Pricing
2014-2015
Course Code MKT 5640
Module Module C 2014-15
Instructor Stephan Sorger
Email [email protected]
[email protected]
Phone / Skype Phone: 650.455.4411
Skype: stephansorger (email/text before using Skype)
Availability On-campus availability: 12-1:30PM on class days
Off-campus availability: Saturdays at 12-1 PM at 160 Spear,
SF, by appointment.
Other times as arranged
Class Times & Rooms See https://mycourses.hult.edu/
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Course Description
There is no decision that marketing managers make that affects profitability more than choosing the right
price for goods and services.
Pricing is dynamic—it changes from one day to the next. Competitors change their strategies, customers’
perception of value has its ups and downs, and the firm’s cost structure changes too.
In this course, students will learn the complexity of pricing decisions and will gain confidence in how to set
prices in competitive marketing environments.
Learning Objectives
Key (Assessed) Learning Outcomes
On completion of this course, students should understand and be able to do the following:
1 Compare and contrast the main alternative pricing strategies. Demonstrate, using relevant
examples, that successful pricing is much more than just “charging the price the market will bear”;
rather that it is a strategic driver of long-term business growth and profitability.
2 Analyze how organizations of all types, in all sectors, can and should plan and actively manage
pricing, based on a unique market position, adding value and communicating this consistently to
target audiences.
3 Explain why it is vitally important to employ a proactive, strategic approach to pricing of products
and services rather than a purely reactive policy of attempting to optimize prices tactically.
Supplemental Learning Outcomes
While not assessed, it is anticipated that students will be able to:
4 Use sensitivity analysis to estimate outcomes where elasticity is unknown, such as pricing at
market entry.
5 Employ pricing tactics to implement the firm’s pricing objectives.
6 Know how to manage price changes to the firm’s advantage.
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Teaching and Learning
This class will use a combination of lectures, cases analysis, projects and an important online price
simulation.
You will learn a general framework for pricing decisions and also the tactics that firms use at market
introduction and in maturity.
Method and weighting of assessment
Assessment form 1000 points total
Final Exam 400 points
In-Class Quizzes: 8 quizzes x 20 points each 160 points
Mini-Case Presentations: 2 mini-cases x 150 points 300 points
each
Class Participation 140 points
In this course, students are evaluated by the following means of assessment.
Assignment Final Exam
Weighting (% of final grade): 400 points
Learning Outcome(s) Assessed: Students will demonstrate their understanding of concepts and
terminology taught throughout the course, as well as the
application of pricing principles.
Description of Assignment: The final exam will consist of multiple choice and/or short
answer questions.
Quality Indicators (how will it be Student performance on the final exam will measure their
graded; what constitutes a good comprehension on the subjects taught in the course.
assignment):
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Assignment In-Class Paper Quizzes
Weighting (% of final grade): 160 points
Learning Outcome(s) Assessed: Students will demonstrate their understanding of concepts and
terminology taught in specific modules of the course.
Description of Assignment: Quizzes are administered during class in a paper-based format.
No online quizzes are permitted.
Quality Indicators (how will it be Quizzes will consist of brief questions to assess reading of
graded; what constitutes a good course materials. Make-up quizzes are only permitted if
assignment): student has an absence that has been approved by university
administration.
Assignment Mini-Case Presentations (Group Assignments)
Weighting (% of final grade): 300 points
Learning Outcome(s) Assessed: Students will demonstrate their ability to apply the knowledge
learned in the course in a typical industry setting, along with
the ability to comment on the case in an intelligent manner.
Description of Assignment: The mini-case presentations ask students to dive more deeply
into essential aspects of pricing, such as the ability to apply
and interpret relevant pricing models to typical marketing
situations.
Student teams will present their findings of the case during in-
class presentations.
Quality Indicators (how will it be Grading methodology: Students will present their case findings
graded; what constitutes a good during class. Students will present as a group. Each student in
assignment): the group will receive the group’s overall score. Professor will
grade the case in real-time as the presentations are made.
Grading will be done in accordance with mini-case
presentation rubric, available in myCourses.
Assignment Class Participation
Weighting (% of final grade): 140 points
Learning Outcome(s) Assessed: Much of this course is hands-on learning, such as in-class
discussions of practical applications of concepts during
lectures.
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Description of Assignment: It is expected that students will be in the classroom during the
assigned class times and will actively participate in individual
and team exercises.
Quality Indicators (how will it be Class participation is made up from two components:
graded; what constitutes a good Attendance and discussions.
assignment):
Attendance: 70 points max.
