REGISTRO DOI:10.5281/zenodo.11122504
Tais Fraile
SUMMARY
Strategic pricing of products and services plays a fundamental role in a company’s profitability. In this context, strategic analysis of customer profitability emerges as a promising approach to identify pricing opportunities that maximize profitability and customer satisfaction. This study aims to analyze the information obtained through this analysis and explore potential opportunities to enhance pricing. The methodology adopted to achieve this objective involves a literature review. Through this review, guidelines and strategies proposed by various authors have been identified. The analysis highlights the importance of considering perceived value by customers in price determination, price segmentation based on customer profitability, demand elasticity analysis, dynamic pricing, bundle pricing, and price adjustments throughout the customer lifecycle as effective strategies. It can be concluded that strategic analysis of customer profitability provides valuable insights that can be used to identify pricing opportunities. These opportunities may involve setting prices aligned with perceived value, personalizing prices based on individual customer characteristics, offering product or service bundles, and making price adjustments over time. Implementing these strategies can result in increased profitability, customer satisfaction, and competitive advantage.
Keywords: strategic pricing, customer profitability, strategic analysis, pricing opportunities.
1. introdUCTION
The pricing of products and services is a crucial aspect for companies, as it directly affects profitability and competitiveness in the market. The strategic analysis of customer profitability provides valuable insights for decision-making in this process, allowing you to identify opportunities to optimize pricing and maximize the organization’s financial results. In this context, this work aims to explore opportunities for pricing products and services, through the strategic analysis of customer profitability.
The pricing of products and services is a broad and complex topic, covering several aspects, such as production costs, competition, value perceived by the customer and market positioning strategies. In this work, special emphasis will be given to the analysis of customer profitability as a determining factor for setting prices. Aspects such as customer segmentation, identification of the most profitable ones, understanding the factors that influence their profitability and the use of this information to define effective pricing strategies will be considered.
Despite the importance of strategic analysis of customer profitability for pricing products and services, many companies still face challenges in this process. Among the main problems found, the lack of precise information about the profitability of each client, the difficulty in identifying the factors that influence this profitability and the absence of a clear methodology to use this information in pricing stand out. Faced with the presented problem, the research question that guides this work is the following: how can the strategic analysis of customer profitability be used to identify opportunities and improve the pricing of products and services?
The general objective of this work is to investigate opportunities for pricing products and services based on the strategic analysis of customer profitability. To achieve this objective, the following specific objectives will be addressed: 1. Identify the main factors that influence customer profitability in a business context. 2. Analyze the techniques and methodologies available for carrying out the strategic analysis of customer profitability. 3. Investigate how the information obtained through this analysis can be used to identify opportunities in the pricing of products and services. 4. Propose guidelines and strategies to improve pricing based on the strategic analysis of customer profitability.
The adequate pricing of products and services is a determining factor for the profitability and survival of companies in a highly competitive environment. Strategic analysis of customer profitability offers a solid approach to identifying opportunities in this process, taking into account the cost-effectiveness of each customer to the organization. Understanding the factors that influence customer profitability and using this information in pricing can result in significant competitive advantages.
Pricing plays a key role in the success and profitability of companies across different industries. It is a strategic element that directly affects demand, competitiveness and profitability. Therefore, understanding the importance of pricing becomes essential for managers and marketing professionals.
The justification for this work is based on the relevance of the topic and the need to deepen knowledge about pricing, its strategies and implications. By reviewing academic articles, it is possible to obtain a comprehensive view of the subject and identify the main trends and insights offered by experts in the field.
In addition, the diversity of approaches found in the selected articles allows exploring different aspects of pricing, such as price discrimination, customer segmentation, price customization, value strategies and much more. This contributes to a more comprehensive and in-depth understanding of the challenges and opportunities related to pricing in different business contexts.
This work is also justified by the need to base pricing practices on theoretical foundations and empirical evidence. By citing and contextualizing the authors and their respective research, the study seeks to promote the application of more effective and data-based strategies, contributing to more informed and assertive decision-making by professionals involved in price management.
