The Ohio State University s2

The Ohio State University Fisher College of Business Pricing Strategy and Tactics M & L 851 Fall, 2010

Larry M. Robinson 636 Fisher Hall Ph: 292-0680 Office Hours: Monday and Wednesday 10 to 3 pm, Tuesday and Thursday 3 pm to 5:30 pm, and by appointment Email: [email protected]

Course Objectives:  Develop understanding of principles managers follow to make effective pricing decisions  Learn how to do economic value estimation (EVE) for a product or service offered to a specific market or for a specific use  Learn how to perform managerial price sensitivity analysis (MPSA) which identifies factors that influence price sensitivity when making judgments about importance of price in a buyer’s purchase decision  Recognize objective of price competition is not to win market share, but to maximize long-term profitability  Learn to analyze pricing concepts related to: new products, pricing changes, bundling/versioning, yield management/revenue management & price wars  Develop ability to integrate pricing decisions with product, promotion and channel management decisions Textbooks and materials

The 1% Windfall: How Successful Companies Use Price to Profit and Grow, Rafi Mohammed, HarperCollins Publishers, New York, NY ISBN#978-0-06-168432-6

Cases and readings that apply to each class session: Readings are available on the course web site on Carmen. Cases are in a course packet available from Xanedu through the Carmen course site. The Xanedu relationship is a “green” concept being used by many Fisher MBA courses with Dean Wruck’s recommendation and approval.

Course web site: The course web site on Carmen has the syllabus, articles for outside reading, example projects, PowerPoint slides for guest presentations, PowerPoint slides for each week, reading list of pricing resources and links to additional resources about pricing.

PowerPoint presentations for each class session are posted on the course web site before each class session. Course Overview:

Professor Raymond Corey at Harvard Business School wrote in the early 1960s that “Pricing is the moment of truth---all of marketing comes to focus in the pricing decision”. This course is intended to provide knowledge required to make the “moment of truth” a successful one for the firm. Our emphasis will be on strategies and tactics to set initial prices for a product or service and to react to internal and external changes as the product or service goes through its life cycle.

Strategic pricing is about much more than just setting and implementing prices. It is about targeting customer segments that can be served profitably, communicating information that justifies price levels and managing pricing processes and systems to keep prices aligned with value seen, acknowledged and received by customers and potential customers.

Pricing is a multidisciplinary and multifunctional subject. Financial, economic, operational, marketing and legal considerations are involved in setting and administering pricing strategies and tactics. Senior management has the responsibility to ensure pricing policies and procedures achieve optimal revenues and profits for the organization.

There are many issues which require attention in developing and executing a repeatable process for pricing strategy and tactics for a company. Few business managers who participate in setting and implementing pricing strategies have any formal training in this very important business activity. Many business schools offer courses in pricing. As of 2010, 34 of the 50 United States business schools ever ranked in the top 30 by Business Week, USNews & World Report or Financial Times offer pricing as an elective in MBA programs. This number is up from 17 of the top 50 MBA programs which had a pricing elective in 2003.

A growing number of companies have separate administrative functions for pricing analysis and decision making. Pricing departments are common in such industries as pharmaceuticals, chemicals, airlines, hotels, car rentals, computer software and waste removal markets. Technology to enable and support pricing decisions is available from such publicly traded firms as Zilliant and Demandtec and privately owned companies such as PROS and Manugistics. Pricing consulting is a major area of consulting engagements at McKinsey, Deloitte, The Monitor Group and other major consultancies. A list of pricing consultants and pricing software companies can be found at www.pricingsociety.com.

The professional practice of pricing management is supported by several organizations and publications. The major industry association is The Professional Pricing Society in Roswell, Georgia (www.pricingsociety.com). The Pricing Institute founded in 1987 as a division of International Institutes of Research is a firm which specializes in conferences for executives in various functions and industries. The Pricing Institute has an annual PriceX conference as a mechanism for encouraging new thinking about pricing and for addressing new ideas about pricing issues. Also, in 2000, the INFORMS Section on Revenue Management and Pricing began an annual conference co-sponsored by Georgia Tech and Revenue Analytics, software consulting firm. See www.revenuemanagementconference.com for the current year’s conference agenda. The INFORMS section also sponsors The Journal of Revenue and Pricing Management which is published by Palgrave Publishing.

