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Purpose
– The purpose of this paper is to develop an innovative conceptual view on the management of strategic or important customers in business markets, so‐called (key) account management. Central to this new perspective is customer value creation through external customer alignment. The paper additionally proposes two propositions, based on quan...
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Context 1
... congruency principle also means that it is impossible to design a universal and single best strategy, applicable to all possible situations. Applied to account management, the congruency principle means that companies must comprehend the key value creation drivers to create or enhance customer value, before deciding what type of account management organisation they need. Based on the TCE (Williamson, 1985) and the Theory of Economic Rent (TER) generation, we can predict the extent to which suppliers, and hence account management organisations, will be more or less considered strategic (as opposed to transactional) by customers. According to the theory of economic rent, a supplier only captures rent (and maintains this rent in the long term) if he possesses a competitive advantage. We believe customer-supplier interactions will move toward a strategic relationship for the supplier when rent generation is high. In cases where rent generation is low, two explanations are possible. First, there may be high levels of competition due to limited differentiation possibilities. Second, there may be high levels of competition due to the structure of the industry. In both cases, however, competition is high, rent generation is low, and profit levels approach marginal cost. This logic will push suppliers into a cost leadership strategy. As a consequence (based on TCE), customers will start to behave opportunistically and try to capture the maximum value out of their interaction/exchange with the supplier who offers a limited range of products, services, systems or solutions (see commoditisation, commodity magnet (Rangan and Bowman, 1992)). Therefore relationships will move to more transaction-oriented interactions. It is important that suppliers realise what type of interaction they are involved in with their customers (strategic vs transactional). If only low customer value creation is possible, it will be very difficult to maintain a more than transactional relationship with the customer. It is better in such situations not to invest too much in relationship marketing, and design an account management organisation that is cost effective, sales driven, technology based and reactive. Based on our previous discussions we propose a classification of account management based on two key variables: relationship proneness (RP) and competence development proneness (CDP). The choice of RP and CDP is theoretical rooted in the congruence theory. RP and CDP are strategic alignment variables between buyer and seller. They measure the extent to which each side of the dyad is willing to commit itself towards the other. Research done by Gosselin (2002) shows that strategic congruence between a buyer and seller is one of the dominant variables explaining account management performance. Both CDP and RP can take, independent from each other, either a high or a low value. Therefore, we can acknowledge four types of important customers or accounts. We name them respectively (Figure 2): key account; strategic account; transactional account; and captive account. It is important to emphasise that all of these accounts or important customers can exist simultaneous within a single buyer firm. This is particularly relevant when dealing with global, international, multinational or industrial holding companies. Often, those types of companies organise themselves around multiple business divisions, units and/or business lines. We believe (based on our own experience) that account management structures should be organised in line with the strategic business units (SBU) of the customer’s organisation structure and not according to the legal company structure (i.e. one company does not imply one single type of account classification). Dealing with global, multi-business, industrial groups with multiple SBUs leads to coordination issues if the supplier does not use a mirror organisation of his customer. Mirror organisations are a form congruency of strategic alignment between customer and supplier. Based on our account classification approach, we think only two attractive and sustainable customer relationships are possible. Relationships evolve either towards a partnership or towards a strategic alliance (i.e. strategic account), or towards transactional sales (i.e. transactional account). Key accounts and captive accounts provide no stable, long-term relationship positions. The reason is that both miss an essential element of mutual proneness to create a stable long-term relationship. This leads us to propose four