The Influence of Market Dynamics on Business-to-Business Platform Service Pricing : A Case Study in the Spirits Industry

Abstract: Digitization of business has evolved business strategies and models. Companies have found new ways of value creation and consequently innovated monetization. A prominent area where this can be seen is within platform services, which lacks business-to-business research. Knowledge contribution in this area is therefore warranted. Aim – This study aims to investigate pricing strategies and contextual challenges and opportunities regarding platform services in the spirits industry. To enable this, the following research questions have been formulated: 1) What are important market dynamics to consider when developing a platform service in the spirits industry? 2) How will these market dynamics affect the pricing strategy of a business-to-business platform service? Method – Considering that theory testing and theory generation are both parts of this study, the methodological approach is abductive. Regarding the data collection, a literature review was paired with a case study. Semi-structured interviews with senior executives from the focal industry provides the source of primary data for this study. Thereafter, a thematical analysis method was applied to help answer the research questions. Findings – From the thematical analysis, this study identified five market dynamics affecting pricing strategies of business-to-business platform services in the spirits industry. Namely, adaptability, legislative barriers, locking effects, individualization of business relations, and digitization.  Implications – This study contributes to the spirits industry and to business-to-business platform developers through the identification of market dynamics. Investigation into how pricing strategies of platform services are affected by the industry-specific market dynamics can contribute to strategic decision-making. In terms of theoretical significance, the aforementioned market dynamics add to the business-to-business discourse. Additionally, this study’s explorative nature is expected to pave the way for further research into business-to-business platforms, the spirits industry, market dynamics, and pricing strategy. Limitations – The work context is limited to digital platform services within the spirits industry. Moreover, albeit the literature review covers established theory regarding both business-to-consumer and business-to-business platform services, the empirical focus and consequently the ambition of the analysis is to generate new knowledge for the business-to-business environment specifically. Lastly, the interview respondents are limited to the case company’s network.