The Professional Pricing Society is an excellent source of information and access to experts, conferences, webinars, blogs, white papers, books, article reviews, quarterly Journal of Professional Pricing and monthly The Pricing Advisor newsletter. The Professional Pricing Society sponsors three major conferences each year, and has developed the CPP (Certified Pricing Professional) designation. See www.pricingsociety.com for info about the conferences, access to pricing blogs, webinars, white papers, corporate members, job board, surveys of pricing professionals, and search function which accesses pricing knowledge accumulated over the 20 years of this professional organization’s history.

Journals that focus on pricing strategy and management include: Journal of Professional Pricing, The Journal of Revenue and Pricing Management, Journal of Product and Brand Management, Marketing Science, Journal of Marketing, Journal of Marketing Research, Marketing Research, Harvard Business Review, McKinsey Quarterly, Across the Board, Marketing Management Magazine, Management Science, International Journal of Research in Marketing, Journal of Business, and Journal of Business Research. Another source of pricing research and information exchange is The Pricing Center at Fordham University which sponsors conferences and provides financial support for doctoral student research on pricing. These organizations and journals provide evidence that pricing is a business discipline with a body of knowledge and practice worthy of management attention in any organization.

Another source of current information about pricing strategies is pricing blogs. Two of the most popular pricing blogs are: “Pricing for Profit” by Rafi Mohammed, CEO of Culture of Profit LLC. Rafi’s blog can be accessed and subscribed to at: www.pricingforprofit.com. The second highly popular pricing blog is: “Dollars and Sense: The Pricing Blog” by Reuben Swartz, President of Mimiran, which is a pricing consulting and software firm. Reuben’s blog can be accessed and subscribed to at http://blog.mimiran.com . Both bloggers post a new entry at least weekly, often more frequently. Both have been doing pricing blogs since 2006. Other pricing blogs include: http://bestpracticepricing.blogspot.com/, http://pricingandvaluestrategies.blogspot.com/ and http://professionalpricingsociety.blogspot.com/. These blogs provide commentary on pricing subjects which can be accessed by subscribing to the blogs for daily updates, by visiting www.pricingsociety.com (click on “Resources” to find the URLs for several active pricing blogs) and by searching blogs for pricing subjects. A simple way to access current blogs about pricing is to sign up for daily alerts on “pricing” and/or “pricing strategy” at www.google.com/alerts. Google Alerts provides 10 items daily on any selected search term.

Yet another source of current information about pricing is the Network of Pricing Champions (NOPC) discussion group on LinkedIn. As of August 30, 2010 this discussion group had 1,328 members. Join (NOPC) at www.linkedin.com/groups where registration is free and the discussions and networking opportunities are great.

There are numerous books on pricing strategies and tactics, many of which have been published or updated since 2000. A widely used pricing text book is by Nagle, Hogan and Zale, The Strategy and Tactics of Pricing, 5th edition; a second widely used text is by Marn, Zawada and Baker, The Price Advantage, 2nd edition. Other popular pricing texts include: Monroe, Pricing: Making Profitable Decisions, 3rd edition; and Dolan and Simon, Power Pricing: How Managing Price Transforms the Bottom Line. The text for this course is by: Rafi Mohammed, The 1% Windfall: How Successful Companies Use Price to Profit and Grow. Other excellent pricing strategy books are included in a pricing literature list posted on the course web site.

