Price Discovery in Marketing

Running head: PRICE DISCOVERY IN MARKETING
Price Discovery in Marketing
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1PRICE DISCOVERY IN MARKETING
Table of Contents
Introduction................................................................................................................................2
Background of the articles.........................................................................................................2
Research issues in the selected articles......................................................................................3
Major findings............................................................................................................................4
Implications for marketing managers as outlined in the articles................................................5
Key issues discussed in the articles and recommended measures.............................................7
Conclusion..................................................................................................................................8
References..................................................................................................................................9

2PRICE DISCOVERY IN MARKETING
Introduction
As opined by Miao et al. (2017), globalization by converting the entire business world
into a global village wherein different business firms from the diverse parts of the world are
being able to indulge in trade and commerce had significantly enhanced the aspect of
business competition. Chen, Chung and Lien (2016) are of the viewpoint that the business
firms more than ever need to take into account the prices that they are charging from the
customers for the products or services that they offer since the entity of price is one of the
most important factors which influence the buying behavior of the customers. However, for
the purpose of fixing the prices of the commodities or the services, the firms not only need to
take into account their manufacturing cost but also the market trends, customer demands and
other factors which are likely to affect the customer decision making process (Narayan and
Smyth 2015). It is precisely here that the notion of ‘price discovery’ gains prominence within
the cannon of the contemporary business world since it enables the firms to fix the right
prices for the commodities or services offered by the firms which in turn would enable them
to influence the customers to opt for them. This paper will explore the concept of price
discovery by undertaking an analysis of three peer-reviewed articles related to the same.
Background of the articles
The three articles which have been selected for the report are “Price discovery among
SSE 50 Index‐based spot, futures, and options markets” by Ahn and Sohn (2019), “Learning
and price discovery in a search market” by Lauermann, Merzyn and Virág (2017) and “Time-
varying price discovery in the eighteenth century: empirical evidence from the London and
Amsterdam stock markets” by Bell, Brooks and Taylor (2016). Lauermann, Merzyn and
Virág (2017) have stated that one of the major challenges that the firms face for the effective
usage of the concept of price discovery is the fact that they are not always sure regarding the

3PRICE DISCOVERY IN MARKETING
market trends or customer demands because of the dynamicity of the contemporary business
world. The net result of this is that the firms often try to take the help of the policy of average
pricing for the commodities or the services that they offer to the customers. On the other
hand, Ahn and Sohn (2019) after studying the market trends and derivates have articulated
the viewpoint that the firms in the absence of any substantial framework of effective
understand the pricing requirements of the customers inevitably end up taking the help of the
pricing strategy of premium pricing. This is significantly rooted in the psychology of the
buyers because of the fact that the buyers over the years have developed the idea or the belief
that the products or services having premium prices are better in quality than others. Lastly,
Bell, Brooks and Taylor (2016) have tried to analyze the concept of price discovery in the
historical context and thereby come to the conclusion that the firms which effectively utilize
the concept of price discovery have been able to derive significant benefits or rewards
through the usage of the same for the pricing of the commodities or the services offered by
them.
Research issues in the selected articles
The major research issue that the authors, Lauermann, Merzyn and Virág (2017), have
highlighted in their article is the fact that they have tried to analyze the impact of the average
pricing policy which is most commonly used by the different firms has on the buying
behavior of the customers. For example, it is a commonly known fact that the entity of price
has a profound impact on the buying preferences or the behavior of the customers. Thus, the
researchers have tried to find out whether this kind of price discovery used by the firms
positively affect the customer behavior or negatively. On the other hand, the research issue
that has been selected by the authors Ahn and Sohn (2019) is manner in which the market
trends influence the concept of price discovery and also the impact that the premium pricing