Analysing a Segmentation Pricing Strategy for ERP Systems under Diffusion Patterns

In a highly uncertain and dynamic industrial business network, Enterprise Resource Planning (ERP) systems vendors face great challenges to enhance their market position and maximize their profit. Being able to simultaneously determine the right price for an ERP system and to anticipate the diffusion of the system in an industrial sector is a complex task. In this paper, we evaluate the options of developing a price discrimination policy for Enterprise Resource Planning (ERP) systems in a business sector governed by a diffusion pattern influenced by the network position of each firm. Based on a real data from the automotive industry, the proposed strategy is operationalized through discounts and optimized through a simulation-based model coupled with design of experiment and response surface techniques. Our results suggest that a segmentation pricing strategy is likely to increase total revenues in network with low initial adoption rates and that price discounts should be adapted according to adoption rates in order to maximize total revenues.

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