Systematic pricing of a product portfolio: An analysis of pricing strategies for agro -biotechnology seeds

摘要

This study analytically investigates the price decisions of a seed firm that simultaneously supplies a portfolio of competing seeds within a competitive environment. As customers require specific seed attributes, the seed firm is forced to expand the existing product line with improved and new products. The product expansion is associated with the introduction of biotechnology techniques. For theoretical and analytical purposes, the study considers a portfolio of non-biotechnology and biotechnology-derived seeds. The seed firm intends, through appropriate pricing strategy, to encourage the adoption of the portfolio of competing seeds and to maximize its potential returns.;Using dynamic programming, the objective is to identify the preferred price path for seed products over a limited product life cycle, given a wide variety of state variable combinations, to capture market environment effects. Theories related to value-driven pricing and diffusion support this research. The study provides the seed sector participants with valuable insights on the importance of market changes and non-price marketing effort in the seed pricing process. Farmers' attitude toward perceived seed benefits has an impact on the seed price even though they are theoretically and empirically price-takers in the input market.;The research outcomes show that farmers' response to perceived seed benefits and non-price marketing effort matter. With respect to non-price marketing effort, the results indicate that a sustainable high pricing strategy is associated with substantial non-price marketing effort, resulting in higher discounted returns. With respect to farmers' response to perceived seed benefits, this study shows the importance of supplying high valued seeds. In addition, farmers' acceptance is an important factor to sustain an adequate pricing system and uphold market share. Finally, some evidences of complementarity interactions between seeds are indicated, mainly in the case of less valued seeds.