PRICING POWER: INFUENCERS, FOLLOWERS, AND STATUS CIRCULATION BETWEEN THE TWO

Strategy & Business Policy

Speaker: Mark Kennedy

Associate Professor - Imperial UK

Conference  Jouy-en-Josas T004

ABSTRACT:

Taking inspiration from the fashion and luxury industires, we seek to explain how some firms command sustained premium pricing for relatively imitable products. We observe that such pricing arises when organizations leverage a following among influencers—often an exclusive clientele—by offering products under a common label to the influencer’s followers. We theorize such pricing power as the product of three ingredients. First, pricing power requires status circulation, a process whereby elite producers transfer status from influencers to followers and back again; this requires straddling very different kinds of markets. Second, pricing power requires elite producers defend their own status by what we call gatekeeping activities—arrangements that separate elite producers themselves from lower tier producers. Third, pricing power is also supported by flanking institutions that give elite producers validation and accreditation. To generalize beyond fashion, we combine these integredients into a framework useful for analysis and development of pricing power, and we call for studies that explore and elaborate the framework’s applications and limitations.