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2023/2024  KAN-CCMVV1449U  Pricing Strategies

English Title
Pricing Strategies

Course information
Language English
Course ECTS 7.5 ECTS
Type Elective
Level Full Degree Master
Duration One Semester
Start time of the course Autumn, Spring
Timetable Course schedule will be posted at calendar.cbs.dk
Max. participants 60
Study board
Study Board for cand.merc. and GMA (CM)
Course coordinator
  • José Mata - Department of Strategy and Innovation (SI)
Main academic disciplines
  • Entrepreneurship
  • Marketing
  • Strategy
Teaching methods
  • Blended learning
Last updated on 15-02-2023

Relevant links
Learning objectives
At the end of the course students should be able to:
  • Calculate the range of admissible prices for products
  • Estimate price sensitivity
  • Choose the level of prices in different environments
  • Understand the impact of costs on pricing
  • Evaluate the financial impact of changes in prices
  • Understand the impact of pricing policies and challenges in pricing implementation
  • Choose strategies for communicating value and prices in different environments
  • Understanding the implications of competition upon price strategy
  • Understand the legal and ethical limitations to pricing practices
Course prerequisites
No formal prerequisites, but knowledge of strategy and marketing is desirable.
Prerequisites for registering for the exam (activities during the teaching period)
Number of compulsory activities which must be approved (see section 13 of the Programme Regulations): 1
Compulsory home assignments
The student must get 1 out of 2 assignments/activities approved in order to attend the ordinary exam.

- Project work plan (no more than 2 pages) to be submitted early in the course.
- Interim presentation to be made around the middle of the course. At this point, groups should have clear ideas of what they are going to do for the final report.
Both activities are opportunities to structure your ideas and get feedback to set you in the right direction for a successful final report.

The student will not have extra attempts to get the required number of compulsory activities approved prior to the ordinary exam. If the student has not received approval for the required number of compulsory activities or has been ill, the student cannot participate in ordinary exam. Prior to the retake the student will be given an extra attempt. The extra attempt is a 10 page home assignment that will cover the required number of compulsory activities. If approved, the student will be able to attend retake. Please note that students must have made an effort in the allocated assignments throughout the course. Students that do not participate in the assignments (no show/U) are not entitled to the extra assignment and will have to wait until the next ordinary exam to complete the course.
Examination
Pricing Strategies:
Exam ECTS 7,5
Examination form Oral exam based on written product

In order to participate in the oral exam, the written product must be handed in before the oral exam; by the set deadline. The grade is based on an overall assessment of the written product and the individual oral performance, see also the rules about examination forms in the programme regulations.
Individual or group exam Oral group exam based on written group product
Number of people in the group 2-4
Size of written product Max. 20 pages
Definition of number of pages:

Groups of
2 students 10 pages max
3 students 15 pages max
4 students 20 pages max
Assignment type Project
Release of assignment The Assignment is released in Digital Exam (DE) at exam start
Duration
Written product to be submitted on specified date and time.
15 min. per student, including examiners' discussion of grade, and informing plus explaining the grade
Grading scale 7-point grading scale
Examiner(s) Internal examiner and second internal examiner
Exam period Winter and Spring, The course will run in the Spring as a third quarter course.
Make-up exam/re-exam
Same examination form as the ordinary exam
Re-take exam is to be based on the same report as the ordinary exam:

*If a student is absent from the oral exam due to documented illness but has handed in the written group product she/he does not have to submit a new product for the re-take.

*If a whole group fails the oral exam they must hand in a revised product for the re-take.

*if one student in the group fails the oral exam the course coordinator chooses whether the student will have the oral exam on the basis of the same product or if he/she has to hand in a revised product for the re-take.
Description of the exam procedure

The exam will be based on a project to be developed in groups of up to 4 students. There are three possible alternatives for this project: 

1) A first option is to select a firm or, where appropriate, a business unit within a firm. Study how you could change its current pricing and show how this could improve the bottom line. 

2) A second option is to study a company's pricing policy or a specific pricing decision that was made in the recent past or is under current consideration. Use of publicly available information and your own research is acceptable. 

3) As a third option, you can select a pricing practice (eg, price promotion, quantity discounts, value communication, etc.) and analyze this practice across firms or industries.  

