Pricing

Pricing is one of the most important, least understood, and most controversial decisions a manager has to make. These decisions often have significant long-term implications for a firm’s bottom line. The purpose of this course is to help future managers make good decisions by preparing them to analyze the environment in which their firm operates and to arrive at an appropriate pricing policy for their product or service. More specifically, the objectives of the course are: 1) to develop an understanding of the relationship between a firm’s environment (e.g., cost, demand, competition, and legal aspects) and its optimal pricing strategy, and 2) to develop skills in applying this understanding.

There are several components to the course: elasticity of demand and relevant costs, price discrimination and market segmentation, and competitive pricing.
Students will learn the fundamentals of economic-value analysis and break-even analysis, and will be made familiar with strategies such as bundling, tie-in sales, quantity discounts, product-line pricing, and demand buildup. The course will cover ways of predicting competitor-pricing responses, and it will discuss a firm’s legal environment as it pertains to pricing.

Prerequisites: STR 401 and MKT 402 (may be taken concurrently)
 

The objective of this course is to prepare students with the intuition and tools to make pricing recommendations, and to meet the booming demand in pricing and consulting related careers. The course builds around applying state-of-the-art data analysis toolkit to data of historical sales to predict underlying consumer demand. We study analytical methods suitable for different types of data structure and different pricing objectives. Topics covered include pricing against competing products, product positioning and finding market segments.

Prerequisite: GBA 436 or CIS 417
 

Students will learn the major differences in pricing strategies between selling to consumers (as in MKT414/STR423) and to other firms which then deal with consumers. The course starts by analyzing the pricing problem of a manufacturer selling to a retailer. We examine the issue of double marginalization, and learn how two-part tariffs get us out of this problem. We also examine different forms of contractual relations—from vertical acquisitions to regular short-term contracts—and potential issues with every form, touching on transfer pricing and outsourcing.

In the second part of the course, we analyze a crucial concept of cost pass-through (how much a retailer should decrease the retail price in response to a decrease in the wholesale price) and the effect of manufacturer’s advertising on the retailer and on the channel overall. This course is a natural continuation of Pricing for those who are interested in working in an industry where a significant portion of sales is done through independently-owned retailers, whether students are planning on working on the retailer side or on the manufacturer side of this industry.

Prerequisite: MKT 414
 

This course builds on MKT 414/STR 423 to equip students with the necessary skills to make profitable pricing decisions in complex business environments. Topics include: pricing with constrained supply, pricing in the presence of uncertainty about demand, markdown management, advance selling, pricing on the internet, pricing in the presence of direct or indirect network effects, selling through auctions, and behavioral and ethical aspects of pricing. The course also includes a comprehensive pricing simulation.

Prerequisite: MKT 414