Planning a Global Dealer Pricing Process in a Business-to-Business Company

Abstract

Pricing processes have not been studied to a large extent in recent academic literature. The researches especially seem to lack empirical views, which integrate tactic planning actions to strategic results, such as profitability. This master’s thesis introduces a tentative framework of planning a global pricing process. The tentative framework was built by relying on global pricing process literature by adopting aspects from the theory of management control systems. The tentative framework suggests that a company’s cost controls drive the finance department’s profitability monitoring objective whereas competitive condition and customer value drive the price elasticity objective of the sales department. This settling causes a contradiction between the work of these two departments, which is why pricing process implementation should be done by compromising those.

The primary research question of the thesis is: what type of a global pricing process would suit the case company and how should it be implemented in practice? The research aims to make a comprehensive analysis of the current stage of the pricing process in a case company and to recognize objectives to improve. The research was conducted with an interventionistic strategy, in which both, quantitative and qualitative analyses, had an equal emphasis. The case company represents an industrial product manufacturer.

The empirical results show that in a case where the pricing is not in the focus of change, instead of price elasticity, the sales department appears to be more interested in supportive actions that an enhanced pricing process could provide for their daily work. Therefore, differing from the previous academic literatures, first, this master’s thesis provides a model along with an action plan and a responsibility form, according to which the top management, sales directors and coordinators can share daily responsibilities within a hierarchically organized pricing process. Second, it presents key ratios with a technical implementation plan, which not only helps to monitor profitability at the top management level, but also provides crucial information to the entire sales department when it comes to strategic decision-making in the dealer interface. These practices were proven to retain the sales motivation of the sales department while still maintaining certain profitability level at the case company, which is something that the previous academic literature has not done in the field of global business-to-business pricing.