Subject matter content and process for the course:

Pricing is about value, including concepts of: perceived value, value differentiation, value equivalence, value delivery, and value communication. This course provides a framework for developing economic value estimation (EVE) for a product or service. EVE (also referred to as “True Economic Value” or “TEV”) compares a product to the most readily available substitute. The value differentiations between the EVE and “next best alternative” to the product or service being priced (also called “reference product”) can be examined to determine opportunities to identify and quantify value differentiations, communicate value and deliver perceived value to customers.

The EVE represents the increment of value over and above the value of the reference product. A managerial price sensitivity analysis (MPSA) helps determine which factors most influence the purchase decision. The MPSA leads to development of an implementation strategy for value capture (sometimes referred to as “value extraction”) which is the maximum amount a seller can expect to gain from a customer who is fully informed and economically rational about the product/service alternatives available to solve a problem. The implementation strategy includes a communications/education plan to increase a potential customer’s willingness to pay (WTP) for economic value received.

This course applies principles which impact effective pricing management from MBA courses on Managerial Economics, Cost Accounting and Negotiations. Each session focuses on pricing concepts and issues presented for that week. Each week includes a chapter from the course text, outside reading, case study and a guest speaker related to the concepts and issues for the week. The guest speakers provide additional perspective beyond text, articles and case studies based on knowledge and experience as pricing executives and consultants.

Each student participates in a team project to develop a pricing strategy for a specific product or service marketed to two or more customer segments, each segment of which gains a different economic value from use of the product or service. Instructions for this assignment are posted on the course web site. Examples of previous team projects are posted on the course web site to provide templates for review by each team. Additional example projects are available for student review from the instructor.

Each student also does an individual project. The Pricing Audit individual project analyzes pricing strategy and tactics for an organization of the student’s choice. The analysis includes a description of the pricing situation for the organization and ratings on ten factors influencing the pricing effectiveness of the organization. The Pricing Audit report includes recommendations to achieve higher levels of pricing excellence. Instructions for this assignment are posted on the course web site. Teaching methods:

 Class discussion, using PowerPoint slides posted on the course web site in advance of each class session and a case study to focus on principles and practices described in assigned readings

 Case studies which focus on pricing principles and issues

 Guest speakers--- consultants and executives who are experts in pricing strategy and tactics:

1. Ralph Zuponcic, Senior Partner, Pricing Point Partners, Hudson, Ohio (November 2) 2. George E. Cressman, Jr., Founder & President of World Class Pricing, Inc. (November 16) 3. Harold Peck, VP of Strategic Pricing, Cardinal Health, (October 5) 4. Richard Braun, VP, Corporate Strategic Pricing, Parker-Hannifin Corp. (October 26) 5. Eric V. Roegner, President, Alcoa Forgings and Extrusions (October 19) 6. Bart Robinson, Senior Product Manager, Sterling Commerce (October 12) 7. Rafi Mohammed, Founder, Culture of Profit, LLC and author of our text. (November 9) Assignments to develop skills in analyzing pricing opportunities and issues (Pricing Audit and Pricing Strategy for Two Segments)

Grading:

Pricing Audit - Individual Project (25 points): Each student reviews the pricing strategy and tactics of an organization of his/her choice, including description and analysis of transactional, competitive, and industry level dynamics. The student analyzes the pricing strategy and tactics based on questions asked in Robert J. Dolan’s article: “How Do You Know When the Price Is Right” to give the organization a report card on current pricing processes and policies. Audits completed by students in previous pricing classes taught by the instructor are posted on the course web site as examples. Additional examples are available for review.

Pricing Strategy - Group Project (25 points): Students form a team to analyze the pricing strategy for a product/service. The analysis determines a pricing strategy for two market segments which may be thought of as two uses of a product/service. Projects completed by teams in previous pricing classes taught by the instructor are posted on the course web site as examples. Additional examples are available for review.

Final Exam: (50 points) in class, open book, open notes. The exam includes questions that apply concepts from the course. A case study will be part of the exam.

