Study of the implementation of dynamic pricing in a company with a recurring revenue model through customer segmentation

Authors

DOI:

https://doi.org/10.5585/exactaep.2021.16754

Keywords:

Dynamic pricing, Strategic planning, Customer segmentation, Recurring revenue model.

Abstract

The formation of the price of products and services is a strategic decision for organizations. The price decision process involves a series of complex and interconnected variables, which must be understood as a management tool. In this context, this article seeks to reveal the need to subordinate pricing to strategic objectives and to suggest a dynamic pricing application for a communication company through customer segmentation, since the company uses superficial and unjustified price management practices. Thus, in addition to losing quality in the decision-making process, its price application model is outdated in relation to the dynamism required by the market. This research is based on literary review and the real application of the most appropriate pricing strategy to the company's case. The results reveal the advantages of price management based on strategic planning.

Downloads

Download data is not yet available.

Author Biographies

Catherine Sudbrack Rothbarth, Universidade do Rio Grande do Sul

Graduanda em Engenharia de Produção pela Universidade Federal do Rio Grande do Sul

Marcine Müller, Universidade do Rio Grande do Sul

Graduanda em Engenharia de Produção pela Universidade Federal do Rio Grande do Sul

Laura Visintainer Lerman, Universidade do Rio Grande do Sul

Possui graduação em Engenharia de Produção pela Universidade Federal do Rio Grande do Sul e em Administração pela Pontifícia Universidade Católica do Rio Grande do Sul. Mestre em Engenharia de Produção pela  Universidade Federal do Rio Grande do Sul e Doutoranda no Deparamento de Engenharia de Produção e Transportes da Universidade Federal do Rio Grande do Sul.

Natália Eloísa Sander, Universidade do Rio Grande do Sul

Possui graduação em Engenharia de Produção pela Universidade Federal do Rio Grande do Sul. Mestranda no Deparamento de Engenharia de Produção e Transportes da Universidade Federal do Rio Grande do Sul.

References

Abrate, G., Fraquelli, G., & Viglia, G. (2012). Dynamic pricing strategies: Evidence from European hotels. International Journal of Hospitality Management, 31(1), 160–168. https://doi.org/10.1016/j.ijhm.2011.06.003

Anthony, C., & Tripsas, M. (2016). Organizational identity and innovation. The Oxford Handbook of organizational identity, 417-435.

Arend, R. J., Zhao, Y. L., Song, M., & Im, S. (2017). Strategic planning as a complex and enabling managerial tool. Strategic Management Journal, 38(8), 1741-1752. https://doi.org/10.1002/smj.2420

Ayerbe, A., Cirion, I., Torres, A. D., Gil, G., & Laka, J. (2014, November). Thinking products in a different way: What is needed for product servitization. In 3rd International Business Servitization Conference Servitization (pp. 13-14). https://doi.org/10.3926/serv2014

Bayoumi, A. E.-M., Saleh, M., Atiya, A. F., & Aziz, H. A. (2012). Dynamic pricing for hotel revenue management using price multipliers. Journal of Revenue and Pricing Management, 12(3), 271–285. https://doi.org/10.1057/rpm.2012.44

BCG (2014). The Go-to-Market Revolution: A Growth Zealot’s Guide to Commercial Transformation. Boston: The Boston Consulting Group, Inc.

Brandtweiner, R. (2000). Pricing for Digitized Information Goods: The Case of Austrian Online Newspapers. AMCIS 2000. Proceedings. 284. http://aisel.aisnet.org/amcis2000/284

Bryson, J. M., Edwards, L. H., & Van Slyke, D. M. (2018). Getting strategic about strategic planning research. Public Management Review, 20(3), 317-339. https://doi.org/10.1080/14719037.2017.1285111

Cassell, C., & Gummesson, E. (2006). Qualitative research in management: addressing complexity, context and persona. Management Decision, 44(2), 167-179. https://doi.org/10.1108/00251740610650175

Cervo, A. L., & Bervian, P. A. (2011). Metodologia científica: para uso dos estudantes universitários. In Metodologia científica: para uso dos estudantes universitários (pp. 144-144).

