PGP 2: Term 5: Pricing Strategies
Course Title: Pricing Strategies Credits: 4
Instructor: Prantosh J. Banerjee No. of Sessions: 20
Email: prantoshb@iima.ac.in Mobile: 8758037263
Course Description:
Of the 4Ps in marketing, pricing is the only P that generates revenues for the firm. Pricing decisions
tend to have both short term and long term influence and they impact both the top line as well as
bottom line for firms. Therefore, they may be monitored by senior management of firms. Pricing
decisions are affected by economic, marketing, organizational, and psychological factors, and are made
within a prescribed legal framework.
This course helps develop amongst the participants an appreciation of the importance of pricing. It
helps develop participants’ conceptual abilities, knowledge and analysis in the field of pricing and
helps them develop a systematic framework for understanding, assessing, formulating and
implementing pricing policies and approaches.
Course Objectives:
This course provides an opportunity for the participants to understand pricing concepts and develop a
systematic framework for formulating and implementing pricing approaches within the context of a
business decision. The course is about understanding the process of making pricing decisions. The
course would combine both, developing a proper pricing perspective, and using relevant tools in setting
and implementing a price approach. At the end of the course, a participant should have developed a
framework for thinking about pricing that can be applied to the contemporary workplace.
Pedagogy / Teaching Method: Case study, Class discussion, Group Assignment.
The class would be divided into groups; each group of 4 – 6 members. For each class session, each
group is required to submit a case analysis (consisting of 5 PowerPoint slides). Two groups (selected
randomly) are required to present the class case; each presentation should be of a maximum of 5
minutes plus time for 2 questions; a maximum of 5 PowerPoint slides may be used for each
presentation. The presentations are graded.
The case presentations may be structured as follows:
a) Slide 1: 5Cs Framework (Company, Customers, Competition, Collaborators, Context)
b) Slide 2: Decision Problem (within 16 words); Alternatives; Framework used to evaluate
Alternatives c) Slide 3: Evaluation of Alternatives (using appropriate Framework)
d) Slide 4: Recommended Action
e) Slide 5: Action Plan to handle negatives arising out of non-selection of other Alternatives.
Each group is also required to do a Group Project. Details of the Group Project would be provided at
the beginning of Session 9.
PGP 2: Term 5: Pricing Strategies
Evaluation
Unit Weightage (%)
Class participation 10
Case Analysis (Group) 20
Group Project 30
End-term examination 40
Total 100
Text Book:
Thomas Nagle, John Hogan and Joseph Zale: “The Strategy and Tactics of Pricing.” 5th Edition / Latest
Edition (referred to as “Nagle” in the Schedule of Sessions).
Schedule of Sessions:
Session 1: Introduction to Pricing: Pricing Concepts
Readings:
Nagle: Chapter 1
Tellis, G. J. (1986). Beyond the many faces of price: an integration of pricing strategies. The
Journal of Marketing, 146-160
Session 2: Role of Costs in Pricing
Reading:
Nagle: Chapter 9
Case:
Chandrashekhar R (2010), Parle-G, #910A22, Ivey Publishing
Guidelines for case preparation
What should Parle do in present and in future?
How can firms insulate themselves and increase in input costs?
What is the role of cost in pricing?
Session 3 + 4: Value Based Pricing
Readings:
Dolan, Robert J. (1999). Pricing: A Value Based Approach (HBS Note # 9-500-071)
Case:
Neufeld, Derrick and Ramasastry, Chandra Sekhar (2009). Nuway Software (# 909E05;
Richard Ivey School of Business)
PGP 2: Term 5: Pricing Strategies
Session 5 + 6: Pricing Goals
Readings:
Mazumdar, T., Raj, S. P., & Sinha, I. (2005). Reference price research: Review and
propositions. Journal of marketing, 69(4), 84-102.
Xia, L., Monroe, K. B., & Cox, J. L. (2004). This price is unfair! A conceptual framework of
price fairness perceptions. Journal of marketing, 68(4), 1-15.
Case:
Gourville, J.A. & Bertini, M. (2009). The London 2012 Olympic Games, (HBS#
510039)
Session 7: Psychological Pricing: Consumer Evaluation of Prices: Framing and Mental Accounting
Reading:
Thaler, Richard (1985), “Mental Accounting and Consumer Choice,” Marketing Science,
4(3), 199-214.