Class Contribution: (25 points): Students are expected to contribute constructively to class discussion. Class contribution is measured by the instructor for each session. The scoring for each class session is:

-1-- Absent without notice 0-- Present for class, no contribution 1-- Present for class, constructive contribution 2-- Provided insight that: built on discussion, contrasted or extended earlier discussion, and/or showed application of concepts from the readings for the session.

There are 125 total points available for your grade in this course. Your highest 100 points will determine your grade. That is, the grade that is lowest will not be included in your grade computation. If the final exam is the lowest grade, 50% of the final exam points will not be included in your grade. Grade cutoffs: A = 93 or higher point out of top 100 A- = 90 to 92 B+= 87 to 89.99 B = 83 to 86.99 B- = 78 to 82.99 C = <78 Class Schedule: Topics, Readings & Assignments

Week 1 Strategic Pricing: Introduction September 28 for Tuesday 6:00 pm to 9:48 pm section; September, 23, 28, and 30 for Tuesday and Thursday 10:30 am to 12:18 pm section

1. Formulating a profit-driven pricing strategy 2. Role in a pricing strategy of Costs, Customers, Competition, Capacity and Communication 3. Leverage of 1% improvement in prices 4. Intro to course assignments (group project, individual project)

Text: Introduction The 1% Windfall (pp xi-xxix)

Article: Robert J. Dolan and John T. Gourville, “Pricing Principles”, Harvard Business Note 9-506-021, January 12, 2006

Article: John E. Hogan and Jamie Rappoport, “Pricing in the New Market Reality, Pricing Advisor Newsletter, 3rd Qtr, 2010

Article: Robert J. Dolan, “How Do You Know When the Price Is Right?” Harvard Business Review, Sept-Oct 1995, pp 4-11

Week 2: The Foundation of Pricing: Value-Based Pricing October 5 for 6:00 pm section, October 5 & 7 for 10:30 am section

1. Better pricing involves setting prices that capture the value of a product or service 2. Value-based prices for selling one product to a customer and for selling one product to multiple customers 3. Process for one-on-one pricing 4. Characteristics that differentiate products 5. Why some customers are willing to pay more than others 6. Process for multiple customers pricing 7. Profit maximize analysis to select prices associated with highest profits 8. Methods to develop demand curves 9. Variables that change value-based prices

Text: Chapter 1: Capture Value by Thinking Like a Customer

Case: Metabical: Pricing, Packaging and Demand Forecasting for a New Weight-Loss Drug. (Harvard Case 4183-PDF-ENG) A spread sheet is posted on the course web site to assist in preparation of case analysis. Discussion questions for each case in the course are provide at end of syllabus along with a description and learning objectives for each case

Guest Speaker: Harold Peck, VP of Strategic Pricing, Cardinal Health, Dublin, Ohio. Harold will speak on “Power Pricing for Results with Science: A Pricing Excellence Journey Across Industries”. He will give this presentation at the Fall Conference of The Professional Pricing Society in San Francisco on October 27, 2010.

Week 3: Versioning October 12 for 6:00 pm section, October 12 & 14 for 10:30 am section

1. Modifications can attract new customers or entice existing buyers to trade up to earn higher profits 2. Versioning tactics: premium attributes, stripped-down basic products, unique customer needs 3. Premium attributes: higher quality, guaranteed access, priority access, faster product, better coverage 4. Stripped-down tactics: lower quality, more restrictions, unbundling, off-peak, private label, lower benefits 5. Unique customer needs: packaging, warranties, clubs, bundling, platforms, usage purpose

Text: Chapter 3 Versioning

Article: Carl Shapiro and Hal Varian, “Versioning: the Smart Way to Sell Information”, Harvard Business Review, November-December, 1998, pp 106-114

Case: Cambridge Software Corp.: Creating versions for a software product. Harvard Case: 191072-PDF- ENG