Chen, D., Sain, S. L., & Guo, K. (2012). Data mining for the online retail industry: A case study of RFM model-based customer segmentation using data mining. Journal of Database Marketing & Customer Strategy Management, 19(3), 197-208. https://doi.org/10.1057/dbm.2012.17

Cohen, M. C., Lobel, I., & Paes Leme, R. (2020). Feature-based dynamic pricing. Management Science, 66(11), 4921-5484. https://doi.org/10.1287/mnsc.2019.3485

Cohen, B., & Neubert, M. (2019). The influence of pricing strategies on corporate valuation. International Journal of Teaching and Case Studies, 10(2), 125-156. http://dx.doi.org/10.1504/IJTCS.2019.101503

Dempsey, D., & Kelliher, F. (2018). Recurring Revenue Model Through a Cloud Computing Channel. Industry Trends in Cloud Computing, 111-128. http://dx.doi.org/10.1007/978-3-319-63994-9_6

Dias, S. R. (2006). Gestão de marketing. São Paulo: Saraiva.

Diehl, A. A., & Tatim, D. C. (2004). Pesquisa em ciências sociais aplicadas: métodos e técnicas. Pearson Brasil.

DiMicco, J. M., Greenwald, A., & Maes, P. (2001). Dynamic pricing strategies under a finite time horizon. IN Proceedings of the 3rd ACM Conference on Electronic Commerce - EC ’01. https://doi.org/10.1145/501158.501169

Elmaghraby, W., & Keskinocak, P. (2003). Dynamic pricing in the presence of inventory considerations: Research overview, current practices, and future directions. Management science, 49(10), 1287-1309. https://doi.org/10.1287/mnsc.49.10.1287.17315

Faruqui, A., & Sergici, S. (2010). Household response to dynamic pricing of electricity: a survey of 15 experiments. Journal of Regulatory Economics, 38(2), 193–225. https://doi.org/10.1007/s11149-010-9127-y

Fruchter, G. E., & Sigué, S. P. (2013). Dynamic pricing for subscription services. Journal of Economic Dynamics and Control, 37(11), 2180-2194. https://doi.org/10.1016/j.jedc.2013.05.003

Gupta, R., & Pathak, C. (2014). A machine learning framework for predicting purchase by online customers based on dynamic pricing. Procedia Computer Science, 36, 599-605. https://doi.org/10.1016/j.procs.2014.09.060

Harden, B. (2014). The Guide to Recurring Revenue Success. São Francisco: Aria.

Hjort, K., Lantz, B., Ericsson, D., & Gattorna, J. (2013). Customer segmentation based on buying and returning behaviour. International Journal of Physical Distribution & Logistics Management, 43(10), 852–865. https://doi.org/10.1108/ijpdlm-02-2013-0020

Jiaqi Xu, J., Fader, P. S., & Veeraraghavan, S. (2019). Designing and Evaluating Dynamic Pricing Policies for Major League Baseball Tickets. Manufacturing & Service Operations Management, 1-18. https://doi.org/10.1287/msom.2018.0760

Karlsen, S. S., Hamdy, M., & Attia, S. (2020). Methodology to assess business models of dynamic pricing tariffs in all-electric houses. Energy and Buildings, 207, 109586. https://doi.org/10.1016/j.enbuild.2019.109586

Keyvanshokooh, E., Fattahi, M., Seyed-Hosseini, S. M., & Tavakkoli-Moghaddam, R. (2013). A dynamic pricing approach for returned products in integrated forward/reverse logistics network design. Applied Mathematical Modelling, 37(24), 10182-10202. https://doi.org/10.1016/j.apm.2013.05.042

Kienzler, M., & Kowalkowski, C. (2017). Pricing strategy: A review of 22 years of marketing research. Journal of Business Research, 78, 101–110. https://doi.org/doi:10.1016/j.jbusres.2017.05.005

Kotler, P., & Armstrong, G. (2018). Principles of Marketing (17.ed.). Harlow: Pearson Education Limited.

