professionals
Publisher: Springer
Year: 2023
Language: English
Pages: 342
City: Cham
Aim of this book
Contents
About the Author
List of Figures
1: Basics of Price Management
1.1 Digitization and Pricing
The scope of the pricing logic in this book
1.2 Price as a Profit Driver
Case study 1: Price effect
1.3 Specific Characteristics of the Price
1.4 The Price-Volume Function as an Indicator of Customer Response
Practical tip
1.5 Market Dynamics and Price Elasticity
Practical tip
1.6 Price Actions, Elasticities, and Profit Effects
As an interim conclusion
Case study 2: Price effect
Practical example: Price effect
1.7 Practical Examples: Market Dynamics in Modern Industries
Case study 1: High demand effect of price cuts
Case study 2: Positive profit effect of price premia
Case study 3: Increasing price elasticity through digitization and price transparency
Case Study 4: Increasing price acceptance through technical advantage and innovation
References
2: Characteristics of Digital Pricing
2.1 Characteristics of Digital Offerings in Terms of Pricing
2.2 General Conditions and Price-Related Characteristics of the Internet
2.3 Stages of Development of Digitization
2.4 Digitization and Competitive Dynamics
References
3: Business Models
3.1 Business Models as the Starting Point for Digital Pricing
Practical Example: Disney Theme Parks
3.2 Digital Business Models
Case Study Music Streaming: Spotify
Practical Examples: Marketplaces and Platforms
Example: Cell Phones
3.3 Value Creation Through Data and Data-Driven Business Models
Practical Example 1: Data-Driven Business Models
Practical Example 2: Data-Driven Business Models
Practical Example 3: Data-Driven Business Models
3.4 The Three-Level Model of Digital Pricing
Practical Example: Modern Monetization Models
Practical example 1: Hitachi (B2B)
Practical example 2: AVE (B2C)
Practical example 3: Amazon (B2C)
Practical example 4: Google (B2C)
Practical Example: Amazon (B2C)
3.5 Method Tip: Business Model Map
Case Study: Resources as a Starting Point for the Business Model Definition
Project Outline for the Business Model Map
References
4: Revenue Models
4.1 Delineation: Revenue Models
Practical Example 1: Google Waymo
Practical Example 2: Automobile Manufacturer
Practical Example 3: Amazon
Practical Example 4: Google
Case Study Music Streaming: Spotify
4.2 Services and Revenue Sources on the Internet
Case Study: Revenue Sources for Smartphones
Case Study: Revenue Sources for Games
Case Study: Revenue Sources for Films
Case Study: Apple Revenue Sources
4.3 Overview of Selected Revenue Models
Case Study Music Streaming: Spotify
References
5: Pricing Process Part 1: Analysis
5.1 Introduction to the Pricing Process
5.2 Determinants of Pricing
5.3 Costs
Case Study MediaMarktSaturn
5.4 Competition
5.5 Customers
References
6: Pricing Process Part 2: Strategy
6.1 From Corporate and Competitive Strategy to Pricing Strategy
6.2 Dimensions of the Pricing Strategy
6.3 Pricing Targets
Method Tip: Target Prioritization
Case Studies: Amazon ebooks and Apple iPhone
6.4 Competitive Strategies
Case Studies
Apple Case Study
6.5 Strategic Segmentation and Positioning
Case Studies
Implementation Tip
6.6 Competitive Advantage Matrix
Case Study Praktiker
Case Study Loewe
6.7 Strategic Behavior in Competition
Case Study Retail Germany
References
7: Pricing Process Part 3: Structure (3a: Price Differentiation)
7.1 Basics of Price Differentiation
7.2 Variants of Price Differentiation
7.2.1 Price Differentiation According to Market Segments
Project Outline Pedelecs
Case Study: Price Differentiation for Advertising Customers on the Internet
Case Study Media-Saturn Retail Group
Case Study Boss
7.2.2 Quantity-Based Price Differentiation
Case Study Quantity-Based Price Differentiation
7.2.3 Price Differentiation According to Products
7.2.3.1 Price Bundling
Case Study: Microsoft Office Package
Case Study ``Customized Bundling´´
Case Studies Product Type
Method Tip
7.2.3.2 Performance-Related Price Differentiation
Case Study Netflix
7.3 Prerequisites for Price Differentiation Concepts
References
8: Pricing Process Part 3: Structure (3b: Price Models)
8.1 Delimitation and Definition: Price Models
8.2 The Six Pillars of a Price Model
Case Studies
Case Study Aladoo
8.3 Reference Bases in Detail
