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2014/2015  BA-BHAAV6015U  Price theory and dynamic Pricing

English Title
Price theory and dynamic Pricing

Course information
Language English
Course ECTS 7.5 ECTS
Type Elective
Level Bachelor
Duration One Quarter
Course period Autumn, Second Quarter
Timetable Course schedule will be posted at calendar.cbs.dk
Max. participants 120
Study board
Study Board for BSc in Economics and Business Administration
Course coordinator
  • Troels Troelsen - Department of Operations Management (OM)
Main academic disciplines
  • Globalization, International Business, markets and studies
  • Marketing
  • Corporate and Business Strategy
  • Economics, macro economics and managerial economics
Last updated on 25-04-2014
Learning objectives
To give the students a practical and theoretical understanding of:
Price theory in the basic operations management theory and pricing models including the impact of production costs and presumtions to optimize prices.
The state of the art in dynamic pricing and price theory in a fast moving and changing internationally oriented business environment.
To understand the classifications of markets and products in varying markets.
To know leading new theories and research concerning setting the prices a.o. how to price new products and services.
To understand and apply dynamic pricing, value based pricing and pricing theory in general is one of the single most important parameter in the company’s task to balance consumer’s utility and expectations and to produce a sufficient business profit.
To understand, that pricing is “the crash test” for all parameter theory.
Course prerequisites
Good understanding of English, oral and written. Basic understanding of managerial economics, cost theory, demand and market structures. This course builds on the foundation of the operations management and managerial science. Students attending this class get a strong analytical understanding of how pricing can be used.
Prerequisites for registering for the exam
Number of mandatory activities: 2
Compulsory assignments (assessed approved/not approved)
Workshops to be approved

Requirements about active class participation (assessed approved/not approved)
The course recommends active class participation in the lectures to optimize outcome and require class participation in the 3 active learning sessions including discussions and oral presentation by the students of specific models and articles in groups. For further info see study material. The 3 case solving sessions are evaluated by former students as an extraordinary efficient method to relate theory to the challenges in the specific industries.
Examination
Home assignment:
Exam ECTS 7,5
Examination form Home assignment - written product
Individual or group exam Individual
Size of written product Max. 15 pages
15 pages - and read studymaterial for further ínformation.
Assignment type Written assignment
Duration Written product to be submitted on specified date and time.
Grading scale 7-step scale
Examiner(s) One internal examiner
Exam period December/January
Make-up exam/re-exam
Same examination form as the ordinary exam
Normally 7 weeks after the normal exam
Description of the exam procedure

Will be explained in details in the study material.
Course content and structure

1.Pricing theory and models
Introduction to stake and stockholder analysis, Porter’s models in relation to the pricing challenges. Basic theory on demand, elasticity and pricing policies in different markets.
Price discrimination, price leadership et al the practicability. The influence of the pricing decision by cartels and/or collusion.
Cost in relation to the pricing aspect. How do costs influence the pricing decision?
 
2.Pricing policies and pratices
Outcome of the large pricing research program performed by CBS / Troels Troelsen with cases from real life.  Set into context with the developed pricing models, DIM (Decision making - Information search - Models for pricing) and PDS ( Products - Demand - Supply)
How do executives and managers set the price in real life? Strategies on pricing in different environments, including life-cycle pricing, segmented pricing, pricing in the marketing mix. 
 
The focus of this module will be to present some often used models from real life. 
 
3. Pricing taking dynamic – and value based pricing into consideration. 
A study of dynamic and value based pricing - the newest research among pricing experts. Dynamic pricing, how, where and when? Perspectives of using dynamic pricing. What are the advantages, where are the pitfalls?
The aspects of value based pricing. Where is value-based pricing applicable? Perception of value – how to measure it. Customer targeting.
 
Learning session will give the students the change to apply the tools of dynamic- and value based pricing on different case studies.
 
4.Auctions and e-pricing
Comparing the bidding and pricing between in person and online. Pricing and markets on the internet. Different auction models.
Risk and internet. Auctions and exchanges. Buying and selling on the internet. What are the pitfallst?  The students will have to buy/sell things on the internet as part of this learning session to get a feel of the mechanisms involved in such transactions.

5. Guest lectures are invited from different industries will be invited to present their experiences on different subjects and how prices are actually set in different industries and companies. 

In the learning session the students will have to apply the above mentioned elements on specific pricing problems. We focus on how to use the different models in different situations, all focused on the pricing aspect.
Teaching methods
The course is in total 36 lecturing hours. Consisting of
9 lectures (one lecture = 3 hours a 45 min)
and 3 work shops (one work shop = 3 hours).
The course will require active class participation in the lectures and case solving. Sessions include discussions and oral presentations of specific models or articles by the students in groups of 4-6 persons. Each group will have to give one oral presentations and hand in mandatory essays for each work shop.
Further Information
Class schedule: Monday 11.40-14.15, week 43,44,46,48,50
and wednesday 13.30-16.05, week 43,44,46,48,50.
workshop monday 11.40-14.14, week 45,47,49.
workshop wednesday 13.30-16.05, week 45,47,49.
Expected literature
1.Thomas Nagle and John E. Hogan: “The Strategy and Tactics of Pricing”
4th  edition . Pearson International Edition, 2006, 345 pages, ISBN 0-13-204358-0
2. Hermann Simon, Frank F. Bilstein, Frank Luby : Manage for Profit -  not for Market Share" -  Harward Business School Press, 230 pages, 2006, ISBN 1-59139-526-7
3. Supplementary text book - but awesomely good: William Poundstone: "Priceless", Hill and Wang 2010, 335 pages, ISBN 978-0-8090-9469-1
4. Selected articles from scientific and managerial journals. Will be uploaded on the learn site of the course in due time before the course starts.
5. www.sites and e-mails will be used to provide study materials and to secure a high level of information
Last updated on 25-04-2014