ABSTRACT

Customer value map analysis (CVMA) is often recommended as a technique for implementing value-based pricing (e.g. Dolan and Simon 1996; Marn et al. 2004; Monroe 2003). CVMA is a technique for the competitive positioning of products based on their customer value and the prices of competing products. While there are detailed recommendations on how to identify customer value and competitor prices in the literature (Forbis and Mehta 1981; Kortge and Okonkwo 1993; Marn et al. 2004; Monroe 2003; Shapiro and Jackson 1978; Smith and Nagle 2005), the internal coordination and control mechanisms that determine firms’ ability to implement value-based pricing are often vaguely described. For example, coordination and cooperation between different business departments (Dolan 1995; Dutta et al. 2002; Lancioni 2005b; Lancioni et al. 2005; Monroe 2003; Nagle and Holden 2002; Vogel et al. 2002) is identified as a key success factor for a more effective pricing but seldom elaborated. This is troubling since prior studies have found that firms often find it difficult to replace less effective pricing strategies, such as cost-based pricing and competition-based pricing, with value-based pricing (Hinterhuber 2008). One reason for this is that firms lack clearly specified authority levels for granting list price discounts to customers and systems for monitoring the sales force (Hinterhuber 2008; Stephenson et al. 1979).