Kreiner, G. E., Hollensbe, E., Sheep, M. L., Smith, B. R., & Kataria, N. (2015). Elasticity and the dialectic tensions of organizational identity: How can we hold together while we are pulling apart? Academy of Management Journal, 58(4), 981-1011. https://doi.org/10.5465/amj.2012.0462

Kumar, A. (2007). From mass customization to mass personalization: a strategic transformation. International Journal of Flexible Manufacturing Systems, 19(4), 533.

Kung, L.-C., & Zhong, G.-Y. (2017). The optimal pricing strategy for two-sided platform delivery in the sharing economy. Transportation Research Part E: Logistics and Transportation Review, 101, 1–12. https://doi.org/10.1016/j.tre.2017.02.003

Mahmoudi-Kohan, N., Moghaddam, M. P., & Sheikh-El-Eslami, M. K. (2010). An annual framework for clustering-based pricing for an electricity retailer. Electric Power Systems Research, 80(9), 1042-1048. https://doi.org/10.1509/jimk.11.1.47.20136

Montes, H., & Chaves, M. (2017). O Verdadeiro Valor do Pricing: Da estratégia de preços à excelência comercial. 2017. Deloitte Touche Tohmatsu. https://www2.deloitte.com/content/dam/Deloitte/br/Documents/strategy/verdadeiro-valor-pricing-tax.pdf

Müller, C.J. (2003). Modelo de gestão integrando planejamento estratégico, sistemas de avaliação de desempenho e gerenciamento de processos (MEIO – Modelo de Estratégia, Indicadores e Operações). Tese de doutorado. Universidade Federal do Rio Grande do Sul - UFRGS, Programa de Pós-Graduação em Engenharia de Produção - PPGEP. Porto Alegre.

Namvar, M., Gholamian, M. R., & KhakAbi, S. (2010). A two phase clustering method for intelligent customer segmentation. In 2010 International Conference on Intelligent Systems, Modelling and Simulation (pp. 215-219). IEEE. https://doi.org/10.1109/ISMS.2010.48

Oliveira, D. P. R. (1999). Excelência na administração estratégica: a competitividade para administrar o futuro das empresas (4 ed.). São Paulo: Atlas.

Pagnoncelli, D., & Vasconcellos Filho, P. (1992). Sucesso empresarial planejado. Rio de Janeiro: Qualitymark.

Raddats, C., Burton, J., & Ashman, R. (2015). Resource configurations for services success in manufacturing companies. Journal of Service Management. https://doi.org/10.1108/JOSM-12-2012-0278

Ramos, P. M., Maya, P. C. C., & Bornia A. C. (2005). Um Estudo Científico do Componente Preço e sua Relação com o Marketing Mix de Produto Brasileiro de Exportação: uma Pesquisa Multicasos nas Empresas do Consórcio de Exportação de Calçados de São João Batista. In: ENCONTRO DA ANPAD, 29, 2005, Curitiba. Anais... Brasília: Anpad. http://www.anpad.org.br/diversos/down_zips/9/enanpad2005-mktc-1151.pdf

Randall, C., Lewis, A., & Davis, A. (2016). How subscriptions are creating winners and losers in retail. Harvard Business Review, 1-6. https://hbr.org/2016/01/how-subscriptions-are-creating-winners-and-losers-in-retail

Seamans, R., & Zhu, F. (2014). Responses to entry in multi-sided markets: The impact of Craigslist on local newspapers. Management Science, 60(2), 476-493. DOI: https://doi.org/10.1287/mnsc.2013.1785

Sibata, K. T. (2017). Segmentação de Clientes de uma Empresa de Assinatura através da análise de clusters. Trabalho de Conclusão de Curso (Bacharel em Engenharia de Produção). Universidade de São Paulo.

Taylor, S., & Bogdan, R. (1992). Introducción a la observación participante. Barcelona. Editorial Paidos.

Published

2021-10-13

How to Cite

Rothbarth, C. S., Müller, M., Lerman, L. V., & Sander, N. E. (2021). Study of the implementation of dynamic pricing in a company with a recurring revenue model through customer segmentation. Exacta, 19(4), 843–863. https://doi.org/10.5585/exactaep.2021.16754