Pricing as a relationship marketing instrument

Abstract

Although the principles of relationship marketing are well understood, the role of pricing in building relationships between supply chain partners has not been researched. This study was designed to determine the role, if any, of pricing as a tool for building relationships between suppliers and distributors. A relationship pricing model (RPM) was developed and tested among 83 distributors in the Swiss beverage market, to explore how businesses can define, operationalise and implement a relational pricing system. The research shows that both the process of developing a relational pricing system as well as the output it produces support the adoption of relationship marketing between supplier and distributors. The conclusion reached is that businesses can turn their pricing practices into a relationship marketing instrument if they are dyadic in focus and create mutual longterm benefits for both supply chain partners. An RPM needs to be a pricing mechanism which is fair, transparent, empowers customers to participate in determining pricing conditions and encourages ongoing interaction and communication between supply chain partners. With this research, a major instrument and a step-by-step approach has been created that enables businesses to adopt relational pricing. Directions for future research have been identified. One direction is to set up a longterm study, to investigate the impact of a relationship pricing model over time. Another direction is to build an RPM, which incorporates non-financial incentives and/or additional variables to those investigated during this study.