Gaining sustainable competitive advantage through strategic pricing: selecting a perceived value price

Abstract

Sustainable competitive advantage is recognized as a critical factor for survival in the turbulent environments of the 1990s. The limited use of pricing as a strategic tool to gain and hold competitive advantage has created an opportunity for companies willing to redesign their competitive portfolios and go with unorthodox strategy mixes. Proposes an approach to value pricing that can be used to seize and drive competitive advantage, and which yields a price that minimizes the risk that buyers will not perceive value at least equivalent to that provided by a reference product. At the same time, the risk to sellers of not achieving minimum margins is controlled. Suggests that this approach enhances the ability of management to develop dynamic and proactive strategies for pricing.