In recent publications, I suggested that the pricing field is under-researched and under-published compared with other elements of the marketing mix. Empirical research from McKinsey & Company reported by Clancy and Shulman in 1993 shows that less than 15% of companies do any systematic research on pricing. In 1996, Malhorta conducted a study on the nature of published marketing articles that concluded that less than 2% of all articles published in major marketing journals cover the subject of pricing.
More recently, a group of dedicated scholars conducted a review of the nature of 1,900 pricing-related papers published in the top 20 marketing journals over the last 30 years. Yes, some people are dedicated enough to conduct these types of analysis and publish their findings. While 1,900 journal articles sounds like a lot, only 106 of these papers related directly and exclusively to pricing strategies and tactics as well as to price–quality relationships. One hundred six papers published over 30 years in the top 20 academic marketing journals. That does not sound like a lot to me. Herein lies the main problem: not enough high-quality academic research directly related to pricing is conducted and published in top marketing journals. You might ask yourself: why should we care? Let me tell you why.
Consultants Do Not Conduct Fundamental Research
Let me first say that consulting research helps in many ways. It is descriptive, timely and provides snapshots of pricing practice. Consultants have access to customers and prospects, and build survey questionnaires to satisfy their need for innovation and to investigate potential trends that might enhance their pricing consulting practice. For the most part, however, consulting companies do not produce explanatory models linking variables to potential performance outcomes. Their research is sometimes qualitative, is anecdotal and lacks statistical robustness. From these surveys, one cannot draw new theory or claim significant discovery that will advance the field of pricing.
Theory Building in Pricing
Theory is built through a thorough and transformational research agenda. Getting published in top marketing journals can be a very difficult process requiring multiple iterations of the paper, the analysis and the research framing. Because papers undergo blind peer review by top pricing scholars, their research frameworks, methods and findings are profoundly challenged. Theory is built over time. Theory building is incrementa. It happens when new research builds on past research, contradicts past research or proposes another angle to it. In the pricing theory space, little of that has happened since the golden years of Nagle, Monroe, Anderson, Noble, Gruca and Cressman. Recently, thanks to your support and to support from the PPS, we have been able to conduct academic pricing research on a variety of topics. We hope that our papers might survive the grueling review process.
The Bridge Between Pricing Theory and Practice
It does take time to build theory in academia. I think it is a journey and not a destination. It is real, hard work that requires patience and resilience. Besides the recognition in academic circles, the exciting outcome to generating knowledge and theory building is to see them used in practice. For example, it took decades of research supporting and contradicting the positive influence of firms’ market orientation on profit performance, but eventually, theory-based knowledge was moved into practice, and firms embraced a market orientation. Could we envision a similar outcome for the study of value-based pricing and its impact on firm performance? Value-based pricing has been linked to superior firm performance by many consultants. However, that link has never empirically validated. It is time for our profession to conduct such a study so that we can convince top executives to embark on the pricing transformation from cost to value.
Please Join the Next Wave of Exciting Academic Research
In 2011, the Professional Pricing Society supported my Ph.D. academic research process by circulating an electronic survey to their current and prospective members. We were able to use 748 complete surveys out of over 1,200 total responses. But given our less than acceptable response rate, the chances of our results being published in a top marketing journals are slim. At the same time, a consulting company gathered 3,000 responses from their annual pricing survey. I was puzzled by these statistics. I give a lot of credit to the Professional Pricing Society for embarking on more academic research that will hopefully lead to new knowledge and theory. The profession needs it to make sure pricing gets its well-deserved place at the marketing table. It is time to bring new, robust empirical findings to the world so that pricing practitioners can benefit from them in their daily work. It is time to bring the pricing profession to new heights and to reach the next frontier.
At the end of May 2012, we will launch another academic research project on the topic of change management. We would like to ask for your support in making this research a successful endeavor. We will all benefit from that. Thanks in advance for your support.
Stephan Liozu is President & CEO of Ardex America Inc (ardexamericas.com), an innovative and high-performance building-materials company in Pittsburgh, PA. He is also a PhD candidate in Management at Case Western Reserve University and can be reached at email@example.com.