Intuitive pricing by independent store managers: Challenging beliefs and practices

Abstract

Independent store managers—who constitute a substantial portion of the retailing sector—often have limited resources with which to practice the formalized, data-driven pricing processes prescribed in the literature. On that basis, this article addresses how independent convenience store managers arrive at prices and whether their practices are effective. To begin with, 33 interviews with independent convenience store managers identified six common beliefs and ten practices underlying managers’ intuitive decision making. Based on point-of-sale survey data from 1,504 customers of two convenience store chains at petrol stations, a second study compared market-oriented managerial beliefs with actual customer price perceptions and buying behaviors. The combined insights from these studies reveal that managers base their pricing decisions on beliefs that are only partially accurate and suggests how managers might benefit by altering their price-setting practices.