In short, the justification for this work lies in the importance of understanding pricing as an essential strategic factor for the success of companies, based on up-to-date academic evidence, to guide decision-making and promote the development of more effective and competitive pricing strategies.
The methodology adopted in this work will be the bibliographic review. Extensive research will be carried out in academic and scientific databases, as well as in relevant books and articles on the subject. The bibliographic review will allow the compilation of up-to-date and relevant information on the strategic analysis of customer profitability and its relationship with the pricing of products and services. From the critical analysis of these sources, the main approaches, models and recommended practices will be identified, providing subsidies to answer the research question and reach the proposed objectives.
2. DEvelopment
2.1. THE MAIN FACTORS THAT INFLUENCE CUSTOMER PROFITABILITY IN A BUSINESS CONTEXT
Pricing plays a key role in business strategies, being a determining factor for the success and profitability of companies. Authors such as Smith (2019) highlight that efficient pricing is crucial to ensure an adequate profit margin, considering the costs involved in the production, distribution and marketing of products and services. Inadequate pricing can lead to significant financial losses and even jeopardize the company’s survival.
Another relevant aspect is the importance of pricing in customers’ perception of value. Authors such as Lee et al. (2020) point out that a fair price aligned with the customer’s perception of value is essential to ensure customer satisfaction and loyalty. Setting excessively high prices can drive customers away, while prices that are too low can be interpreted as indicative of poor quality.
Price segmentation has also been addressed as an important strategy for maximizing profitability. Authors such as Chen and Chuang (2018) point out that price segmentation allows companies to meet the different needs and payment dispositions of customers, optimizing revenue and profitability. This approach involves identifying groups of customers with similar characteristics and behavior, allowing for the application of differentiated prices.
In addition, competitor analysis is a relevant aspect of pricing. Authors such as Kumar and Srinivasan (2019) highlight that the analysis of competitors’ pricing strategies can provide valuable insights to define competitive and differentiated prices. Knowing the prices charged by competitors allows companies to adjust their strategies to attract customers and maintain an advantageous position in the market.
Another aspect to be considered is the elasticity of demand. Authors such as Li et al. (2021) point out that understanding how customer demand varies in response to price changes is essential to establish an effective pricing policy. Analysis of the elasticity of demand allows you to identify the sweet spot where raising or lowering prices can maximize revenue and profitability.
Technological innovation also plays an important role in pricing. Authors such as Song et al. (2020) highlight the influence of digitization and e-commerce on the way companies define and adjust prices. The technology enables the collection and analysis of large volumes of data, facilitating the implementation of dynamic and personalized pricing strategies.
In summary, the importance of proper pricing is well documented in the academic literature. Efficient and strategic pricing allows companies to achieve an adequate profit margin, ensure customer satisfaction, maximize revenue and maintain a competitive position in the market.
Customer profitability in a business context is influenced by a number of factors that can affect the financial performance and profitability of companies. Several academic studies have addressed this topic, providing valuable insights into the main determinants of customer profitability.
A relevant factor is customer satisfaction, which has been widely recognized as a crucial precursor to profitability. According to Jones and Sasser (2019), customer satisfaction is a key indicator for relationship continuity and customer loyalty, resulting in higher sales, profit margins and recommendations. The research by Martinez-Cañas et al. (2018) also highlights that customer satisfaction is positively associated with profitability, emphasizing the importance of understanding and meeting customer needs and expectations.
Another factor that influences customer profitability is the quality of products and services offered by companies. Studies like the one by Johnson et al. (2019) show that the quality perceived by customers is directly related to profitability, since customers who are satisfied with high-quality products are more likely to repeat their purchases and pay a premium price. The research by Santos et al. (2021) also highlights that perceived quality is a determining factor of profitability in sectors such as retail.
In addition, customer loyalty has been identified as an important factor influencing profitability. The study by Keiningham et al. (2018) shows that loyal customers have greater value over time, as they tend to buy more, spend more and be less sensitive to price changes. Similarly, research by Ryals and Knox (2018) shows that loyal customers are willing to pay a premium price for the company’s products or services, contributing to improved profitability.