8.3.1 Usage-Independent Reference Bases
Case Study Telecommunications
8.3.2 Usage-Dependent Reference Bases
8.3.3 Value-Dependent Reference Bases
Case Studies: Outcome-Based Price Models (Cf. Figure 8.5)
8.4 Price Metrics in Detail
8.5 Competitive Strategies and Price Models
8.6 Methodical Innovation: Concept for Optimizing Price Models
8.7 Success Criteria of Price Models
Example 1: Software (SAP)
Example 2: DVD Rental (Netflix)
Example 3: Occupational Disability Insurance (WWK)
References
9: Pricing Process Part 3: Structure (3c: Price Optimization)
9.1 Methods for Determining the Optimum Price
9.1.1 Observation
9.1.1.1 Price Experiments
Case Study Offer Configurator
9.1.1.2 Econometric Analysis of Market Data
9.1.1.3 Voice of Consumer Analytics (``Social Listening´´)
9.1.1.4 A/B Testing
9.1.1.5 Online Auctions
9.1.2 Survey
9.1.2.1 Direct Price Query
9.1.2.2 Open Line Pricing
9.1.2.3 Gabor-Granger Method
9.1.2.4 Price-Sensitivity-Meter
9.1.2.5 Conjoint Measurement
Excursus: Comparison of Methods (Conjoint Measurement Vs. Price Experiments)
9.1.3 Workshops
9.1.3.1 Focus Group Interviews
9.1.3.2 Expert Estimation
9.1.4 Excursus: Impact of Artificial Intelligence on Price Optimization Methods
9.2 Calculation of the Profit-Optimal Price
Case Study: Automatic Price Optimization Via a Repricing Tool
9.3 Simulation Analyses for Product and Price Optimization
9.4 Method Innovation: Value-Price Optimization
9.4.1 Value-Price Optimization: Philosophy and Fundamentals
9.4.2 Methodological Steps of Value-Price Optimization at a Glance
Practical Tip
Method Tip: Analysis of Value Drivers
9.4.3 Summary of the Value Driver Analysis
9.5 Pricing Strategies for New Products
Case Studies Penetration Strategy
Case Studies Skimming Strategy
References
10: Pricing Process Part 3: Structure (3d: Portfolio Pricing)
10.1 Challenges of Portfolio Pricing
Apple Case Study
Practical Example: Long-tail Business Model and Price Structure
10.2 Methodical Derivation of Price Structures
10.3 Project Outline: Product Line Pricing for Information Goods
10.4 Method Innovation: Analysis and Steering of Price Elasticity
10.5 Implementation Tip: Price-Related Measures to Influence Price Elasticity
10.6 Dynamic Pricing
10.6.1 Definition of Dynamic Pricing
10.6.2 History and Development
Case Study Gas Stations
10.6.3 Delineation: Dynamic Pricing Versus Revenue Management
Case Study Air Traffic
10.6.4 Requirements and Fields of Application
10.6.5 Objective of Dynamic Pricing
10.6.6 Technical Variants and Forms of Dynamic Pricing
10.6.7 Personalized Dynamic Pricing
10.6.8 Dynamic Pricing Case Studies
10.6.9 Risk Factors in Dynamic Pricing
References
11: Pricing Process Part 4: Implementation
11.1 Introduction: Condition System and Sales Management
11.2 Basics of the Condition System
11.3 Performance-Oriented Condition Systems
11.4 Target Price Systems and Peer Pricing
11.5 Price Enforcement
11.5.1 Value Selling
11.5.2 Total Cost of Ownership Approach
11.5.3 Total Value of Ownership Bonus System
11.6 E-Bidding
11.7 Incentive System
11.8 Tactical Pricing
References
12: Pricing Process Part 5: Monitoring
12.1 Price Monitoring: Challenges
12.2 Pricing Cockpit
12.2.1 Financial Monitoring
12.2.2 Monitoring Market Effects
Case Study of User-oriented Monitoring: Amazon and Netflix
Case Studies: Target Prioritization in Selected Industries
Method Tip: Integration of Financial and Market Objectives
Case Study Pricing Power: Sea Freight
12.2.3 Monitoring Pricing Excellence
References
13: Pricing Process and Pricing Psychology
13.1 Focus Topic Pricing Process and Pricing Psychology: Introduction
13.2 Price Psychology and Structure (1): Mental Accounting
13.3 Price Psychology and Structure (2): Price Level Effect
13.4 Price Psychology and Structure (3): Anchoring
13.5 Price Psychology and Structure (4): Value Effect
13.6 Price Psychology and Structure (5): Price Threshold Effect
13.7 Price Psychology and Structure (6): Compromise Effect
13.8 Price Psychology and Structure (7): Decoy Effect
13.9 Price Psychology and Structure (8): Price Figure Communication
13.10 Price Psychology and Implementation (1): Tiered Discounts
13.11 Price Psychology and Implementation (2): Endowment Effect
13.12 Price Psychology and Implementation (3): Loss Aversion
References