possible account management strategies (Figure 2): two dominant account management strategies for each of the two unstable customer relationship positions. In this situation the supplier wants a relationship with the customer (CDP high), but the customer is not prone (RP low) to maintain a relationship with the supplier: . Strategy A. Invest in the relationship if the customer is willing to consider your offer from a strategic point of view. . Strategy B. Reduce investment with the customer; consider this customer no longer a potential strategic account. Try to service the customer in a cost effective way (e.g. through technology – telesales, web-based sales, SAS sales automation systems, etc . . . ). In this situation the customer wants a relationship with the supplier (or a relationship is imposed with the supplier) (RP high), but the supplier is not prone (CDP low) to maintain a relationship with the customer: . Strategy C. Invest in specific solutions in order to increase your competence level with or through this customer relationship. . Strategy D. Harvest profits as long as possible. This is a particularly appropriate strategy when dealing with structural captive accounts that have no alternative. This paper approaches account management from a conceptual, economic and strategic point of view. Our analysis and research (Gosselin, 2002) leads us to believe that in an increasingly complex business environment (see Figure 1) (e.g. globalisation, pace of technological change, deregulation), rent generation through important customers in business markets will increasingly depend on external rather than on internal (organisational) congruence or alignment. We define congruence according to the definition proposed by Gosselin (2002, p. 122): We define rent, as the capability of a company to deliver value above its marginal costs or above its break-even point, as long as this situation does not create new competition. Rent is synonymous with economic profit (EP). EP is accounting profit (AP) (i.e. company profit reported in a profit and loss statement) minus opportunity costs. The concept of EP relates closely to the concept of net present value (NPV). It can be shown that when an investment has a positive rent, it will have a positive NPV (Besanko et al. , 2000, pp. 22-4). Rent generation also relates closely to competitive advantage, because no rent can be generated in the absence of a competitive advantage. This is a consequence of competition. Indeed competition does two things to companies: it reduces profits to marginal cost level, and it keeps profits at that level over time. To be able to generate rents companies must therefore have a competitive advantage; otherwise competition will prevent them form earning much more than marginal cost. Four types of rent generation are described in the economic literature: 1 Ricardo rents (ownership of valuable assets); 2 Schumpeterian rents (entrepreneurial risk taking, innovative advantage); 3 monopolistic rents (government protection, collusion or cartel behaviour); and 4 Pareto rents or quasi-rent (idiosyncratic distribution of company resources). Profits generated by a competitive advantage called “market driven customer value creation”, are due to Pareto-rents or quasi-rents. Pareto-rents originate from the possibility of creating a competitive advantage based on heterogeneous distribution of idiosyncratic resources between companies in the industry. This type of rent generation applied to account management is rooted in the theoretical interactions as presented in Figure 3. Customer selection based on external customer alignment will develop relationships with the customer, leading to an increase in customer loyalty. This loyalty creates a competitive advantage based on entry barriers (see replacement cost imposed on the competition if they want to recruit a customer). Those entry barriers, through the competitive advantage they create, are the basis for Pareto-rent generation. This competitive advantage will translate into an increase in “sales/customer” ratio and a decrease of “customer acquisition cost” and “customer cost to serve”. It leads to improvements in the contribution to margins, Free cash flow (FCF), customer lifetime value (CLV) and finally to an increase in shareholder value (SHV). We define customer lifetime value according to Kotler (2003, p. 45) as: This must be compared to economic rent generation based on internal process alignment and based on the product concept (i.e. customers favour those products that offer the most quality, performance or innovative features) or the production concept (i.e. customers prefer products that are widely available and inexpensive) business philosophy. Companies with a production-oriented business approach favour high production efficiency, low costs, mass-distribution, while companies with a product-oriented approach favour high product quality, performance and innovative features. In those product or production business philosophies, ...
