Marketing in a world with costs of price adjustment

We suggest that consideration of costs of price adjustment in marketing offers a promising research direction. These costs can have substantial implications for research in pricing-from determining the magnitude and frequency of price changes to asymmetric pricing, pass-through in channels, and price synchronization. Our understanding of the nature and scope of these costs has been undergoing an evolution recently, from simple menu costs to richer decision-making, organizational, and customer-based costs. In this chapter, we review the literature in marketing and economics to summarize what we know about the nature, magnitude, and broad impact of these costs. We then identify some areas of potential interest to both researchers and practitioners in marketing, where consideration of price adjustment costs is likely to yield greater insights into marketing decisions.