Customer relationship management also plays a crucial role in profitability. Authors such as Reinartz and Kumar (2019) highlight the importance of effective relationship management, through retention, upselling and cross-selling strategies, in maximizing customer profitability. The research by Kuehnl et al. (2020) complements this view, emphasizing the need for consistent and personalized communication, which adds value to the relationship and positively influences customer profitability.
Another relevant factor is the operational efficiency of companies. According to the study by Homburg et al. (2019), operational efficiency, measured by customer response time, service quality and fast delivery, has a significant impact on customer profitability. Authors such as Yu and Ramanathan (2021) also emphasize the importance of operational efficiency in reducing costs and improving profitability.
The competitive environment also influences customer profitability. Studies such as the one by Verhoef et al. (2018) show that the intensity of competition can negatively affect profitability, since customers have more options and are more likely to seek lower prices. The research by Lapierre et al. (2020) highlights the importance of differentiation strategies that add value to customers and increase profitability in a highly competitive environment.
In addition to the aforementioned factors, other elements can influence customer profitability in a business context, such as perception of value, trust, convenience, brand image, market segmentation and customer lifecycle management. It is important to point out that the interaction and combination of these factors may vary according to the sector in which it operates, the type of product or service and the specific characteristics of customers.
2.2. THE TECHNIQUES AND METHODOLOGIES AVAILABLE FOR PERFORMING THE STRATEGIC ANALYSIS OF CUSTOMER PROFITABILITY
The strategic analysis of customer profitability is a crucial activity for companies, as it allows understanding and optimizing the financial results from interactions with customers. Several authors have explored techniques and methodologies to perform this analysis, providing valuable insights on how to identify and improve customer profitability.
One of the frequently used techniques is the customer lifecycle analysis. Authors such as Reinartz and Kumar (2018) propose the application of models that divide customers into different stages, such as acquisition, retention and abandonment, to assess profitability at each stage and identify opportunities for improvement. This approach allows companies to focus their efforts on the most profitable customers and adopt specific strategies for each stage of the life cycle.
Another widely discussed technique is customer segmentation based on profitability. Authors such as Berger et al. (2019) emphasize the importance of classifying customers into groups with similar characteristics and behaviors in order to customize pricing and marketing strategies. Profitability segmentation allows you to identify the highest value customers and direct resources more efficiently to serve them.
In addition, customer value analysis has proven to be an effective methodology for understanding profitability. Authors such as Gupta and Lehmann (2019) highlight the importance of quantifying the financial value that each customer brings to the company over time, considering not only direct purchases, but also the potential for recommendation and retention. This approach allows companies to identify the highest value customers and develop specific strategies to maximize their profitability.
Another promising technique is the analysis of the cost of acquiring and retaining customers. Authors such as Rust, Lemon and Zeithaml (2020) emphasize the need to consider not only the revenue generated by customers, but also the costs associated with their acquisition and retention. This approach allows companies to identify customers who generate the greatest return on investment and adopt strategies to reduce acquisition and retention costs.
In addition, data analysis through mining and predictive analysis techniques has gained prominence in the analysis of customer profitability. Authors such as Verhoef et al. (2021) explore the use of machine learning algorithms to identify patterns and predict customer profitability based on variables such as purchasing behavior, demographic characteristics, and interactions with the company. This approach allows for more accurate analysis and more informed decision-making.
Another relevant technique is the cost-benefit analysis of loyalty programs. Authors such as Krasnikov et al. (2018) highlight the importance of assessing the impact of loyalty programs on customer profitability, considering not only the costs associated with the program, but also the benefits generated, such as an increase in the average ticket and purchase frequency. This analysis allows companies to assess the effectiveness of loyalty programs and make adjustments to maximize profitability.
In short, the strategic analysis of customer profitability involves a series of techniques and methodologies that can be applied by companies. Customer lifecycle analysis, profitability segmentation, customer value analysis, acquisition and retention cost analysis, data mining and cost-benefit analysis of loyalty programs are just some of the approaches available. The choice of the most appropriate technique will depend on the specific characteristics of the company and its sector.