70 points: Attended all classes punctually
60 points: Late 10 minutes or more to 1 class
50 points: Late 10 minutes or more to 2 classes
40 points: Late 10 minutes or more to 3 classes
30 points: Late 10 minutes or more to 4+ classes
Even if absences are excused, being late to the class is not.
Discussions: 70 points max = 7 points max per class x 10
classes (final exam session not included).
70 points: Leads class in discussions in every session
60 points: Regular contributor with relevant examples
50 points: Occasional participation
40 points: Rare participation; Superficial comments
0 points: Disrupts class; Discusses irrelevant topics
Discussion is monitored by a class scribe/TA, who will
monitor participation during the class. In the event that a TA is
not used, the professor will select a volunteer to act as scribe at
the start of each class. Volunteer scribes get full participation
credit for the class. Volunteer scribes will assess participation,
with a maximum of 7 points of participation in each class.
Attendance, Participation and Student Responsibilities
Every school has expectations for behavior and performance in the classroom, although the expectations might
vary by school or country. The expectations take the form of guidelines, policies, and procedures, which, if not
followed, might have serious consequences for a student. Important expectations for Hult students are set forth
in the Student Handbook and summarized below.
Attendance
Students are expected to attend all scheduled classes, examinations, class presentations, simulations, exercises,
field research visits, discussion groups, plant visits, lectures, and special programs. An absence for any reason
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except those qualifying for an excused absence as described in the Student Handbook will be considered an
unexcused absence.
Students who miss more than 20% of scheduled classroom/activity hours because of unexcused absences (e.g.
more than two meetings of a 10-meeting course, or more than 4 meetings of a 20-meeting course) will fail the
course. Students who miss substantial portions of a course because of excused absences will receive an
Incomplete grade for the course and will be required to make up missed work or re-take the course. If a student
misses a class or other required activity, it is his or her responsibility to review, with classmates, the material
covered, and to consult with the Instructor prior to the next class meeting regarding any possible make-up
requirements.
Classes begin promptly according to the published schedule. It is the responsibility of each student to be in class
on time. Classroom attendance will be recorded. To eliminate disruption, students are requested not to enter or
leave the classroom when class is in session. Switching cohorts to accommodate class attendance is not allowed
except in the presence of extenuating circumstances and with the prior approval by the course Instructor and the
Registrar’s Office.
Attending group meetings and participating in the assigned study teams are required components of the program
and are considered an important part of the experiential learning process. Group member feedback evaluations
will be administered by individual Instructors to assess each team member’s participation and attendance for
group projects. Students are expected to participate orally in class and in online forums and team activities.
Academic Integrity
Any work submitted by a student in this course for academic credit must be the student's own work. The Hult
policy on plagiarism applies to all work done at the School. In addition, any failure to abide by examination
rules will result in failure of the exam, and may lead to failure of the course and School disciplinary action.
Please consult the Student Handbook for further details. 1
Accommodating Special Needs
Hult provides disability related accommodations. Planning for accommodations with school Registrars at the
beginning of the academic year is necessary, as set forth in the Student Handbook.
1
These web sites provide helpful guidance regarding plagiarism and how to cite sources:
http://library.acadiau.ca/tutorials/plagiarism/, http://www.plagiarism.org/learning_center/citation.html
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Essential Reading
Nagle, T; Holden, J; and Zale, J. “The Strategy and Tactics of Pricing.” 5 th Edition, 2011. Prentice-Hall.
Print and Kindle versions available. ISBN-13: 978-0136106814;
Articles assigned for this course.
Recommended Reading
“Barrons” features a good overview of economic activity in the U.S. and abroad, along with impacts
from different pricing methodologies.
Dolan, Robert J. and Simon, Hermann. “Power Pricing: How Managing Price Transforms the Bottom
Line.” 1997. Free Press. Provides a different voice, and more on international pricing.
Mohammed, Rafi. “The 1% Windfall.” 2010. Harper Collins. How successful companies use price to
profit and grow.
Price Intelligently blog. www.priceintelligently.com/blog
SAAS Pricing eBook: www.priceintelligently.com/saas-pricing-page-blueprint
SAAS Growth Strategies: www.sixteenventures.com
Venture Capital: Brad Feld: www.feld.com
You should also have on hand a basic marketing textbook, such as Kotler and Keller, “Marketing
Management” in any recent edition. One copy will be available at the Hut for reference.