Context 2
... congruency principle also means that it is impossible to design a universal and single best strategy, applicable to all possible situations. Applied to account management, the congruency principle means that companies must comprehend the key value creation drivers to create or enhance customer value, before deciding what type of account management organisation they need. Based on the TCE (Williamson, 1985) and the Theory of Economic Rent (TER) generation, we can predict the extent to which suppliers, and hence account management organisations, will be more or less considered strategic (as opposed to transactional) by customers. According to the theory of economic rent, a supplier only captures rent (and maintains this rent in the long term) if he possesses a competitive advantage. We believe customer-supplier interactions will move toward a strategic relationship for the supplier when rent generation is high. In cases where rent generation is low, two explanations are possible. First, there may be high levels of competition due to limited differentiation possibilities. Second, there may be high levels of competition due to the structure of the industry. In both cases, however, competition is high, rent generation is low, and profit levels approach marginal cost. This logic will push suppliers into a cost leadership strategy. As a consequence (based on TCE), customers will start to behave opportunistically and try to capture the maximum value out of their interaction/exchange with the supplier who offers a limited range of products, services, systems or solutions (see commoditisation, commodity magnet (Rangan and Bowman, 1992)). Therefore relationships will move to more transaction-oriented interactions. It is important that suppliers realise what type of interaction they are involved in with their customers (strategic vs transactional). If only low customer value creation is possible, it will be very difficult to maintain a more than transactional relationship with the customer. It is better in such situations not to invest too much in relationship marketing, and design an account management organisation that is cost effective, sales driven, technology based and reactive. Based on our previous discussions we propose a classification of account management based on two key variables: relationship proneness (RP) and competence development proneness (CDP). The choice of RP and CDP is theoretical rooted in the congruence theory. RP and CDP are strategic alignment variables between buyer and seller. They measure the extent to which each side of the dyad is willing to commit itself towards the other. Research done by Gosselin (2002) shows that strategic congruence between a buyer and seller is one of the dominant variables explaining account management performance. Both CDP and RP can take, independent from each other, either a high or a low value. Therefore, we can acknowledge four types of important customers or accounts. We name them respectively (Figure 2): key account; strategic account; transactional account; and captive account. It is important to emphasise that all of these accounts or important customers can exist simultaneous within a single buyer firm. This is particularly relevant when dealing with global, international, multinational or industrial holding companies. Often, those types of companies organise themselves around multiple business divisions, units and/or business lines. We believe (based on our own experience) that account management structures should be organised in line with the strategic business units (SBU) of the customer’s organisation structure and not according to the legal company structure (i.e. one company does not imply one single type of account classification). Dealing with global, multi-business, industrial groups with multiple SBUs leads to coordination issues if the supplier does not use a mirror organisation of his customer. Mirror organisations are a form congruency of strategic alignment between customer and supplier. Based on our account classification approach, we think only two attractive and sustainable customer relationships are possible. Relationships evolve either towards a partnership or towards a strategic alliance (i.e. strategic account), or towards transactional sales (i.e. transactional account). Key accounts and captive accounts provide no stable, long-term relationship positions. The reason is that both miss an essential element of mutual proneness to create a stable long-term relationship. This leads us to propose four possible account management strategies (Figure 2): two dominant account management strategies for each of the two unstable customer relationship positions. In this situation the supplier wants a relationship with the customer (CDP high), but the customer is not prone (RP low) to maintain a relationship with the supplier: . Strategy A. Invest in the relationship if the customer is willing to consider your offer from a strategic point of view. . Strategy B. Reduce investment with the customer; consider this customer no longer a potential strategic account. Try to service the customer in a cost effective way (e.g. through technology – telesales, web-based sales, SAS sales automation systems, etc . . . ). In this situation the customer wants a relationship with the supplier (or a relationship is imposed with the supplier) (RP high), but the supplier is not prone (CDP low) to maintain a relationship with the customer: . Strategy C. Invest in specific solutions in order to increase your competence level with or through this customer relationship. . Strategy D. Harvest profits as long as possible. This is a particularly appropriate strategy when dealing with structural captive accounts that have no alternative. This paper approaches account management from a conceptual, economic and strategic point of view. Our analysis and research (Gosselin, 2002) leads us to believe that in an increasingly complex business environment (see Figure 1) (e.g. globalisation, pace of technological change, deregulation), rent generation through important customers in business markets will increasingly depend on external rather than on internal (organisational) congruence or alignment. We define congruence according to the definition proposed by Gosselin (2002, p. 122): We define rent, as the capability of a company to deliver value above its marginal costs or above its break-even point, as long as this situation does not create new competition. Rent is synonymous with economic profit (EP). EP is accounting profit (AP) (i.e. company profit reported in a profit and loss statement) minus opportunity costs. The concept of EP relates closely to the concept of net present value (NPV). It can be shown that when an investment has a positive rent, it will have a positive NPV (Besanko et al. , 2000, pp. 22-4). Rent generation also relates closely to competitive advantage, because no rent can be generated in the absence of a competitive advantage. This is a consequence of competition. Indeed competition does two things to companies: it reduces profits to marginal cost level, and it keeps profits at that level over time. To be able to generate rents companies must therefore have a competitive advantage; otherwise competition will prevent them form earning much more than marginal cost. Four types of rent generation are described in the economic literature: 1 Ricardo rents (ownership of valuable assets); 2 Schumpeterian rents (entrepreneurial risk taking, innovative advantage); 3 monopolistic rents (government protection, collusion or cartel behaviour); and 4 Pareto rents or quasi-rent (idiosyncratic distribution of company resources). Profits generated by a competitive advantage called “market driven customer value creation”, are due to Pareto-rents or quasi-rents. Pareto-rents originate from the possibility of creating a competitive advantage based on heterogeneous distribution of idiosyncratic resources between ...
Context 3
... is still large and may even have increased. Research, by McDonald and Woodburn (1999) shows that relationship-marketing paradigms applied to account management have not been fully understood by many practitioners in industrial and business firms. Consequently, many companies think in a rather confused way about account management. The importance of account management derives from fundamental characteristics of business and industrial markets. Empirical observations show that revenues in business and industrial markets are Pareto distributed, i.e. 20 per cent of customers account for 80 per cent of revenues (Sheth and Parvatiyar, 2002). This results in a few powerful customers controlling an important portion of the suppliers’ revenues and (possibly) profit. Over time, this revenue concentration, towards important customers, may even have increased in developed and mature business and industrial markets. Such changes have led to a further increase in the importance of account management. Figure 1 presents a schematic overview of driving forces, root causes and critical success factors, contributing to the increased importance of account management. Gosselin (2002, pp. 54-9), identified at least five driving forces leading to the increased importance of account management: 1 Characteristics of the revenue structure in business and industrial markets (i.e. Pareto distribution). 2 Globalisation, leading to global customers and the need to protect the customer base from competition. 3 Market maturity of most business and industrial markets, resulting in a reduction of the number of suppliers in global markets (i.e. mergers, acquisitions, strategic alliances). 4 Customer power due to the increasingly centralised organisation of purchasing by important customers in global markets. 5 Technological developments leading to mass customisation, acceleration in competition. Technological developments, together with globalisation, eventually bring about the phenomenon of industry consolidation. The structure of our article develops three topics. First, we propose a new classification of the account management concepts based on buyer/seller strategic proneness interaction. In practice, account management means different things to different people, in different industries, in different types of companies and in different types of functions. Academics, consultants and managers all use different names for same account management concepts and the same names for different account management concepts. Therefore, account management nomenclature has been and still is a source of confusion (Gosselin and Heene, 2005). Second, we formulate a new research proposition explaining how account management could create competitive advantage based on the creation of customer value. Central to our proposition is the customer alignment perspective. Finally, we discuss the organisational consequences of these new propositions from a practical point of view. More specifically, we consider both personal and organisational prerequisites necessary to create and develop a competitive advantage based on account management. Based on an extensive review of both academic and practice- oriented account management literature, we identified three distinct sources of confusion. The first source of confusion relates to the purpose: is account management a sales or a marketing activity? This boils down to the question: “Is account management responsible for relationship building and coordination with important customers or mainly responsible for (transactional) sales generation?” The second source of confusion relates to geographical scope: “Does account management show the same characteristics on a local, regional or global level, or does change in geographical scope imply corresponding changes in the organisational concept of account management?” The third source of confusion relates to a universal applicability question: “Is it possible to design and implement a