On November 5th 2008, the European pricing Platform(ePP) organized on the Marketing & Information Event (MIE) - Rotterdam, the yearly Pricing award of the "Best European Pricing Master Thesis Award".
The winner of the first edition is Tanja Berber - Erasmus University Rotterdam with the thesis: 'What's price got to do With it?’. Tanja has received a cash reward of € 1500, an ePP-training valued at € 1500 and a bundle of Pricing books. Secondly was Johannes Hertzog - University of Applied Sciences Westcoast, Heide, Germany ‘Dynamic Pricing – Effects on Profit through Proactive Price Management’ and thirdly was Mark Stokes - Georg-Simon-Ohm Management Institute, Nürnberg, Germany ‘Pricing for Profitability: Development and Implementation of a Pricing Methodology for Customized Products and Solutions’. They received each a free ePP-participation valued at € 395 and a bundle of Pricing books.
The motivation of Tanja to generate a thesis about Pricing became to reality as Tanja practiced her internship at Nike - Hilversum, and traveled daily by train from Rotterdam to Hilversum. Nike is a company par excellence that has a strong brand image and offers a lot of budget, time and energy on its marketing efforts. This feeling came in the workplace also strongly back - the Nike logo should only be used in certain ways, all communication was written in a specific "Nike" font, promotion material is shown anywhere on the campus.
One day, while Tanja was waiting for a connection in Utrecht, she saw a man standing in an old worn and probably unwashed t-shirt, with a huge Nike logo. He looked shabby and unattractively, with his appearance, all the marketing-violence that took place a few miles away and where a lot of investment was put in, immediately became abolished. This situation was for Tanja incredibly ironic, and it raised in her the question on how the situation in the market - on the field - came in line with what the brand from its office is trying to bring. "The field” is a widely understandable term. To what extent the clothing retailers present it in the right way? To what extent are the products through retailers offered right? To what extent are the products correctly priced? Thus came a series of questions by Tanja, and price seemed a very interesting topic. Price in the marketing-mix is the only component which generates direct sales. It is the means by which a company has a direct impact on its sales and margins. But it is also difficult to scientifically manage, because it is still quite vague. It is a marketing component that very easily can be copied by the competition, and thus may offer little in the balance.
The thesis-question became eventually: "What affects the difference between the reference price and the actual price - whereby the actual price is lower than the reference price – what are the perceptions a customer has of the brand image? The biggest challenge, according to Tanja in the study was to describe the results. With many different price measurements, deltas and correlations, it was difficult to consider the results without being reported as an encoded message. The jury took an interesting outcome of the investigation, the fact that systematic respondents expecting a higher price for a product than they were to prepare to spend.
It seems as if there is a feeling among consumers that everything is more expensive than we'd like. The investigation revealed that the brand image was positively affected if the price of a product is close to the price that a customer wants to pay. If the actual price is close to the expected price, there is no strong impact on the brand image to be seen. There was also evidence that lower prices will not be endlessly appreciated.
Looking back, Tanja was very pleased with the chosen topic. It is extremely rewarding for companies if they proceed in a structured way their pricing strategy, from the scientific angle there is still much to investigate on this part. Tanja is also convinced that there is an awful lot of space available for a follow-up study.
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