Namangan muhandislik pedagogika instituti

The Role of Value-Informed Pricing in Market-Oriented Product Innovation 
Management  
Ingenbleek Paul T. M.; Frambach Ruud T.; Verhallen Theo M. M. 
 JOURNAL OF PRODUCT INNOVATION MANAGEMENT   
DEC 2010  
(Web of Science)
 
 
Although the positive effect of a market orientation on new product success is widely 
accepted and the market orientation literature has increased its understanding of how a market 
orientation leads to performance, the extant literature has overlooked the role of value-informed 
pricing in the relationship. Value-informed pricing is a pricing practice in which the decision 
makers base the price of the new product on the customers' perceptions of the benefits that the 
product offers and how these benefits are traded by customers against the price (that has yet to be 
determined). Considering that pricing mistakes may hit hard on the profitability of product 
innovations, it is important to firms to have a good understanding of its role. This study develops a 
framework in which value-informed pricing is integrated in the relationship between market 
orientation and new product performance. A distinction is made between customer and competitor 
orientations, and relative product advantage is also included in the conceptual model. The model is 
tested on data obtained from managers based on a cross sectional sample of 144 firms. The 
respondents were involved in a decision-making process of the pricing of a new product. The model 
is tested using structural equations modeling. The results show that value-informed pricing has a 
strong effect on new product performance. It also reveals that each component of a market 
orientation fulfills a specific role in a market-oriented organization. Value-informed pricing is 
found to have important mediating effects in the market orientation-new product performance 
relationship. Results show that firms with a strong customer orientation engage in value-informed 
pricing and develop superior benefits to customers in an advantageous product. In turn, both value-
informed pricing and relative product advantage positively affect new product market performance. 
However, no significant effect of competitor orientation on value-informed pricing is found. 
Combined with the finding that competitor orientation negatively affects relative product advantage, 
this suggests that competitor orientation may hurt new product performance when this orientation is 
not balanced with a strong customer orientation. The results also portray that value-informed 
pricing leads to higher product advantage. Interestingly, this relation is contingent on the degree of 
interfunctional coordination within the firm. This suggests that the relationship between market 
orientation and new product performance is strongest if firms integrate value-informed pricing in 
the new product development process. In this sense, a market-oriented firm mirrors the customer 
value perception that makes a trade-off between benefits and price.