Purpose - Despite the importance of price, many companies do not implement pricing policies smoothly, because typical price management strategies insufficiently consider logistics efficiency and an increase in logistics costs due to logistics waste. This study attempts to examine the effect of product line pricing, which corresponds to product mix pricing, on logistics efficiency in the case of manufacturer A, and analyzes how logistics performance changes in response to these variables. Research design, data, and methodology - This study, based on the case of manufacturer A, involved research through understanding the current status, analyses, and then proposing improvement measures. Among all the products of manufacturer A, product group B was selected as the research object, and its distribution channel and line pricing were examined. As a result of simulation, for products with low loading efficiency, improvement measures such as changing the number of bags in the box were suggested, and a quantitative analysis was conducted on how these measures influence logistics costs. The TOPS program was used for the Pallet loading efficiency simulation tool in this study. To prevent products from protruding out of the pallet, the maximum measurement was set as 0.0mm, and loading efficiency was based on the pallet area, and not volume. In other words, its size (length x width) was focused upon, following the purpose of this study and, then, the results were obtained. Results - As a result of the loading efficiency simulation, when the number of bags in the box was changed for 36 products with low average loading efficiency of 73.7%, as shown in <Table 11>, loading efficiency improved to 89.9%. Further, from calculating logistics cost based on the cost calculation standard of manufacturer A, the amount of annual logistics cost reduction amounted to 101,458,084 KRW. Given that the sum of the logistics cost of the product group B of manufacturing enterprises A is 400,340,850 KRW, it can be reduced by 25%, to 298,882,766 KRW. Although many methods improve loading efficiency, this study proved that logistics cost could be reduced by changing the number of bags within boxes. If this measure is applied to other items, visible logistics cost reduction effects will be realized through improvements in loading efficiency. Conclusions - Future pricing policies should consider their correlation with quality, loading efficiency, product specifications, and logistics standardization to prevent logistics waste, enabling management to improve earnings for companies. Thus, when companies decide pricing policies for new products, the aspects of merchandising and marketing should take priority; however, the aspect of logistics also needs to be considered as significant. Measures revealed by the study results are not only the responsibilities of manufacturing enterprises. Pricing policy agreements between manufacturing enterprises and distribution companies, and logistics factors related to price determination should be considered; further, governments should also support them for their collaborations. This will enable consumers to purchase quality products with low prices.
Agarwal, M. K., & Ratchford, B. T. (1980). Estimating demand function for product characteristics, The case of automobiles. Journal of Consumer Research, 12(1), 249-262.
Ahn, Jong-Yun (2004). A Study on Introduction to RFID(Radio Frequency IDentification) System in the Pallet Pool System Operation. Seoul, Korea : Thesis for Doctorate in MyungJi University.
Berkowitz, Eric N., & Walton, John R. (1980). Contextual Influences on Consumer Price Responses : An Experimental Analysis. Journal of Marketing Research, 17(8), 349-358.
Besanko, D., Gupta, S., & Jain, D. (1998). Logit demand estimation under competitive pricing behavior : an equilibrium framework. Management Science, 44(11), 1533-1547.
Bowersox D. J. (1994). Logistics Information System. In J. F. Robeson and W. C. Copacino (Eds). The Logistics Handbook (pp697-705), New York : Free Press.
Carlson, J. P., & Weathers, D. (2008). Examining Differences in Consumer Reactions to Partitioned Prices with a Variable Number of Price Components. Journal of Business Research, 61(1), 724-731.
Chernev, A., & Carpenter, G. S. (2001). The role of market efficiency intuitions in consumer choice: a case of compensatory inferences. Journal of Marketing Research, 38(1), 346-361.
Cho, Jun-ho, & Lee, Sang-Youn (2011). A study on the activation plan of domestic franchise companies third party logistics. Journal of Industrial Distribution & Business, 2(2), 15-24.
Choi, Sung-Sik, Kim, Pan-Jin, & Lee, Sang-Youn (2011). Research on Private apparel Brand’s Product Strategy in Discounted Stores. Journal of Industrial Distribution &Business, 2(2), 25-38.
