Sales force behaviour and best practice pricing drive a product's return on investment Online publication date: Thu, 12-Oct-2017
by Timothy Baker; David Collier; Vaidy Jayaraman
International Journal of Services and Operations Management (IJSOM), Vol. 28, No. 3, 2017
Abstract: A causal model is proposed that defines the relationships between safes force behaviour and effectiveness, current pricing compared to a new way of setting pricing benchmarks, and a product's return on investment (ROI). The purpose of this paper is to investigate what drives consistent pricing decisions and financial performance, and introduce a new benchmarking metric. Sales agents and pricing executives for business-to-business (B2B) manufacturers in the durable goods industry were surveyed. A price adherence fraction (PAF) is defined that measures current pricing decisions against the best (i.e., highest logit probability out of ten pricing situations) pricing decision for that particular product-firm-market pricing situation. The structural equation model that tested if the actual survey data fit the hypothesised causal model was reasonably acceptable while a more parsimonious multiple regression model was statistically valid in all respects at predicting a product's return of investment.
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