Session 8: Consumer Evaluation of Price Bundles
Readings:
Yadav, Manjit, S. (1994), “How buyers evaluate product bundles: Model of anchoring and
adjustment”, Journal of Consumer Research, 21 (September), 342-353.
Janiszewski, Chris and Marcus DaCunha Jr. (2004), “The influence of price discount framing
on the evaluation of a product bundle”, Journal of Consumer Research, 30 (March), 534-546.
Case:
Robinson, D and Ostersdorf, (2013), Netflix: Pricing Decision 2011 MA: University of
California, Berkley.
Session 9 + 10: Dynamic Pricing: Demand and Time Based Pricing
Readings:
Elmaghraby, Wedad and Pinar Keskinocak (2002), “Dynamic Pricing: Research Overview,
Current Practices and Future Directions,” Technical Report, The Logistics Institute
GeorgiaTech and the National University of Singapore, 1-31.
Sahay Arvind (2007), “How to Reap Higher Profits With Dynamic Pricing” MIT Sloan
Management Review (#SMR 254)
Case:
Avari Ramada Renaissance Hotel (Stanford Business School: Case # M-314)
PGP 2: Term 5: Pricing Strategies
Session 11 + 12: Pricing and Market Sizing; Pricing over the PLC
Reading:
Nagle: Chapter 7
Bergstein, H., & Estelami, H. (2002). A survey of emerging technologies for pricing
new-to-the-world products. Journal of Product & Brand Management, 11(5), 303-319.
Case:
Quelch, J.A. & Beckham, H. (200910). Metabical: Pricing, Packaging, and Demand Forecasting for a
new weight-loss drug, HBS # 4183. Boston, MA: Harvard Business School Publishing
Guidelines for case preparation
What are the pros and cons of forecasting method presented by Printup? If you had to
estimate the demand for this product how would you go about doing it? What would your
forecast look for the first five years?
What considerations should be taken into account when making decisions about the package
count? What package size would you recommend?
What pricing apprcoaches youd you suggest Princup explore? What are the afvantages and
disadvantages of each strategy? What price would you recommend?
What impact does your pricing decision have on profitability? What is the ROI over the first
five years of each of the pricing strategies identified?
Session 13 + 14: Online Pricing
Reading:
Baker, Walter, Mike Marn and Craig Zawada (2001). Price Smarter on the Net. Harvard
Business Review, (February), 122-127
Case:
Dolan, Robert J. (2000), Priceline.com: Name your own price HBS No. 9-500-070, Boston, MA:
Harvard Business School Publishing.
Session 15 + 16: Pricing and Sharing Gains
Reading:
Dolan, Robert J. (1995). How Do You Know When the Price is Right. Harvard
Business Review, (September-October), 4-11.
Case:
Sawhney, M. (2004). Trilogy Corporation Customer Value based pricing, KEL 106,
Kellogg School of Management
Guidelines for case preparation
What are the principal goals for Trilogy? What are its pricing goals?
How would you translate these goals into a suitable pricing approach for Trilogy?
What is the nature of perceived value to the customer?
PGP 2: Term 5: Pricing Strategies
Evaluate the Trilogy approach in terms of the organizational changes that are required
for the gain sharing pricing approach to work.
Is Trilogy justified in pursuing the gain sharing approach? Why or Why not?
Session 17 + 18: Price Wars, Price Guarantees and Price Signaling
Readings
Nagle Chapter 10 & Chapter 11
Rao, Akshay, Mark E. Bergen and Scott Davis (2000), “How to Fight a Price War,” Harvard
Business Review, (March-April), 107-116.
Case:
Gupta, Seema; Mishra, Kanchan; Ashish Maheshwari (2013). Procter & Gamble India:
Gap in the Product Portfolio? (IMB# 433 Indian Institute of Management, Bangalore)
Session 19 + 20: Sales Force and Pricing; Course Review
Reading
Sodhi, Manmohan S. and Navdeep S. Sodhi (2005), “Six Sigma Pricing,” Harvard Business Review,
May, 135-144.
Case:
Signode (HBS Case# 9-586-059)
Guidelines for Case Preparation:
What is the current market position of Signode and its products? What are the pricing
goals?
What criteria should guide the pricing decision?
How does the customer evaluate and value the product? What is the value to the
customer? Why?
What is the role of the sales force in the pricing decision?
What should Gary Reed do? Why?
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