The Role in New Product Development and Aspects Influencing the Target Price -At Swedish Business-to-Business Manufacturing Companies

Abstract

Background and Problem: Pricing has begun to gain more interest in the management account-ing field, where cost management earlier has been in focus. The use of price during the develop-ment of new products is a concern which there is divergent opinions about. The establishment of an early target price is a well known practice in new product development in the manufacturing industry. With which types of processes this target price enters into the new product develop-ment process and how the target price is set are not entirely clear from the literature, though. Aim of the Study: This thesis has explored which aspects business-to-business companies con-sider in their pricing of new products. The thesis has also explored how these aspects interact in the determination of the target price in the new product development process, and how the final price to the individual customer is reached. Methodology: The empirical data is obtained via semi-structured interviews conducted and rec-orded on site at three large Swedish manufacturing companies. The case companies were chosen out of criterion regarding size, product line range and that they produce somehow standardized products. Analysis and Conclusion: The thesis finds that the case companies allow the target price to emerge throughout the new product development process and that it is influenced by three main aspects; competitors, costs and customers, which integrate during the process. The price is dy-namic in the process and none of the companies had an exact target price established in the first phases. The final price is usually reached through customer negotiations.