single best account management organisation structure, applicable to most types of companies and independent of the complexity of: products, services or systems; customer organisation; supplier organisation; or environment? Understanding the different sources of confusion will contribute to the enhancement of companies” capabilities to create competitive advantages based on the creation of customer value. Since different sources of confusion are rooted in different levels of complexity, this will imply the need to create and implement different ways to approach customers from a sales or marketing perspective in order to be able to create customer value. In addition understanding those sources of confusion also implies specific structural organisation, designs, processes and interactions with customers. These considerations have implications for relationships within companies as well as between them. Those specific characteristics will lead to a new classification of important customers (see Figure 2). Academic research on account management has a long tradition, going back to the mid-1970s (Gosselin and Heene, 2005; Weilbaker and Weeks, 1997). This academic research was based on experiments of leading and innovative companies in the USA who knew and used some account management concepts from the mid-1960s onwards. Account management originated as a response to pressure from important industrial customers, called major accounts or national accounts. Fuelled by economic growth, industrial companies extended their geographic coverage, and used their purchasing power to force suppliers to create coordinated and client specific sales and service channel. (See Gosselin and Heene (2005) for an overview of different nomenclatures used in account management literature over the past 30 years.) Those new sales channels led, in the early 1970s, to the emergence of a new phenomenon in industrial sales management, the so-called national account management (NAM). The term “national” refers to the national coverage within the USA coverage. Suppliers had to put structures in place to service the most innovative and important customers who developed their business on a national scale. Because in the early 1970s neither relationship marketing, business marketing nor sales management had an extended academic body of knowledge, the literature on account management was mainly application oriented. It was characterised by an anecdotal and practical approach lacking basic theoretical foundations. Consequently, account management was studied as a new phenomenon from a practical, sales distribution oriented, organisational and implementation perspective (Gosselin and Heene, 2005). Account management literature during this period did not differentiate between a marketing or a sales approach. In practice however, account management was mainly driven by a defensive sales approach, imposed by important customers, in order to increase their service levels through a single point of contact. Differences in approach and maturity toward account management (e.g. sales vs marketing driven) could be found between, and within, different industries. Differences also existed between early adopters of account management and their followers, and between big and small companies (Gosselin, 2002; Weilbaker and Weeks, 1997). Although this was the situation in the 1970s, very little had changed by 2002. During the 1980s and 1990s, Millman and Wilson (1995) proposed a relationship marketing-oriented approach towards account management. Their approach was a practical application of the basic buyer/seller relationship model developed by Dwyer et al. (1987). Today, account management still remains within the marketing literature as a practical application of either a sales management or relationship marketing approach. The general position described in the previous paragraph was also found in Belgium in 2002, when we performed research. We distributed questionnaires to account managers from business and industrial companies. The main characteristics of the research design were as follows: . The research population was Belgian business and industrial account managers from companies with annual revenues in excess of e 25 million and more than 200 employees. . The population size was 513 account managers (companies). . The sample size was 115 account managers. . The response rate was 22.4 per cent. Companies in the sample are characterised by annual revenues averaging e 128 million (median), and 673 employees (median) (see Table I). Table I, shows that the duration of ongoing customer relationships were 15 years (median) and positioned in the mature phase of relationship development. Sales with the important customer were e 8 million (median) and represent 6.25 per cent of the sample revenues. Account managers were, on average, very experienced persons, with more than 20 years of experience, who simultaneously managed 8 customers (median). The characteristics shown in Table I are in line with previous studies done in the UK and in the USA (Conlon et al. , 1997; McDonald and Woodburn, 1999). Table II summarises the level of development of the different subsystems of account management systems used by the companies studied in the research ( n 1⁄4 115). We found that account management systems were only “well to very well” developed in fewer than half of the companies (44 per cent). The most highly developed account management subsystems were sales-tracking systems and evaluation systems (44 per cent), while the least developed were career-tracking systems (17 per cent). We also observed that less than one-third of the companies invested in internal/ coordination forums or platforms (29 per cent). This may indicate that account management is not considered to be of strategic importance to suppliers. Our research data support this assumption because only 36 per cent of the companies in our sample appointed a member of the executive committee as a ...
