Conceptualizing and modeling firms’ price image in the business market

Purpose Price image studies have dominated the consumer market but have been slower to evolve in the business market. This research aims to conceptualize and validate the firms’ price image (FPI) in the business market, as well as to develop a conceptual framework for exploring the importance of pricing capability (PC) in the formation of FPI and its influence on customer value (CV) and business performance (BP). Design/methodology/approach The study conducted field interviews with business managers and customers of Indian small and medium-sized enterprises to operationalize and validate the FPI variable using a mixed method of qualitative and quantitative multivariate analyses. Partial least square structural equation modeling technique was applied to validate a conceptual model on a sample of 286 respondents acquired from both physical and digital questionnaire survey techniques. Findings The findings revealed that PC is positively linked to FPI, which in turn, significantly affects CV and BP. Moreover, CV serves as a partial mediator in the FPI–BP link. The research also offers a measurement scale consisting of eight items for assessing the FPI variable from the stakeholders’ perspective. Research limitations/implications This research contributes to the literature on price image by refining and testing measures of FPI, and enriches the existing literature by understanding the theoretical relationships among PC, FPI, CV, and BP. Practical implications The research reveals that developing PC is a useful tool for SMEs to build favorable FPI, which delivers superior CV and obtains improved BP. The findings can also assist SME managers to gain a sustainable competitive advantage by maintaining a favorable FPI. Originality/value While a growing number of consumer market studies reveal that price image is strategically important for the retailers who own it, no study has explored the role of price image in the business market. This is the first study to explore price image at the firm level in the business market. This study further provides empirical evidence for the claim that PC influences the formation of a FPI and clarifies the relationship between FPI, CV and BP.