The advent of rich marketing data and analytic tools has brought pricing into the forefront of strategic thinking. For most companies, the improvement of pricing strategy is one of the main strategic goals and also one of the main strategic challenges. Most companies struggle with the same basic questions. How do we formulate a pricing strategy? Which data and methods should we be using to make pricing decisions? Who should be in charge of pricing decision-making? In practice, most firms use ad hoc rules of thumb that often fail to generate pricing recommendations that are even close to optimal. The simplicity of these rules of thumb comes at a substantial cost to profitability. Most rules fail to align pricing with the perceived value of consumers and their underlying willingness-to-pay. Many firms also struggle with the delegation of pricing responsibility within the organization, exacerbating the use of simple rules of thumb that fail to deliver effective pricing decisions.
This course blends marketing analytic frameworks, marketing strategy microeconomic theory, and data to formulate actionable pricing strategies. Students will learn how to coordinate pricing decisions with the rest of the marketing value proposition. Numerous pricing structures are developed in the course, along with their microeconomic foundations. Students will learn the underlying theory for each pricing structure, along with the practical considerations for implementation.
The course combines cases and homework to teach students how to design and execute pricing strategies. Students will be expected to work with different forms of data and corresponding analytic methods. The course will cover pricing strategies across many contexts including services, B2B and international.
During the quarter, there are 4 group homework assignments, 3 group case write-ups and 1 individual case assignment. The individual assignment is due during week 3. If you register late for the course, you must still submit this first assignment in class during week 3. Failure to submit this assignment will result in a grade of zero and no exceptions will be made. Provisional grades can be assigned so long as students complete all the assignments during the quarter.
For some of the group homework assignments, you will need to run a regression and/or use optimization software. Two review sessions have been scheduled with one of the course TAs to assist those students who are unfamiliar with these techniques.
For the group assignments and group case write-ups, students need to form a group of 4-5 people. All group members must be registered for the same section. No exceptions will be made.