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Purpose
The present study aims to contribute to the growing stream of literature about the network perspective of value co-creation via key account management (KAM) by exploring how firms, in complex industrial markets, use key account strategies to create value, not only for buyers and sellers of industrial products/services but also, more widely, for larger ecosystems of stakeholders. The research question this paper seeks to address is how the KAM approach promotes value co-creation in multi-stakeholder ecosystem.
Design/methodology/approach
To answer this research question, this study uses a qualitative research approach based on data triangulation. This study focuses on the market access (MA) strategies implemented by a multinational UK-based pharmaceutical company within the Italian multi-stakeholder health-care ecosystem over several years.
Findings
The results show that KAM in complex networks acts as a catalyst for value creation, through multiple interactions with different actors and an ad hoc configuration of five strategic levers: product performance, economic impact, institutional relationships, commercial organization and communication. These levers are able to unlock the appropriate value drivers and form a specific “market access mix” implemented by the firm to both promote the adoption of the firm’s products and generate value for all market stakeholders.
Originality/value
The study offers an innovative and comprehensive evidence-based model for designing specific MA strategies aimed at co-creating value within multi-stakeholder ecosystems. The proposed MA mix outlines the fact that knowledge, relationships and innovation are not unique factors that can be leveraged by stakeholders to co-create value.
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Value-based pricing (VBP) is often considered the most profitable pricing method. However, VBP is rarely implemented by companies. This research study asks the question Why? and investigates the obstacles to an implementation of VBP. The objectives of this paper are to provide an assessment of customer-based obstacles to implement VBP in four different German industries and to evaluate the degree of company-based obstacles by industry. For that purpose, 792 consumer questionnaires were collected and 20 expert interviews were conducted. The results show that the technology industry is the German industry with the lowest obstacles, while the pharmaceutical industry experiences the strongest obstacles. The degree of obstacles varies significantly by industry. This study contributes to theory by taking both a customer perspective and a business perspective towards VBP while identifying the degree of the obstacles to implement VBP by industry. This paper allows future researchers and business practitioners to assess the industry-specific obstacles and take appropriate measures to overcome them.
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Purpose
The purpose of this study is to explore relational aspects of key account management (KAM) in terms of social capital and relationship quality. The second objective was to identify the main dimensions that shape social capital and relationship quality within the KAM context. Finally, the third objective was to explore how relational KAM is practiced in the Middle Eastern context.
Design/methodology/approach
This study used a qualitative methodology and a multiple case design. Semi-structured interviews were carried out with a sample of senior executives from large Saudi firms.
Findings
The results highlight the importance of relationship quality and social capital to KAM implementation. A multiple case study was used to build a relational framework for KAM in the Middle Eastern context.
Practical implications
Three strategies were identified for use within the context of KAM in the Saudi market. The first strategy consisted of a means of attracting potential customers. The second strategy involved communication, aimed at maintaining frequent contact with key accounts. Finally, the third strategy was concentrated in maintenance to help sustain the relationship with key accounts.
Originality/value
This study extends understanding and the application of KAM to the Middle Eastern context, contributing to social capital, relationship quality and the KAM literature.
... competencies and allocate business-relevant resources to work on the high level of relationship marketing(Gounaris and Tzempelikos 2014;Gosselin, Matthyssens, and Bauwen 2006).Overall, the corporate strategy, including the top management level are crucial success factors for KAM in terms of an efficient customer portfolio management and corporate change management(Ojasalo 2001;Piila and Haapasalo 2009;Spencer 1999;Workman, Homburg, and Jensen 2003;Guesalaga 2014; Marcos-Cuevas et al. 2014;Tzempelikos 2015;Pereira et al. 2019). The corporate strategy includes the development of an understanding of the business approach to KAM, identifying what resources are available, developing a comprehensive strategic plan, implementing the plan, and evaluating and making any necessary adjustments(Davies and Ryals 2009; Kientop 2009;Ryals and Rogers 2007). ...