Davis, H. L., & Rigaux, B. P. (1974). Perception of marital roles in decision processes. Journal of Consumer Research, 1(1), 51-62.
Deneffe, D., & Rudiger, S. (2005). Profitable Pricing with Irrational Competitors and Rational Customers. Prism, 2(1), 71-89.
Emiliani, M. L. (2004). Is management education beneficial to society? Management Decision, 42(3), 481-98.
Engleke, G., & Simon, H. (2007). Decision Support Systeme im Marketing. in : Schmalenbachs Zeitschrift fur betriebswirtschaftliche Forschung, 59(1), 120-142.
Erickson, G., & Johansson, J. (1985). The Role of Price in Multi-Attribute Product Evaluations. Journal of Consumer Research, 12(1), 195-199.
Fox T. (1994). Logistics Information System Design. In J. F. Robeson and W. C. Copacino (Eds). The Logistics Handbook (pp714-736), New York: Free Press.
Grewal, D., & Baker, J. (1994). Do retail store environmental factors affect consumers’ price acceptability? An empirical examination. International Journal of Research in Marketing, 11(2), 107-115.
Grewal, Dhruv, Gottlieb, Jerry, & Marmorstein, Howard (1994). The Moderating Effects of Message Framing and Source Credibility on the Price-Perceived Risk Relationship. Journal of Consumer Research, 21 (6), 145-153.
Hauser, J. R., & Shugan S. M. (1983). Defensive marketing strategies. Marketing Science, 2(4), 319-360.
Huber, J., & McCann, John (1982). The Impact of Inferential Beliefs on Product Evaluations. Journal of Marketing Research, 19(8), 324-33.
Joel, E. (2001). Justifying Profitable Pricing. Journal of Product & Brand Management, 10(3), 141-159.
Johnson, Richard D., & Levin, Irwin P. (1985). More Than Meets the Eye: The Effect of Missing Information on Purchase Evaluations. Journal of Consumer Research, 12(9), 169-177.
Johnson, M. (1987). The body in the mind: Bodily basis of meaning, imagination, and reason. Chicago: University of Chicago Press.
Jung, Sung-Tae (2013). A Study on Compatible Pallet Sizes between T-11 and T-12 Pallet System : Focused on KS T 1002. Journal of Korea Logistics Review, 23(2), 63-97.
Jung, Sung-Tae, & Yoon, Nam-Soo (2013). The Effect on Logistics Cost of Incompatible Packaging Sizes in T-11and T-12 pallet systems. Journal of Distribution Science, 11(8), 13-21
Kim, Dae-Yun (2011). A Study 0n the Improvement of the domestic in producing area organizations According to the change retail environment : Focused on organized, scaled, Specialization. Journal of Industrial Distribution &Business, 2(2), 5-14.
Kim, Junh-Hee, & Chun, Tae-Yu (2008). Retail Marketing. Seoul, Korea : Dunam Publishing, 233-256.
Kim, Sung-Tae, & Shin, Hae-Woong (2009). A Study on the Logistics Facilities and Unit Load Systems in Korea. Korean Standards Association, 17, 69-71.
Kotler, P. (1999). Marketing in the Network Economy. Journal of Marketing, 63(4), 146-163.
Kwon, An-Sig (2007). The Building Pallet Pool System among Korea, China, and Japan for Strengthening competitive Power of Logistics. Seoul, Korea : Thesis for Doctorate in MyungJi University.
Lambert, Douglas, Stock, James R., & Ellram, Lisa M. (1998). Fundamentals Logistics Management. Irwin : McGraw-Hill.
Lee, Chang-Sup (2008). A Study on Success Factors of Logistics Information Standardization in Korea. Busan, Korea: Thesis for Doctorate in Donga University.
Lee, Gwang-Jong (2008). Retail Merchandising. Seoul, Korea :Dunam Publishing, 276.