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Class Schedule (see myCourses for dates and times)
Class Topic Reading
Syllabus Review Syllabus
1
Economics Review Economics module slides
Chapter 1: Strategic Pricing Chapter 1 reading due: Pages 1-15 (15 pages)
Mini-Case 1 Preparation In-class preparation for mini-case 1 presentation: 15 min.
Class Topic Reading Due
Mini-Case #1 Presentations: Case 1A Due: Team 1
2 Strategic Pricing Pricing to the Demand Curve (Approx. 1-1/2 pages)
http://cdixon.org/2012/07/04/pricing-to-the-demand-curve/
Case 1B Due: Team 2
Forbes: “A Strategic [Pricing] Mistake That Haunts JC
Penney.” (Approx. 1-1/2 pages)
http://www.forbes.com/sites/panosmourdoukoutas/2013/09
/27/a-strategic-mistake-that-haunts-j-c-penney/
Case 1C Due: Team 3
Forbes. “When Altering Your Company’s Pricing Strategy,
Consider Consumers’ Shopping Patterns.” (Approx. 2
pages)
http://www.forbes.com/sites/prospernow/2012/06/04/when-
altering-your-companys-pricing-strategy-consider-
consumers-shopping-patterns/2/
Quiz 1: Chapter 1 and 2 Read material to prepare for quiz: Chapters 1 and 2
Chapter 2: Value Creation Chapter 2 reading due: Pages 17-45 (28 pages)
Mini-Case 2 Preparation In-class preparation for mini-case 2 presentation: 15 min.
Class Topic Reading Due
Mini-Case #2 Presentations: Case 2A Due: Team 4
3 Value Creation Price Intelligently blog: Value Metric (Approx. 3 pages)
http://www.priceintelligently.com/blog/bid/195287/The-
Value-Metric-Optimize-Your-Pricing-Strategy-for-High-
Growth
Case 2B Due: Team 5
Seth Godin blog: Cost vs. Value (Approx. 1 page)
http://sethgodin.typepad.com/seths_blog/2014/02/most-of-
all-money-is-a-story.html
Case 2C Due: Team 6
Entrepreneur: “To Keep Your Startup Alive, Keep Creating
Value.” (Approx. 2 pages)
http://www.entrepreneur.com/article/238779
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Quiz 2: Chapter 3 Read material to prepare for quiz: Chapter 3
Chapter 3: Price Structure Chapter 3 reading due: Pages 47-70 (23 pages)
Mini-Case 3 Preparation In-class preparation for mini-case presentation: 15 min.
Class Topic Reading Due
Mini-Case #3 Presentations: Case 3A Due: Team 7
4 Price Structure Entrepreneur: 2 Simple Rules to Follow for Segmentation
(Approx. 2 pages)
http://www.entrepreneur.com/article/237083
Case 3B Due: Team 8
Forbes: VW’s Market Segmentation Pricing (Approx. 2
pages)
http://www.forbes.com/sites/timworstall/2013/10/20/apples-
market-segmentation-difficulties-with-the-new-iphones/
Case 5C Due: Team 9
Forbes: Tata Motors Looks to Improve Passenger Car
Sales by Penetrating the Compact Segment (Approx. 2
pages)
http://www.forbes.com/sites/greatspeculations/2014/06/13/t
ata-motors-looks-to-improve-passenger-car-sales-by-
penetrating-the-compact-segment/
Quiz 3: Chapter 4 Read material to prepare for quiz: Chapter 4
Chapter 4: Price and Value Chapter 4 reading due: Pages 72-93 (21 pages)
Communication
Mini-Case 4 Preparation In-class preparation for mini-case presentation: 15 min.
Class Topic Reading Due
Mini-Case #4 Presentations: Case 4A Due: Team 10
5 Price and Value Netflix 2011 Price Change Announcement (Approx. 2 – 1/2
Communication pages)
http://www.forbes.com/sites/theyec/2011/12/28/5-business-
lessons-from-the-netflix-pricing-debacle/
Case 4B Due: Team 11
Intuit Reverses TurboTax Deluxe Price Increases (Approx.
2 – 1/2 pages)
http://www.forbes.com/sites/janetnovack/2015/01/29/intuit-
cries-uncle-will-roll-back-turbotax-deluxe-changes/
Case 4C Due: Team 12
BBC News: Vodafone Price Rises (Approx. 2 pages)
http://www.bbc.com/news/business-27523813
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Quiz 4: Chapter 5 Read material to prepare for quiz: Chapter 5
Chapter 5: Pricing Policy Chapter 5 reading due: Pages 96-117 (21 pages)
Mini-Case 5 Preparation In-class preparation for mini-case presentation: 15 min.
