Integrative pricing via the pricing wheel

Pricing is a critically important management activity with major strategic and operational implications. However, pricing is a much neglected and ineptly administered marketing responsibility, and numerous errors are made. A prime reason for this is that firms are preoccupied with the use of convenient, often singularly cost-based, pricing methods that fail to assimilate the impact of the full range of effective pricing determinants. This article introduces the concept of the pricing wheel that is a multistage process for effective price management. It provides a systematic means for analyzing and incorporating into decision making the strategic role of price, pricing objectives, the plethora of infernal and external pricing determinants, pricing strategy, the pricing technique and the necessary implementation and control procedures. As a key element of the pricing process, the article advocates utilization of an integrative pricing technique, and it proposes a logical sequence in which it can be applied. (C) 2001 Elsevier Science Inc. All rights reserved.