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Stephan M. Liozu Andreas Hinterhuber (ed.) Routledge, 2014, $39.94, £24.35,
ISBN-10: 0415730716/ISBN-13: 978-0415730716
Following on from their successful compendium of articles in 'Innovation in Pricing: Contemporary theories and best practices', Liozu and Hinterhuber have put together a further selection of articles that specifically focus on the ROI of pricing.
In the introduction, the editors outline the importance of being able to measure the impact of pricing endeavours, and outline the fact that, until recently, pricing (and marketing in general) have suffered from an inability to accurately measure effectiveness and impact on the bottom line. The purpose of the book is to advance theory, discussion and practice of understanding how pricing activities, or the pricing function, affects performance. The specific objectives of the book are:
To provide a summary of current research of the topic.
To report on the editors own research on tools being used to measure Pricing ROI.
To highlight how to calculate pricing ROI.
To illustrate the calculation of pricing ROI through case studies.
The 15 chapters within the book are all focused on Pricing ROI and are split into three sections:
Pricing Strategy.
Pricing Tactics.
Pricing Organization.
Section One, Pricing Strategy, consists of 5 chapters. In Chapter One, Value Based Pricing ROI , Best and Vomocil look at how value-based pricing improves pricing ROI. They explore three value based pricing methods: price performance, total cost of ownership and trade-off analysis, and explore some of the steps and the ROI of each method. Hinterhuber explores the key area of Cannibalization in Chapter 2: Cannibalization - Five Easy Pieces. This exploration looks at Cannibalization in a flat market, cannibalization with market expansion, cannibalization with market expansion and a changing baseline, price promotions and cannibalization - specifically looking at the Coca Cola case, as well as a look at general findings around price promotions and cannibalization. Within this chapter, Hinterhuber offers clear suggestions to manage cannibalization in the context of new product launches and price promotions. In Chapter 3, Is there a Long Term Return on Price Promotions?, Balan looks to summarize approaches to modelling long-term effects of price promotion including varying parameter models and vector auto...