Class Topic Reading Due
Mini-Case #5 Presentations: Case 5A Due: Team 1
6 Pricing Policy Forbes: Best Buy Pricing Policy vs. Amazon.com (About 2
pages)
http://www.forbes.com/sites/walterloeb/2014/11/20/amazon
s-pricing-strategy-makes-life-miserable-for-the-competition/
Case 5B Due: Team 2
Forbes: Pricing Policy for Uber and Lyft (Approx. 2 pages)
http://www.forbes.com/sites/timworstall/2015/01/03/so-
uber-and-lyfts-surge-pricing-worked-just-perfectly-on-new-
years-eve-then/
Case 5C Due: Team 3
Forbes: Gillette Pricing Policy in the Digital Age
http://www.forbes.com/sites/ciocentral/2012/12/19/razor-
and-blades-pricing-strategies-in-the-digital-age/
Quiz 5: Chapter 6 Read material to prepare for quiz: Chapter 6
Chapter 6: Price Level Chapter 6 reading due: Pages 118-139 (21 pages)
Mini-Case 6 Preparation In-class preparation for mini-case presentation: 15 min.
Class Topic Reading Due
Mini-Case #6 Presentations: Case 6A Due: Team 4
7 Price Level Entrepreneur: Sticker Shock (Approx. 2 pages)
http://www.entrepreneur.com/article/223816
Case 6B Due: Team 5
Forbes: Best Buy Price Matching Strategy (Approx. 2
pages)
http://www.forbes.com/sites/greatspeculations/2013/03/06/
best-buys-price-matching-strategy-helps-as-turnaround-
efforts-drag-on/
Case 6C Due: Team 6
Forbes: Coach Brand Image and Pricing (Approx. 2 pages)
http://www.forbes.com/sites/greatspeculations/2014/07/01/
can-coach-rebuild-its-brand-image-with-new-promotional-
strategies/
Quiz 6: Chapter 7 Read material to prepare for quiz: Chapter 7
Chapter 7: Pricing Over the Chapter 7 reading due: Pages 141-155 (14 pages)
Product Life Cycle
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Mini-Case 7 Preparation In-class preparation for mini-case presentation: 15 min.
Class Topic Reading Due
Mini-Case #7 Presentations: Case 7A Due: Team 7
8 Pricing Over the Product Life Pricing over Product Life Cycle (Approx 2 pages)
Cycle http://www.forbes.com/sites/prospernow/2013/09/24/is-
your-marketing-life-cycle-flatlined/
Case 7B Due: Team 8
Apple Product Launch Pricing (Approx 2 pages)
http://www.inc.com/karl-and-bill/3-strategies-to-adopt-from-
apple.html
Case 7C Due: Team 9
How China’s Xiaomi Manages over Product Life Cycle
(Approx 2 – 1/2 pages)
http://www.forbes.com/sites/bigbangdisruption/2014/04/03/
big-bang-disruption-how-chinas-xiaomi-manages-
catastrophic-success/
Quiz 7: Chapter 11 Read material to prepare for quiz: Chapter 11
Chapter 11: Competition Chapter 11 reading due: Pages 244-267 (23 pages)
Mini-Case 8 Preparation In-class preparation for mini-case presentation: 15 min.
Class Topic Reading Due
Mini-Case #8 Presentations: Case 8 Due: Team 10
9 Competition Competition in the Ride-Sharing Industry (About 3 pages)
http://www.businessinsider.com/anthony-weiner-on-uber-
and-the-taxi-industry-2014-4
Case 8B Due: Team 11
Drug Price War: Pharmaceuticals and Pricing (Approx. 2 –
1/2 pages)
http://www.forbes.com/sites/matthewherper/2014/12/22/dru
g-price-war-takes-pharma-back-to-the-future/
Case 8C Due: Team 12
Entrepreneur: How to Survive a Price War (Approx. 2
pages)
http://www.entrepreneur.com/article/222528
Quiz 8: Chapter 12 Read material to prepare for quiz: Chapter 12
Chapter 12: Measurement of Chapter 12 reading due: Pages 269-300 (31 pages)
Price Sensitivity
Class Topic Reading Due
Management by the Num- Teams execute the Management by the Numbers
10 bers Simulation: Linear De- simulation for Pricing I: Linear Demand
mand Pricing
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Exam Time 01:00 Exam Date see mycourses
Class 11 consists of the final exam.
The final exam is closed book, with no reference sheets allowed.
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