Guest Speaker: Bart Robinson, Senior Product Manager, Sterling Commerce. Bart will speak to us about pricing in the software industry. He is Senior Product Manager for a product suite that has many versions at his company. Sterling Commerce is an industry leader in software suites for government, banking and commercial applications for product ordering, purchase and fulfillment functions. Week 4: The Strategy of Pricing and “Pick A Plan”, October 19 for 6:00 pm section, October 19 and 21 for 10:30 am section 1. Pick-a-plan offers new pricing plans that activate dormant customers interested in a product but who do not want the pricing approach offered for the product 2. Customer differences: desire a different pricing plan; have unique needs; value a product differently 3. Different pricing strategies for each key customer difference: pick a plan, versioning, differential pricing---this week focuses on pick a plan 4. Pick a plan strategy activates dormant customers who won’t buy under the basic pricing plan 5. Tactics include: ownership alternatives, uncertain value, price assurance and financial and other constraints 6. Ownership alternatives recognize some customers don’t want to own the product 7. Uncertain-value tactics reduce risk for customers 8. Price certainty options allow customers to reduce/eliminate swings in price 9. Plans that address financial constraints allow customers to spread out payments

Text: Part Two intro The Strategy of Pricing (pp 27-32) and Chapter 2 “Pick a Plan”

Article: Elisabeth A. Sullivan, “Value Pricing”, Marketing News, January 15, 2008, 8.

Article: Vince Gennaro, “Value-Based Ticket Pricing”, Indians 2009 Annual, pp 69-75. The article sub- title is: “After over 100 years, the Indians are the first team to do something serious about ticket prices.”

Case: The Springfield Nor’easters: Maximizing Revenue in the Minor Leagues Case 2510 (discussion questions at end of syllabus)

Guest Speaker: Eric V. Roegner, President, ALCOA Extrusions and Forgings. Eric is co-author of: The Price Advantage. Eric is President of the Aluminum Company of America (ALCOA) division which produces forgings and engineered hard alloy products to multiple markets from manufacturing plants around the world. His division has over $1 billion of annual revenues. Eric will speak to us about “Pricing Reflections” which is about his experience as a pricing consultant and as a “pricer” for a major manufacturing company. Eric will include in his session a case for our discussion. The case is about how to price a new product category being developed by his company.

Week 5: Differential Pricing, October 26 for 6:00 pm section, October 26 and 28 for 10:30 am section

1. Price customization for customers who are willing to pay more and for customers who are willing to pay less than the one fixed price 2. Differential pricing is strategy for selling same product at different prices to different customers 3. Differential tactics: hurdles, customer characteristics, selling characteristics, selling techniques 4. Hurdles: rebates, periodic discounts, coupons, price-match guarantee, distribution options, time in sales cycle with lower prices over time for a product 5. Customer characteristics: geography, readily identifiable traits, club status, customer history 6. Selling characteristics: quantity, mixed bundling, next-best alternative 7. Selling strategy: negotiation, two-part pricing, metering, dynamic pricing

Text: Chapter 4: Differential Pricing

Article: Timothy Aeppel, “Changing the Formula: Seeking Perfect Prices, CEO Tears Up the Rule Wall Street Journal, March 27, 2007, pp A1, A16.

Article: Michael V. Marn and Robert L. Rosiello, Managing Price, Gaining Profit, Harvard Business Review, Sept-Oct, 1992, pp 84-94. This article provides the pricing analysis framework developed by McKinsey, which is the basis for The Price Advantage text which is a popular text for MBA pricing strategy courses.

Case: The Monarch Battery case in The Price Advantage, pp 220-236. This case is available on the internet. It is posted on the course site for your reading and preparation for class discussion for this session.

Guest Speaker: Richard Braun, VP, Corporate Strategic Pricing, Parker Hannifin Corporation, Cleveland, Ohio. Dick will speak about the pricing excellence journey at Parker Hannifin as reported in the March 27, 2007 Wall Street Journal article assigned for reading in preparation for this class session. Week6: Implementation: Use Price to Profit and Grow—Offensive Pricing: Create a Pricing Blossom Strategy.

