1995 Volume 3 Issue 2 Pages 3-25
In the market where consumers do not perceive noticeable differences in the quality of products, or in the mature and saturated market, the marketer of a new product sets the price by taking prices of its competing products into consideration. This practice is called market-oriented pricing. According to this pricing, the price of a product is determined by customers’ perceptions of the value of the product. In many industrial markets, customers’ perceptions of the value of the product depend on performance variables. Performance variables in turn depend on design characteristics. Several market-oriented pricing methods with multiple design characteristics have been proposed: weighting by experts in the field of several simple regression equations of price on each design characteristics; principal components analysis; weight analysis by design parameters; coordinative planning method. In this article, we propose graphical and interactive “multiple regression analysis”. Graphics such as adjusted variable plots, C_p plots, normal quantile-quantile plots, residual plots are successively used to construct the best multiple regression pricing model in this analysis. Unlike traditional regression techniques, this analysis relies little on numerical summaries. Instead it is an interactive decision-making system whereby an marketer can construct the best pricing model by carefully examining several kinds of informative graphics on the display. We illustrate the graphical and interactive “multiple regression analysis” through an example from the mature and saturated market, the Japanese automobile market.
