Pricing Strategy in Practice

Start Date: 05/31/2020

Course Type: Common Course

Course Link: https://www.coursera.org/learn/uva-darden-bcg-pricing-strategy-practice

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About Course

In this project-centered course, Darden's Ron Wilcox and BCG's Thomas Kohler will walk you through a real-world case, from problem statement to detailed analyses. You'll use all three lenses (cost, customer value, and competition) to recommend an optimal price—and then adjust to market disruptions. Utilizing the concepts, tools and techniques taught in previous Specialization courses—from basic techniques of economics to knowledge of customer segments, willingness to pay, and customer decision making to analysis of market prices, share, and industry dynamics—you will practice setting profit maximizing prices to improve price realization. You'll finish the course with a portfolio-building project that demonstrates your pricing prowess.

Course Syllabus

Welcome to the course! We'll kick off the week with an overview of the project, which centers around Philips introduction of an eco-friendly light bulb. Once you've read the case, Thomas and Ron will guide you as you apply the cost lens to analyze the economics of the LED light bulb Philips has introduced to the market. After you've analyzed the economics of the case, Ron and Thomas will debrief to make sure you are on the right track. You will also hear from BCG pricing experts, who will share their lessons and tips gleaned from years of helping clients in multiple industries optimize their prices and improve the bottom line.

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Course Introduction

Pricing Strategy in Practice In this course, you will learn how companies are able to identify, price, and manage their capital investments effectively. You will learn the primary elements of cash flows and strategic financing, the valuation of companies, the pricing of equity securities, the pricing of derivative securities, and the risk mitigation techniques that can mitigate the effects of currency exchange rates. Throughout this course, you will be able to identify the best value-creating investments for your company and use the proper valuation techniques. This will enable you to price derivatives properly and ensure you are not overpaying for them. This is the first course in the new MOOC that teaches an in-depth approach to pricing strategy through the analysis of case studies.Week 1: Introduction and Financial Statements Week 2: Financial Statement Analysis Week 3: Monitoring and Remediation Week 4: Risk Management Principles of Chinese Politics: Choosing Your Leader This course is aimed at introducing the basic political principles and practices of the Chinese Communist Party, in addition to Chinese politics in general. The course focuses on the question of who should be the Chinese president for a given time, and for how long. This is not a ‘political theory’ course, but a ‘who-has-been’ one. We will look at both the major political parties and individual leaders, discussing both theoretical and practical issues. We will also give an overview

Course Tag

Competition (Economics) Conjoint Analysis Pricing Strategies Executive Presentation Pricing Economics