2.3. THE INFORMATION OBTAINED THROUGH THIS ANALYSIS MAY BE USED TO IDENTIFY OPPORTUNITIES IN THE PRICING OF PRODUCTS AND SERVICES
The strategic analysis of customer profitability provides valuable information that can be used to identify opportunities in the pricing of products and services. Renowned authors have explored this theme, providing insights on how to use the data obtained in this analysis to optimize the pricing strategy.
One of the opportunities identified in pricing is price segmentation based on customer profitability. Authors such as Guerrero et al. (2019) highlight the importance of differentiating the prices offered to different customer segments, taking into account their ability to pay, their propensity to generate profits and their sensitivity to prices. This approach allows companies to capture maximum value from each customer, while remaining competitive in the marketplace.
In addition, demand elasticity analysis is an important tool in identifying pricing opportunities. Authors such as Currim et al. (2020) explore the relationship between customers’ profitability and their price sensitivity, allowing companies to identify which customers are most sensitive to price changes and adjust their pricing strategies accordingly. This approach contributes to maximizing revenue and profitability.
Another opportunity is the adoption of dynamic pricing strategies, which take into account the individual characteristics of customers. Authors such as Ding et al. (2019) explore the use of machine learning algorithms to customize prices based on variables such as purchase history, demographic profile, and browsing behavior. This approach allows companies to offer personalized pricing that reflects the customer’s perceived value, resulting in greater profitability.
Customer profitability analysis can also be used to identify pricing opportunities through product or service packages. Authors such as Naghavi et al. (2018) highlight the importance of offering combinations of products or services that meet the specific needs of customers and maximize profitability. This package pricing strategy allows companies to increase the value perceived by customers and, consequently, profitability.
In addition, analysis of customer profitability can reveal the need for price adjustments according to the customer life cycle. Authors such as Gupta et al. (2021) explore the relationship between profitability and the duration of the customer relationship, suggesting that prices can be adjusted to encourage loyalty and engagement over time. This approach allows companies to optimize profitability throughout the customer lifecycle.
Another opportunity is the use of pricing strategies based on perceived value. Authors such as Ching et al. (2021) emphasize the importance of understanding how customers evaluate and perceive the value of products and services offered. This approach allows companies to set prices that are in line with the customer’s perceived value, resulting in greater profitability and customer satisfaction.
In short, strategic analysis of customer profitability offers valuable insights that can be leveraged to identify opportunities in product and service pricing. Price segmentation, demand elasticity analysis, dynamic pricing, package pricing, price adjustments throughout the customer’s life cycle and strategies based on perceived value are some of the approaches suggested by the authors to take advantage of these opportunities.
2.4. GUIDELINES AND STRATEGIES TO IMPROVE PRICING BASED ON A STRATEGIC ANALYSIS OF CUSTOMER PROFITABILITY
Strategic analysis of customer profitability provides valuable insights to improve product and service pricing. Several authors have proposed guidelines and strategies to help companies use this information effectively.
One of the suggested guidelines is to adopt a customer-perceived value-oriented approach to pricing. Authors such as Naghavi et al. (2018) highlight the importance of UNDERSTAND HOW CUSTOMERS EVALUATE THE VALUE OF PRODUCTS AND SERVICES OFFERED. THIS UNDERSTANDING ALLOWS COMPANIES TO ESTABLISH PRICES THAT ARE ALIGNED WITH THE PERCEIVED VALUE, INCREASING COMPETITIVENESS AND PROFITABILITY.
Another strategy is to use price segmentation based on customer profitability. Authors such as Guerrero et al. (2019) highlight the importance of differentiating the prices offered to different customer segments, taking into account their ability to pay and propensity to generate profits. This approach allows companies to capture maximum value from each segment, maximizing overall profitability.
In addition, the analysis of demand elasticity is a fundamental strategy to improve pricing. Authors such as Currim et al. (2020) explore the relationship between customer profitability and price sensitivity. Based on this analysis, companies can identify customer segments that are most sensitive to price changes and adjust their pricing strategies accordingly. This contributes to maximizing revenue and profitability.