The written project should be handed in two weeks before the exam date.
Course content, structure and pedagogical approach

Pricing is one of the most powerful tools that managers have available for increasing profits and the value of their firms. Pricing is a critical tool for companies to appropriate part of the value that they create through innovations. However, this potential often remains unexploited, as many managers lack a clear understanding of how to improve upon their firm's customary pricing practices.

During the course, students will learn to assess the value of products and the role that value plays in the pricing process. They will learn how to assess price sensitivity and evaluate the financial implications of price changes. They will learn how communication of value and prices can influence the perceptions and behaviors of clients and competitors. The course will conclude with a discussion on the legal and ethical limits to pricing.

Overall, the course prepares you for addressing both strategic and tactical pricing issues and for identifying changes in pricing practices that can lead to improvements in firm profits. This should be relevant for a wide number of jobs that you may hold throughout your careers, such as product and marketing manager, but also business unit manager, management consultant, and entrepreneur.
Description of the teaching methods
The course will be a blend of lectures and applications to real-world cases. Most teaching will be face-to-face, but parts of the expositional lectures may be given online.
In case of health-related restrictions, more activities will take place online.
Feedback during the teaching period
Feedback is provided on the project plan and on the interim presentation.
During classes, feedback is provided during case discussions, Q&A time in class, and office hours.
Student workload
Teaching 33 hours
Preparation and exam 173 hours
Expected literature

The basic textbook for this course is: 

 

Thomas T. Nagle, Georg Müller,  The Strategy and Tactics of Pricing , 6th edition, 2018, Routledge.

 

The following textbook can also be useful: 

Tim Smith,  Pricing Strategy: Setting Price Levels, Managing Price Discounts and Establishing Price Structures , 2012, Cengage

 

The following articles can be used to go more in-depth over the different topics covered:

Enz, CA, Canina, L. and Lomanno, M., 2009. Competitive pricing decisions in uncertain times. Cornell Hospitality Quarterly, 50(3), pp.325-341.

Garrison, LP and Towse, A., 2017. Value-based pricing and reimbursement in personalized healthcare - introduction to the basic health economics. Journal of Personalized Medicine, 7(3), p.10.

Grewal, D., Ailawadi, KL, Gauri, D., Hall, K., Kopalle, P. and Robertson, JR, 2011. Innovations in retail pricing and promotions. Journal of Retailing ,  87 , pp.S43-S52.

Hinterhuber, A., 2004. Towards value-based pricing—An integrative framework for decision making. Industrial marketing management ,  33 (8), pp.765-778.

Homburg, C., Jensen, O. and Hahn, A., 2012. How to organize pricing? Vertical delegation and horizontal dispersion of pricing authority. Journal of Marketing, 76(5), pp.49-69.

Johansson, M., Hallberg, N., Hinterhuber, A., Zbaracki, M. and Liozu, S., 2012. Pricing strategies and pricing capabilities. Journal of Revenue and Pricing Management, 11(1), pp.4-11.

Kienzler, M., 2018. Value-based pricing and cognitive biases - An overview for business markets. Industrial Marketing Management, 68, pp.86-94.

Kucher, E. and Hilleke, K., 1993. Value pricing through conjoint measurement: A practical approach. European Management Journal ,  11 (3), pp.283-290.

Mandal, PC, 2021. Pricing and Ethical Issues for Global Markets - Strategies and Initiatives. International Journal of Business Strategy and Automation (IJBSA), 2(2), pp.1-15.

Noble, PM and Gruca, TS, 1999. Industrial pricing - Theory and managerial practice. Marketing science, 18(3), pp.435-454.

Palazon, M. and Delgado‐Ballester, E., 2009. Effectiveness of price discounts and premium promotions. Psychology & Marketing, 26(12), pp.1108-1129.

Pesendorfer, M., 2002. Retail sales - A study of pricing behavior in supermarkets. The Journal of Business, 75(1), pp.33-66.

Tan, Q. and Sousa, CM, 2011. Research on export pricing - Still moving towards maturity. Journal of International Marketing, 19(3), pp.1-35.

van der Rest, JPI, Sears, AM, Miao, L. and Wang, L., 2020. A note on the future of personalized pricing - Cause for concern. Journal of Revenue and Pricing Management, 19(2), pp.113-118.

Yelkur, R. and DaCosta, MMN, 2001. Differential pricing and segmentation on the Internet - the case of hotels. Management Decision, 39(4), pp. 252-261

 

For the purpose of in-class discussion, other readings, such as cases, press articles, and short exercises will be indicated before and during the course.
Last updated on 15-02-2023