1. A pricing blossom strategy is a set of publicly known prices and plans composed of a value- based price, pricing plans to attract new customers, product variations that meet unique customer needs and higher/lower prices for specific customer groups 2. Seven steps to create a retail pricing blossom strategy: a. Always set a value-based price b. Sometimes offer pick-a-plan tactics c. Usually offer “good, better, best” versions d. Sometimes offer one or two product versions that meet some customer’s needs e. Always offer two or three differential prices f. Set prices for each tactic of a pricing blossom strategy g. Conduct a cannibalization check 3. Avoid cannibalization which is when full paying customers take advantage of discounts not intended for them 4. Pricing tactic templates for professional services, other services, retailers 5. A B2B wholesale pricing blossom strategy has two phases: for end users and for retailers 6. A “Marco Polo” pricing is the beginning step of a pricing blossom: listening to customer needs and responding with tactics to best serve them 7. A pricing blossom strategy is important for non profits to invest in improving services

Text: Intro to Part 3: Implementation: Use Price to Profit and Grow (p113) and Chapter 5, Offensive Pricing: Create a Pricing Blossom Strategy

Article: Anne Kadet, “Price Profiling”, Smart Money, May, 2008, 80-5

Case: Avari Ramada Hotel: Pricing Hotel Rooms Ivey case: 314-PDF-ENG

Guest Speaker: Ralph Zuponcic: Senior Partner, PricePoint Partners. Ralph is a value- based pricing strategy consultant in the B2B space. His specialty is gaining price increases for products sold by a dedicated sales force. Ralph will provide an overview of his consulting practice, with examples of processes his firm uses and of results they have helped clients achieve.

Week 7: An evening meeting with the author of our text This will be a combined section on November 9 for 10:30 and 6:00 pm sections with class ending at 7:30 pm; No class on November 11, Veterans Day Holiday

Guest Speaker: Rafi Mohammed, Founder of Culture of Profit, LLC and author of the text used in this course. This session will be a combined class meeting with both sections. Rafi will speak at 6 pm to 7:30 pm. Room TBA. Visit his web site at www.pricingforprofit.com prior to class to learn about his consulting practice, his 1st book The Art of Pricing and his blog.

Week 8: Defensive Pricing: 1st half of this week: Recession, Inflation and New Competitors November 16 for 6:00 section, 10:30 am November 16 for 10:30 am section

1. Market changes that require companies to reset pricing strategy: recession, inflation and entry of a new competitor 2. Recession may lead to “trading away”: maintain price and create a decreased-demand pricing blossom strategy with discounts 3. Recession may lead to “trading down”: temper increases and crate an increased-demand pricing blossom strategy to increase margins 4. Inflation can be “demand-pull”: when prices of inputs rise which reduce margins—raise value- based price, offer higher quality versions, scale back differential pricing tactics 5. Inflation can be “cost-push”: create a decreased demand pricing blossom strategy 6. New rival: maintain value-based price, establish and communicate relative value, create a new- competitor pricing blossom that provides discount opportunities, locks in customer demand and attracts new customers. Text: Chapter 6: Defensive Pricing: Recession, Inflation and New Competitors

Article: Akshay R. Rao, Mark E. Bergen and Scott Davis, “How to Fight a Price War” Harvard Business Review March-April 2000, pp 107-16

Note: George E. Cressman, Jr. “Dealing with “Dumb” Competitors”, The Pricing Advisor, A Professional Pricing Society Publication, April, 2003, pp 1-2.