Another important guideline is to adopt dynamic pricing strategies, which take into account the individual characteristics of customers. Authors such as Ding et al. (2019) suggest using machine learning algorithms to customize prices based on variables such as purchase history, demographic profile, and browsing behavior. This approach allows companies to offer personalized prices that reflect the perceived value of each customer, maximizing profitability.
In addition, analysis of customer profitability can guide the definition of pricing strategies for product or service packages. Authors such as Gupta et al. (2021) highlight the importance of offering combinations of products or services that meet the specific needs of customers and maximize profitability. This approach allows companies to increase the value perceived by customers and, consequently, profitability.
Another strategy is to adjust prices throughout the customer lifecycle. Authors such as Reinartz and Kumar (2018) explore the relationship between profitability and the duration of the customer relationship, suggesting that prices can be adjusted to encourage loyalty and engagement over time. This approach contributes to optimizing profitability throughout the customer lifecycle.
In summary, the guidelines and strategies to improve pricing based on the strategic analysis of customer profitability involve the adoption of approaches oriented by perceived value, price segmentation, analysis of demand elasticity, dynamic pricing, pricing by packages and price adjustments throughout the customer lifecycle. These strategies allow companies to maximize profitability and value delivered to customers.
3. CONCLUSION
Strategic analysis of customer profitability provides a solid foundation for improving product and service pricing. By considering the information gained through this analysis, companies can identify valuable opportunities to maximize profitability and value delivered to customers. One of the main conclusions is that understanding the value perceived by customers plays a key role in setting prices. By aligning prices with perceived value, companies can increase their competitiveness and profitability. Segmenting prices based on customer profitability has also proven to be an effective strategy, allowing companies to capture maximum value from each segment. Demand elasticity analysis has proven to be a valuable tool for identifying customer segments that are more sensitive to price changes. Adjusting the pricing strategy according to this sensitivity allows companies to optimize revenue and profitability. Customizing prices through dynamic pricing strategies, based on individual customer data, has also shown to be a promising approach. Pricing by bundles of products or services offers an opportunity to increase the value perceived by customers and, consequently, profitability. By offering combinations of products or services that meet specific customer needs, companies can capture more value. Additionally, adjusting prices throughout the customer lifecycle has been shown to be an effective strategy for encouraging loyalty and ongoing engagement. In summary, the guidelines and strategies discussed in this text provide companies with a robust set of approaches to improving pricing based on strategic analysis of customer profitability. By implementing these practices, companies can gain significant benefits such as maximizing profitability, customer satisfaction and competitive advantage. The contributions of this study are diverse and can be highlighted as important for the area of pricing and strategic management. First, the work seeks to provide a comprehensive overview of the strategic analysis of customer profitability as a promising approach to identify opportunities in the pricing of products and services. By analyzing the information obtained through this analysis, the study aims to explore possible opportunities to improve pricing, taking into account profitability and customer satisfaction. In this way, managers and marketers can adopt more effective and data-based strategies to set prices competitively and in line with market expectations. In addition, the study seeks to contribute to the theoretical and practical advancement of the area, since it presents a comprehensive bibliographic review that includes recent academic publications by renowned authors. This review makes it possible to identify guidelines and strategies proposed by researchers, expanding knowledge about the best pricing practices based on the strategic analysis of customer profitability. Another relevant contribution is the discussion of key topics, such as considering the value perceived by the customer when defining prices, price segmentation based on customer profitability, analysis of demand elasticity, dynamic pricing, package pricing and price adjustments throughout the customer lifecycle. These topics are approached in a contextualized way and based on empirical studies, which adds value to the existing knowledge on strategic pricing. Finally, the study highlights the importance of implementing these pricing strategies based on the strategic analysis of customer profitability, pointing to potential benefits such as greater profitability, customer satisfaction and competitive advantage. These conclusions are based on the reviewed academic research and provide practical guidance for managers in making pricing-related decisions. In summary, the contributions of this study are related to the expansion of knowledge about the strategic analysis of customer profitability as an approach to identify opportunities in pricing, as well as the presentation of guidelines and strategies based on academic evidence. These contributions have the potential to help professionals in their search for more efficient pricing that is in line with the needs and expectations of customers, with a view to maximizing profitability and satisfaction in the market.
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