Lee, Gwang-Jong (2011). Global Retail Format Strategy. Seoul, Korea : Dunam Publishing, 300.
Lee, Soon-Cheul, Hong, Sung-Wook, & Moon, Dae-Seop (2005). The Economic Effects of Logistics Standardization on Firm Costs : Focused on Pallet Standardization. The Journal of Korea Logistics Review, 45(1), 121-144.
Lee, Soon-Young (1998). Modern Quality Management. Seoul, Korea : Beobmunsa Publishing, 1-576.
Lee, Suk, Kim, Young-Joo, Kwon, Yong-Jang, & Kim, Kyung-Tae (2010). A Study on Compatibility of Pallets to Domestic Cargo Truck Bodies and Maritime Containers. The Journal of Korea Logistics Review, 20(3), 111-132.
Lichtenstein, D. R., Ridgway, N. M., & Netemeyer, R. G. (1993). Price perceptions and consumer shopping behavior : a field study. Journal of Marketing Research, 30(1), 234-245.
Lichtenstein, D. R., & Burton, S. (1989). The relationship between perceived and objective price - quality. Journal of Marketing Research, 26(1), 429-443.
Lim, Seong-Gil (2003). A Study of Price Design for E-Business, Ansan, Korea, Thesis for Doctorate in Hoseo University.
Little, A. D. (1991). Logistics in Service Industries. USA, Council of Logistics Management, 10.
Momoe, Albert J., Bitta, Della, & Downey, Susan L. (1977). Contextual Influences on Subjective Price, Perceptions. Journal of Business Research, 5(12), 277-291.
Porter, M. (1985). Competitive Strategy. The Free Press, New York.
Rao, A. R., & Monroe, K. B. (1989). The effect of price, brand name, and store name on buyers’ perceptions of product quality : an integrative review. Journal of Marketing Research, 26(1), 351-357.
Ratchford, B. T., Agrawal, J., Grimm, P. E., & Srinivasan, N. (1996). Toward understanding the measurement of market efficiency. Journal of Public Policy and Marketing, 15(2), 167-184.
Ryu, Tae-Hui, & Lee, Sang-Youn (2011). A Study on the Exchange Cooperation of Circulation·Distribution between South and North Korea. Journal of Industrial Distribution & Business, 2(1), 29-37.
Shin, Hae-Woong (2011). Efficiency Evaluation Model of the Unit Load System Based on the Principle of Compatibility and Consistency. The Journal of Korea Logistics Review, 21(5), 5-24.
Simon, H. (1992). Preismanagement : Analyse-Strategy-Umsetzung. 2. Auflage, Wiesbaden: Gabler.
Simon, H. (2004). A Dynmic Product Line Model: Theory, Evidence, Strategy, Working Paper. University of Bielefeld, West Germany, March.
Sterman, J. D. (2001). Business Dynamics: System Thinking and Modeling for a Complex World. CmGraw-Hill.
Thaler, R. H. (1985). Mental accounting and consumer choice. Marketing Science, 4(1), 199-214.
Tellis, Gerard J., & Wernerfelt, B. (1987). Competitive Price and Quality Under Asymmetric Information. Marketing Science, 6(2), 24-54.
Tellis, G. J. (1988). The Price Elasticity of Selective Demand :A Meta-Analysis of Economic Models of Sales. Journal of Marketing Research, 25(4), 331-341.
Yoo, Yang-Ho, & Kim, Sang-Cheol (2011). Logistics Development Strategy in Korea: Focusing on 3PL. Journal of Industrial Distribution & Business, 2(1), 17-22.
Yoon, Mun-Kyu (2006). A Study of the Pallet Connection System for Logistics Standardization. Soonchunhyang Social Science Review, 12(1), 5-20.
Yu, Phil-Hwa, Simon, Hermmann, & Fassnacht, Martin (2012). Price Management. Seoul, Korea: Pagyoungsa Publishing.
Wiltinger, K. (1998). Preismanegement in der undernehmerischen Praxis. Probleme der organisatorischen Implementierung, Wiesbaden, Gabler.