• Ability to critically view pricing from various perspectives such as managerial and behavioral economics, marketing and organisation theory.
• Ability to reflect on and identify pricing opportunities and challenges in a global business environment.
• Ability to apply pricing theory to real- life contexts, and to derive managerial implications from research findings.
• Knowledge of state-of-the-art pricing research.

Price setting is one of the most powerful levers for improving firms’ profitability. Therefore pricing is moving up the strategic agenda in many firms and firms devote considerable effort to the management of their pricing process. Pricing management is a complex task that involves multiple departments and that uses a variety of techniques and diverse sets of information.

In this course, we look at pricing management as a tool to tackle and find solutions to three challenges. The first is to generate and analyze customer, market and cost information. The second is to control price setting and price discounting behavior. The third is to coordinate interdependencies between functions and markets in pricing.

In order to supply a comprehensive understanding of how firms may deal with these challenges, the course investigates the challenges and their solutions in an interdisciplinary perspective. The course draws on insights from marketing, managerial and behavioral economics and organization theory. This approach will allow you to acquire hands-on experience on the techniques of pricing, give you an understanding of the organizational practices and processes and give you models and theories to analyze the three pricing challenges. 

The pedagogical approach in the course is the following. In general, each session starts out with discussing a particular challenge as well as models and techniques for analyzing and solving them. Following this, the session will move on to more detailed work on challenges and solutions through simulations, exercises, casework, and workshops.

The course will make use of guest lectures to illustrate the practice applications of the models and theories of the course. Around three guest lecturers are invited from different industries to share their experiences and explain how they apply pricing theories in practice. Last year, we had presentations from the head of pricing of a global pharma company, as well as from a senior consultant and partner of two well-renowned consultancy firms.

The content of the course is divided into 5 modules:

1. Introduction to Pricing & Pricing techniques

This module lays the foundation for the course in terms of the technical basis of pricing. The focus will be on introducing the concept of pricing and its importance in several disciplines (e.g. managerial economics, marketing). Furthermore, several pricing techniques are introduced (e.g. the construction of list prices, price waterfall, cost-plus, value, and competitor based pricing)

2. Information problem  

This module analyzes how firms can use market, cost and competitor information in pricing. The focus will be on information acquisition and elaboration (e.g. price sensitivity, conjoint analysis, key buying factor analysis, willingness-to-pay, dynamic pricing). Furthermore, several problems linked with pricing information are presented (e.g. irrationality and use of intuition in pricing from a behavioral economics perspective)

3. Control problem

This module addresses the problems of controlling pricing decisions. The focus will be on implementation of pricing decisions (e.g. sales force management, negotiations, and incentives) and the control of pricing decisions (e.g. discount management, Key Performance Indicators (KPIs), use of pricing softwares).

4. Coordination problem

This module discusses organizational issues in pricing. The focus will be on coordination efforts for pricing (e.g. new product pricing, target costing) and effective communication practices.

5. Pricing Perspectives and future outlook

This module discusses the various perspectives covered in the course further explicating their basic assumptions and relevance. There will also be a session on emerging topics in pricing (e.g. pricing in startups) from a research and a practitioner perspective. 

The overall course textbook:

1. Thomas Nagle, John E. Hogan & Joseph Zale: “The Strategy and Tactics of Pricing”. 5th edition, Pearson International Edition, 2013, 345 pages, 9781292023236.

All required readings as well as all slideshows from the lectures and the workshops are curriculum.

Selected articles from academic journals will be uploaded on CBS Learn in due time, i.e. one week before each lecture.