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Every firm eventually has to sell all its products. Questions that arise in this context are, for example: What sales channels should the firm use? How should a product be priced in the different channels? How can the firm prevent cannibalization across channels? How should prices be adjusted due to seasonality or after initial demand has been observed? In this course, we focus on how to set the best prices for the offered products, a decision very often linked to the profit performance of the supply chain.

Pricing Management—or revenue management as it is also called—focuses on how a firm should set and update pricing and product availability decisions across its various selling channels in order to maximize profitability. The use of such strategies has transformed the transportation and hospitality industries and has become increasingly important in retail, telecommunications entertainment, financial services health care and manufacturing.

In this course you will learn to identify and exploit opportunities for revenue optimization in different business contexts. You will review the main methodologies that are used for each of these areas, discuss legal issues associated with different pricing strategies and survey current practices in different industries. As the ensuing course outline reveals, most of the topics covered in the course are either directly or indirectly related to pricing issues faced by firms that operate in environments where they enjoy some degree of market power

Within the broader area of pricing theory the course places particular emphasis on tactical optimization of pricing and capacity allocation decisions, tackled using quantitative models of consumer behavior (e.g. captured via appropriate price-response relations), demand forecasts and market uncertainty, and tools of constrained optimization—the two main building blocks of revenue optimization systems.

The course is meant for those who want to understand the revenue dynamics of price. This course will be of great value to those students who wish to be Product and Brand Managers; Retail Merchandisers; Pricing Consultants; and IT software professionals who want to develop pricing software!

Books:

1. Handouts and readings
Session wise details

Session No.	Topic	Particulars	Readings	Case	Pedagogy
1	Introduction to Pricing Management	History of Pricing and Revenue Management; Traditional Pricing Techniques; Context of the Pricing Decision	1. Managing Price Gaining Profit	Case of the Pricing Predicament.	Lecture/Case Discussion
2.	Microeconomics of Pricing	Review of Economic Pricing Theory	1. Economics of Product variety 2. Price Quantity Determination 3. Price Discrimination	The ready to eat breakfast cereal industry: Coupon Competition and Price Discrimination	Lecture/ Case Discussion
3 & 4	Behavioral Theory of Pricing	The Prospect Theory and Price; St. Petersburg’s Paradox; Price Information Processing and Numerical Cognition. Concept of Willingness to Pay, reference prices and their creation	1. Note on Behavioral Pricing 2. Pricing and the Psychology of Consumption	Soren Chemicals.	Lecture in session 3 and case in session 4.
5& 6	Value Based pricing	Focus is on how to position a product right and develop a corresponding pricing strategy. Essentially we will be looking at tradeoffs on the value Map	1. Pricing—A Value based Approach	Case: Atlantic Computers: A bundle of pricing offerings	Concept/ Case Discussion
6.	Estimating Price Sensitivity	Introduction to the concept of price sensitivity; models of customer demand and fit it into customer choice model to given data using Multinomial Logit Models.			Lecture
7 & 8.	Pricing in Supply constrained Industries.	This session focuses on pricing in a supply constrained industry. We shall look at the optimal pricing issues for a company selling one or more products over one or several time periods.		Case: Sea Pines Racquet Club	Lecture
9.	Special Pricing Techniques	Bundling		Bundling	Concept & Case Discussion
10.	Special Pricing techniques	Odd Pricing/ Hi-Lo Pricing/ EDLP Pricing	1. Minding your pricing cues.	Randall Departmental Stores	Lecture/Case Discussion
11.	MID TERM EXAMINATION
12 & 13	Pricing and Product	Product Line Pricing/ PLC and Pricing/ Price and Promotions	1. Who benefits from a price promotion?	Giant Consumer Products	Lecture/ Case Discussions
14.	New Product Pricing	New Product Pricing		Biopure
15.	Yield Management	Littlewood’s Rule, Overbooking and working under demand uncertainty			Lecture
16.	Yield Management	Nature of Yield Management, Problems and Prospects of yield management.		Case: NW Airlines: Revenue Management
17 & 18	B2B Pricing	Nature of price negotiations in B2B scenario and Cost to Serve.	1. Industrial pricing to meet customer needs	Case: Signode Industries Ltd.	Case Discussion/ concept
19.	Competitive Responses to Pricing		1. The Right Game 2. How to fight a price war	Case: Beauregard Textiles Company	Case
20.	Ethics of Pricing and Wrap up				Lecture

Evaluation

Quiz: Weight 10%

There will be two quizzes of 5 marks each.

Case Assignments: Weight 20%

Groups will be assigned cases which they need to analyze and submit before the start of the session.

Project: Weight: 20%:

Will have to done in groups. Will be discussed later

Mid Term Examination: 20%

This will be a case, to be solved in class.

End Term Examination: Weight: 30%

This will be a case covering the entire learning from the course.

Attendance

Attendance rules as per the Institute Manual Of Policies shall Apply

Created By: Debasis Mohanty on 08/28/2010 at 11:38 AM
Category: PGDM-II Doctype: Document