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Pricing objectives over the service life cycle : some empirical evidence

Avlonitis, George and Idounas, Kostis and Gounaris, Spiros (2005) Pricing objectives over the service life cycle : some empirical evidence. European Journal of Marketing, 39 (5/6). pp. 696-714. ISSN 0309-0566

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To explore the pricing objectives that service companies pursue along with the extent to which these objectives are influenced by the stage of the services' life cycle. Reviews the existing literature and analyzes data from 170 companies operating in six different services sectors in Greece in order to achieve the research objectives. The literature on pricing of services reveals the complete lack of any previous work endeavoring to examine empirically this potential influence. The study concludes that the objectives are mainly customer oriented aimed at improving the companies' financial performance in the market. Furthermore, the stage of these services' life cycle along with the sector of operation seems to have an influence on the pricing objectives pursued. The context of the study (Greece) is an obvious caveat to the research findings suggesting the need for further replication of the current study in different national contexts. The practical implications of the findings refer to the fact that managers might have much to gain by adopting a “situation specific approach” when setting prices. Thus, different pricing objectives should be set as a service passes from one stage of its life cycle to another, while different services necessitate also a different pricing approach. The value of the paper lies in the fact that it presents a first attempt to investigate empirically this issue.