Purpose: The present work is aimed to provide a comprehensive overview of the research landscape in Key Account Management (KAM) and to identify potential knowledge gaps and under studied research questions in the context of innovation in KAM.
Method: Bibliometric and content analyses have been performed. The identified scientific articles underwent into a quantitative and qualitative investigation to map the global research landscape and to measure the evolution of scientific domains and production within KAM.
Findings: The study highlights the significance of the corporate strategy, quality of the sales team and organizational framework for the evolution of KAM. Furthermore, the study identified key opinion leaders and current expanding research areas around KAM. Emerging areas for innovation for growth in KAM are cross-culture business management, digital marketing and e-commerce technologies.
Implications: This study offers a guide for researchers on the area of KAM providing information on scholarly work covering B-to-B marketing insights on innovation in KAM.
Originality: The conduction of a systematic review of the relevant literature allows us to understand better the intellectual structure of the field, to synthesize the findings of previous studies, and to identify expanding and emerging research areas. In addition, we identify the most influential publications and authors in the KAM field, providing guidance to researchers and practitioners when conducting research on this subject area.
... Within the approach of VBP, the customer represents the starting point of the pricing process [12]. VBP is often recognized as a highly recommended pricing method [7], [8], [9], [10], [11], [12]. However, the approach also comes with several drawbacks or difficulties in its implementation stage, being the cause of low implementation rates of VBP among companies. ...
Within the research area of pricing, the most strongly emerging trend is the one towards value-based pricing, where prices are based on the customer perceived value. Researchers have agreed that value-based pricing is the most innovative and potentially most profitable pricing approach that is available. Yet, research has so far not identified the environment of value-based pricing in the future, with a lack of research in the field of supplementary pricing trends that align to value-based pricing. This research study investigates which supplementary pricing trends are most likely to occur over the upcoming years. For that purpose, 20 semi-structured expert interviews with pricing experts have been conducted as a form of mono method qualitative research design. The results suggest that four main supplementary pricing trends can be found in the future environment of value-based pricing. These four new, supplementary pricing trends are the stronger pricing awareness, Big Data and Artificial Intelligence, behavioral pricing and modern price models.
... Ding [17] explains the concept of it: "Value-based pricing is an important conceptual approach […] that leverages the benefits of the service offering in order to match the buyer's willingness-to-pay with the value received". Several researchers have indicated that value-based pricing is perceived to be the most profitable and most highly recommended pricing method that is available [18], [19], [20], [21], [22], [23]. If value-based pricing is seen as such a profitable and highly recommended pricing method, why have not all companies implemented it? ...
Pricing is a research area that is generally underestimated, yet it is a powerful revenue-generating strategy. Several researchers have agreed that within pricing, the recently emerging method of value-based pricing is a more profitable one than the more commonly used cost- and competition-based pricing. However, in business practice, implementing value-based pricing is far more complex than it may initially be assumed. Several barriers to implement value-based pricing are existing and have already been found by researchers. However, most of these barriers were identified years ago, leaving it open if there are new barriers to implement value-based pricing which may have surfaced recently. The objective of this research study is to investigate whether there are new barriers to implement value-based pricing that have surfaced, or if literature has already covered all of them. For this purpose, a mono method qualitative research approach is taken by conducting 20 semi-structured expert interviews with German pricing experts and questioning them about their business experience around the topic of value-based pricing and barriers to implement it. The results show that literature has not yet identified all barriers to implement value-based pricing, but rather four new barriers were found. These four new barriers are the non-holistic pricing approach, the fear to lose customers, the lack of value recognition and the inconsistency in execution.