Case: Yamato Transport: Valuing and Pricing Network Services (A) Harvard case: 704475-PDF-ENG

Week 8, 2nd half of this week: Create a Culture of Profit: A Company Environment That Promotes Profits and Growth, November 16 for evening section, 8:00 to 9:48 and at 10:30 am to 12:18 for the morning section on November 18

1. A culture of profit is a business environment that supports and encourages all associates to price for profit and growth 2. A culture of profit involves implementing 13 principles in corporate philosophy, foundations and ongoing initiatives 3. Six principles for corporate pricing philosophy: a. Set prices to capture value customers place on a product b. It is possible to achieve both market share gains and higher profits c. High-volume customers do not have to get the lowest prices d. A discount today does NOT guarantee a premium tomorrow e. Higher operating margins are NOT a sign of better pricing f. An across-the-board discount is NOT the best response to reduced sales volume 4. Two principles for foundation confidence in the product(s) of the company: a. Create a value statement to encourage employees to highlight and capture value b. Reinforce that it is ok to earn higher profits 5. Five principles for ongoing initiatives: a. Speak and sell in terms of net prices b. Organize and collect competitive information c. Monitor the value of products as perceived by customers of the product category d. Incorporate profitability into compensation packages to align incentives e. Host periodic pricing roundtables to focus attention on pricing and profitability

Text: Chapter 7: Create a Culture of Profit

Article: Laura Preslan, “Building the Business Case for Price Management”, The Pricing Advisor, June, 2006, pp 4-5. Article: George E. Cressman, Jr., “Why Pricing Strategies Fail”, Journal of Professional Pricing, Second Quarter, 2009, pp 18-22.

Guest Speaker: George E. Cressman, Jr., Founder and President, World Class Pricing, Atlanta, Georgia George will speak to the class about why pricing strategies fail. He holds two degrees from The Ohio State University and has a distinguished career as a Pricing executive at DuPont, Monsanto, and Union Carbide and as a consultant and author. Prior to founding World Class Pricing he was a consultant with the Strategic Pricing Group and with The Monitor Group. He is the author of numerous articles on pricing strategies, several of which are assigned readings for this course and others are included in the pricing literature list compiled by your instructor. He has guest lectured on pricing strategies and tactics at The Ohio State University, University of Minnesota, Purdue University, University of Chicago, Columbia University and Penn State University. He is an adjunct professor at Drexel University and University of Delaware and was a visiting scholar at the University of Virginia.

Week 9: Making a Pricing Action Plan, November 23 for 6:00 pm to 7:30 pm evening section, November 23 for 10:30 am section. No class on Thursday, November 25 (Thanksgiving Day Holiday)

1. Phase 1: Develop a mind-set that encourages pricing for profits and growth 2. Phase 2: Set a value-based price 3. Phase 3: Implement a differential pricing by offering a range of prices 4. Phase 4: Create product versions 5. Phase 5: Provide pick-a-plan options 6. Phase 6: Continue better pricing with ongoing initiatives 7. Result of the six phases: a pricing blossom strategy and a culture of profit

Text: Chapter 8: Make a Pricing Action Plan

Article: Hermann Simon, “Pricing—Where Is It Headed?” Note to Professional Pricing Society Members, April, 2004

Article: Tim Matanovich, “Staying Out of Trouble with Innovation”, Marketing Management, March- April, 2004, pp14-15

Week 10 Pricing Project Presentations, November 30 for 6:00 pm section, November 30 and December 2 for 10:30 am section

Each team will give a presentation summarizing the analysis and recommendations from their course project on pricing strategy for a product/service sold to two market segments. Week 11 Final exam:

December 7 for 6:00 pm section and December 7 for 10:30 am section: In- Class, Open Book, Open Notes

Cases in M&L 851 fall, 2010:

Week 2: Metabical: Pricing, Packaging and Demand Forecasting for a New Weight-loss Drug 4183-PDF-ENG

Week 3: Cambridge Software: Pricing Versions 191072-PDF-ENG

Week 4: Springfield Nor’Easters: Maximizing Revenue in the Minor Leagues 2510-PDF-ENG

Week 5: Monarch Battery: Using Value-Based Pricing for Profitable Growth (posted on course site from internet download)

Week 6: Yamato Transport (A): Pricing When Competitor Gets Aggressive in Pricing 704475-PDF-ENG

Week 7: Avari Ramada Hotel: Pricing Hotel Rooms M314-PDF-ENG