Related Wiki Topic

Article Example
Pricing Marketers develop an overall pricing strategy that is consistent with the organisation's mission and values. This pricing strategy typically becomes part of the company's overall long -term strategic plan. The strategy is designed to provide broad guidance to price-setters and ensures that the pricing strategy is consistent with other elements of the marketing plan. While the actual price of goods or services may vary in response to different conditions, the broad approach to pricing (i.e., the pricing strategy) remains a constant for the planning outlook period which is typically 3–5 years, but in some industries may be a longer period of 7–10 years.
Pricing Broadly, there are six approaches to pricing strategy mentioned in the marketing literature:
Premium pricing The use of premium pricing as either a marketing strategy or a competitive practice depends on certain factors that influence its profitability and sustainability.
Dynamic pricing Dynamic pricing, also referred to as surge pricing, demand pricing, or time-based pricing is a pricing strategy in which businesses set flexible prices for products or service based on current market demands. Businesses are able to change prices based on algorithms that take into account competitor pricing, supply and demand, and other external factors in the market. Dynamic pricing is a common practice in several industries such as hospitality, travel, entertainment, retail, electricity, and public transport. Each industry takes a slightly different approach to repricing based on its needs and the demand for the product.
Premium pricing The disadvantages of this pricing strategy includes:
Premium pricing Premium pricing (also called image pricing or prestige pricing) the practice of keeping the price of a product or service artificially high in order to encourage favorable perceptions among buyers, based solely on the price. The practice is intended to exploit the tendency for buyers to assume that expensive items enjoy an exceptional reputation or represent exceptional quality and distinction. A premium pricing strategy involves setting the price of a product higher than similar products. This strategy is sometimes also called skim pricing because it is an attempt to “skim the cream” off the top of the market. It is used to maximize profit in areas where customers are happy to pay more, where there are no substitutes for the product, where there are barriers to entering the market or when the seller cannot save on costs by producing at a high volume.
Pricing "Multidimensional pricing" is the pricing of a product or service using multiple numbers. In this practice, price no longer consists of a single monetary amount (e.g., sticker price of a car), but rather consists of various dimensions (e.g., monthly payments, number of payments, and a downpayment). Research has shown that this practice can significantly influence consumers' ability to understand and process price information.
Pricing "Premium pricing" (also called prestige pricing) is the strategy of consistently pricing at, or near, the high end of the possible price range to help attract status-conscious consumers. The high pricing of a premium product is used to enhance and reinforce a product's luxury image. Examples of companies which partake in premium pricing in the marketplace include Rolex and Bentley. As well as brand, product attributes such as eco-labelling and provenance (e.g. 'certified organic' and 'product of Australia') may add value for consumers and attract premium pricing. A component of such premiums may reflect the increased cost of production. People will buy a premium priced product because:
Cost-plus pricing Cost-plus pricing is a pricing strategy in which the selling price is determined by adding a specific dollar amount markup to a product's unit cost. An alternative pricing method is value-based pricing.
Pricing Honeymoon Pricing refers to the practice of using a low introductory price with subsequent price increases once relationship is established. The objective of honeymoon pricing is to "lock" customers into a long-term association with the vendor. This approach is widely used in situations where customer switching costs are relatively high such as in home loans and financial investsments.
Pricing strategies Variable pricing strategy sums up the total cost of the variable characteristics associated in the production of the product. Examples of variable characteristics are: interest rates, location, date, and region of production. The sum total of the following characteristics is then included within the original price of the product during marketing. Variable pricing enables product prices to have a balance "between sales volume and income per unit sold". Variable pricing strategy has the advantage of ensuring the sum total of the cost businesses would face in order to develop a new product. However, variable pricing strategy excludes the cost of fixed pricing. Fixed pricing includes the price of dedication received from manufactures in the production of developing the product and other involvement of factors.
Pricing strategies A retail pricing strategy where retail price is set at double the wholesale price. For example, if a cost of a product for a retailer is £100, then the sale price would be £200. In a competitive industry, it is often not recommended to use Keystone Pricing as a pricing strategy due to its relatively high profit margin and the fact that other variables need to be taken into account.
Pricing Guaranteed pricing is a variant of contingency pricing. It refers to the practice of including an undertaking or promise that certain results or outcomes will be achieved. For instance, some business consultants undertake to improve productivity or profitability by 10%. In the event that the result is not achieved, the client does not pay for the service.
Pricing When decision-makers have determined the broad approach to pricing (i.e., the pricing strategy), they turn their attention to pricing tactics. Tactical pricing decisions are shorter term prices, designed to accomplish specific short-term goals. The tactical approach to pricing may vary from time to time, depending on a range of internal considerations (e.g. such as the need to clear surplus inventory) or external factors (e.g. a response to competitive pricing tactics). Accordingly, a number of different pricing tactics may be employed in the course of a single planning period or across a single year. Typically line managers are given the latitude necessary to vary individual prices providing that they operate within the broad strategic approach. For example, some premium brands never offer discounts because the use of low prices may tarnish the brand image. Instead of discounting, premium brands are more likely to offer customer value through price-bundling or give-aways.
Predatory pricing In many countries there are legal restrictions upon using this pricing strategy, which may be deemed anti-competitive. It may not be technically illegal, but have severe restrictions.
Strategy Modern business strategy emerged as a field of study and practice in the 1960s; prior to that time, the words "strategy" and "competition" rarely appeared in the most prominent management literature.
Variable pricing Variable pricing is a pricing strategy for products. Traditional examples include auctions, stock markets, foreign exchange markets, bargaining, electricity, and discounts. More recent examples, driven in part by reduced transaction costs using modern information technology, include yield management and some forms of congestion pricing. Increasingly, sport venues, such as AT&T Park in San Francisco, have employed variable pricing to capture the most revenue possible out of consumers and fans.
Penetration pricing Penetration pricing is a pricing strategy where the price of a product is initially set low to rapidly reach a wide fraction of the market and initiate word of mouth. The strategy works on the expectation that customers will switch to the new brand because of the lower price. Penetration pricing is most commonly associated with marketing objectives of enlarging market share and exploiting economies of scale or experience.
Pricing "Demand-based pricing", also known as dynamic pricing, is a pricing method that uses consumer demand - based on perceived value - as the central element. These include price skimming, price discrimination and yield management, price points, psychological pricing, bundle pricing, penetration pricing, price lining, value-based pricing, geo and premium pricing.
Algorithmic pricing Algorithmic pricing is the practice of automatically setting the requested price for items for sale, in order to maximize the seller's profits.