I like your approach and explanation of your restaurant, however I think I have mentioned this before. Why are you more focus in the elderly community? Don’t you think that is limiting you potential growth in the food market?

Book Review

Pricing strategy: Setting price levels, managing price discounts and establishing price structures

Tim J. Smith

Cengage, London, International edition, 2011, 344 pp., £50.99,

ISBN-13: 978-1111571290 (paperback)

Journal of Revenue and Pricing Management (2013) 12, 470–471. doi:10.1057/rpm.2013.11; published online 9 August 2013

An understanding of marketing is vital for any-

one planning a career in management, and a

grounding in economics provides insights into

the way business world operates, but these two

subjects would not appear to share much com-

mon ground, at least at first glance. As an

economist, it was only when sharing an office

with a marketing expert that I realised exactly

how much these subjects actually have in

common. At its core, economics is a science of

decision making and thinking of it this way, it’s

natural that marketing, in essence of the art of

helping consumers make up their minds, would

draw on insights from economic theory.

Pricing is one of the main areas where

marketing and economic theory collide. Un-

derstanding pricing is at the heart of micro-

economic theory but is an eminently practical

subject; profits depend upon setting the right

price. This book by Tim Smith spans the

disciplines of marketing, economics, strategy

and decision making, to provide a practical

guide to pricing strategy for practitioners and

students alike.

The book is divided into four parts dealing

with price setting, managing price variations,

establishing price structures and pricing strategy.

The first part introduces features of price

setting including influences on the pricing

decisions and methods for determining price

levels. These chapters cover a range of issues

including the importance of price in determin-

ing profits, the theories and quantitative models

used in the price setting process, how markets

influence and are influenced by price, and the

psychological foundations of decision making.

These chapters provide the reader with the

context for the price setting process; it covers

the ‘whys’ and much of the ‘hows’.

The second part of the book deals with the

practicalities of managing price levels. How can

we set different prices for different customers?

What makes an effective price promotion?

How do we manage discounting decisions?

These questions are all addressed in this section

of the book that focuses on the practical aspects

of setting and managing prices.

The third part of the book focuses on the

product and how price structures reflect that

value of the product. In particular, these chap-

ters introduce the concepts of tariffs, comple-

mentary products, versioning, bundling

subscriptions and yield management and how

these ideas are used in the determination of

pricing structures.

The final section turns to the subject of

pricing strategy. Attention is focused on the

competitive behavior of firms and how this

influences not only their pricing decisions, but

also the pricing decisions of their rivals. This

& 2013 Macmillan Publishers Ltd. 1476-6930 Journal of Revenue and Pricing Management Vol. 12, 5, 470–471 www.palgrave-journals.com/rpm/

part of the book also considers the evolution of

price over the life cycle of the product and the

legal aspects of pricing decisions.

The subjects covered in this book range from

the eminently practical to the highly theoreti-

cal. However, the author takes a light touch

when dealing with theory, particularly quanti-

tative theory. Although there is sufficient depth

to provide practical insights, the text avoids

overwhelming the reader with extraneous de-

tails. The text includes derivations of the theo-

retical formulations in appendices, thus leaving

relevant technical details to the interested read-

er. This is particularly useful for those using the

book as a course text for students. Students are

frequently discouraged by detailed technical

expositions, whereas others need such details

in order to develop their understanding and this

text provides a suitable compromise.

A particularly attractive aspect of this book is

the variety of examples used. When discussing

the implementation of pricing techniques and

strategies, theoretical models and real world

examples are used to illustrate practical consid-

erations and throughout the book there is an

effective balance between both the theoretical

and applied aspects of price setting.

Although much of the content of this book

can be readily found elsewhere, Tim Smith

successfully combines the theories and methods

from marketing, economics, strategy and deci-

sion making in one very accessible text on the

strategies and methods of effective price setting.

The added bonus with this text is that the

theory is presented in such a way that you do

not need to be an expert in any of the individual

subject areas in order to understand it, a bonus

for student and practitioners alike.

Sarah Keast

Plymouth Business School,

University of Plymouth, UK

Book Review

471& 2013 Macmillan Publishers Ltd. 1476-6930 Journal of Revenue and Pricing Management Vol. 12, 5, 470–471

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.