Title: Sales force behaviour and best practice pricing drive a product's return on investment

Authors: Timothy Baker; David Collier; Vaidy Jayaraman

Addresses: Department of Finance and Management Science, College of Business, Washington State University, 2710 Crimson Way, West 207P, Richland, WA 99354, USA ' Lutgert College of Business, Florida Gulf Coast University, Lutgert Hall 3332, Fort Myers, FL 33965-65656, USA ' School of Business Administration, University of Miami, Jenkins 417E, Coral Gables, FL 33124-6520, USA

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.

Keywords: pricing; benchmarking; quality management; structural equation modelling; performance measurement and management; logit and multiple regression methods; survey research.

DOI: 10.1504/IJSOM.2017.087289

International Journal of Services and Operations Management, 2017 Vol.28 No.3, pp.335 - 358

Available online: 19 Sep 2017 *

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