BBA

2019-20

Pricing Strategies

(Course Code)

Spring, 2020

Name of the Instructor: Dr. Kishore Kumar

Contact Details: kkgangwani@jgu.edu.in

INTRODUCTION TO THE COURSE

Pricing presents managers with one of their most powerful levers for maximizing profits and shareholder value.
However, this value often lies untapped within many organizations, with managers lacking a clear understanding of
pricing practices within their companies and industries. This course introduces various pricing strategies and innovative
approaches for setting prices.

COURSE OBJECTIVES

This class will explore concepts and practices related to strategic and tactical pricing issues. Students of this course
will appreciate

• The knowledge of current pricing practices in different industries

• learn the state-of-the-art analytical framework for pricing decisions
• Master the basic techniques for analyzing and making profitable pricing decisions

LEARNING GOALS

In addition to the specific course related objectives, this course is designed to achieve the following learning goals

1. Critical and Integrative thinking: Each student will be able to identify key issues in pricing strategies, develop
a perspective that is supported with relevant information and integrative thinking, to draw and assess
conclusions. This learning goal will be measured through assignments and submissions
2. Awareness of Global Issues affecting pricing Decisions: Each student will be able to identify key relevant
global issues and be able to analyze the impact of the global environment on pricing decisions, as compared
with domestic market related management issues. This learning goal will be assessed through class
discussion on the impact of globalization on pricing decisions.
3. Interpersonal Awareness and Working in Teams: Each student shall demonstrate an ability to work effectively
in a team, exhibiting behavior that reflects an understanding of the importance of individual roles and tasks
and the ability to manage conflict and compromise so that team goals are achieved. (e.g. The team-based
case presentation in the class and group assignment will be a major component for measurement of this
learning goal).
4. Effective Presentation Skill: Each student shall be able to communicate verbally in an organized, clear,
persuasive manner and be a responsive listener. (e.g. I will expect you to use case presentations to develop
your presentations skills. I also expect you to be active listeners when your classmates are presenting and to
give specific feedback and contribute to the overall learning of the class).
TEACHING METHOD

The course will be conducted in a highly collaborative manner. So, this course will be a combination of lectures, class
discussions, case presentations, and short assignments. For most sessions, students will have a list of pre-readings,
preassigned case studies, and a self-selected group of 4-5 students will initiate the case discussion. I believe that the
instructor’s role is to facilitate an active classroom learning environment. Hence, the onus of learning will be with the
student. Each student is expected to come to class (physical or online) prepared to learn, to participate, to be
intellectually curious, to act with high integrity, and to work collaboratively with the team.

ATTENDANCE POLICY

As per JGU attendance policy

GRADING

The course grade will be determined on the basis of

Evaluation Item Weightage Nature Explanation

Assessment 1 30 % Individual Submission of an assignment as listed below
Assessment 2 30% Individual Submission of an assignment as listed below
Assessment 3 40% Individual Submission of an assignment as listed below
Please note that due to the uncertainty of the current scenario (Covid-19), course outline and the evaluation matrix
may change.

Assessment: 1

Many brands sell their products through multiple channels. Managing pricing across channels is a tough challenge.
Pricing problems include gray markets, and the conflict between direct and indirect channel partners. Identify a
company that has addressed pricing challenges across channels and submit a write-up about this company.
In preparing your write-up*, I suggest you consider the following questions:

1. What factors were behind these challenges? (6)

2. How did the company address these issues? (6)
3. How successful has its approach been? (4)
4. Are there other actions it could have taken that you would recommend? (6)
5. What insights can this offer to other businesses in the same or other industries? (8)
*Assessment Start Date: 24th April 2020
*Assessment Submission Deadline: 5th May 2020
*Plagiarism Policy: As per JGU Guidelines
Assessment: 2

Walmart stores are not only known for their enormous size and their vast selection but also for extremely low prices for
most of the products. For a long time, Walmart offered low wages to the employees. However, in the last two years
Walmart has increased the wages of the employees significantly. Walmart now provides better training and promotion
opportunities within the organization. The critical question here is how Walmart has been able to keep its prices low1,
despite offering better compensation to the employees.

Answer to this question lies in increased online competition, lack of competition in some geographical areas, which
gives access to large consumer pool, low operational costs, direct sourcing, large volumes and the bargaining power
of Walmart over the suppliers.

Buyers’ bargaining power affect the competitive environment for the seller, for the industry as a whole and influences
the seller’s ability to achieve profits. Power buyers (such as Walmart) can pressurize sellers to reduce the prices,
enhance the product quality, and provide better services. Most of these things are an added cost to the seller. Though
a power buyer can make an industry more competitive, it can reduce the profit potential for the seller.

Imagine that you are a pricing manager for a big firm supplying sanitizers to commercial buyers. In the wake of Covid-
19, your firm has decided to offer sanitizers in smaller SKU’s to the modern retailers (such as Big Bazaar, Vishal Mega
Mart etc.), and bulk buyers (such as municipal corporations, governments). This additional selling opportunities brings
two challenges: one in terms of the procurement of raw material, (which you have already managed), and the other in
terms of buyer’s bargaining power. Your firm can easily overcome the latter challenge by selling the product directly to
the end-user. However, the current situations do not permit to sell directly to the end-user. Hence, you have to deal
with these power buyers. Please list down the strategies** for your firm to deal with these power buyers.

**Assessment Start Date: 6th May 2020

**Assessment Submission Deadline: 15th May 2020
**Plagiarism Policy: As per JGU Guidelines

Assessment: 3

Some industries are adopting new pricing practices. The need for new pricing practices is due to forces such as
deregulation, competition from low cost manufacturers, technological advancement and innovation, and product
transition through different stages of product life cycle.

1
https://www.businessinsider.in/How-Walmart-keeps-its-prices-so-low/articleshow/68783136.cms
Identify an industry witnessing changes in pricing strategies due to environmental forces and submit a write-up*** about
this company addressing following questions:

1. What are the antecedents to this change in the industry? (8)

2. List the changes in pricing strategies in the industry and different strategies adopted by key players. (10)
3. Identify, if few companies are successful in capturing additional value across competitors. (8)
4. Discuss the impact of new pricing policies on the industry as a whole. (8)
5. Is the industry converging to a new pricing regime? (6)

***Assessment Start Date: 16th May 2020

***Assessment Submission Deadline: 5th June 2020
***Plagiarism Policy: As per JGU Guidelines

General Guidelines for Assessments:

• Each Assessment preferably should not exceed a word count of 2000 words. However, if there is a pressing
need to do so, please go ahead.
• Word count excludes coverage, table of contents, citation and references, and annexure etc.
• Sentencing space - 1.5, 12-point font, font – Arial.
• Document format – Word/ pdf
• Referencing: APA

TEXTBOOK, COURSE PACKAGE AND OTHER READINGS

I will be following below mentioned textbook for the course

The Strategy and Tactics of Pricing, by Thomas T. Nagle and Georg Muller, 6th Edition, Routledge (2018)

Chapters from this book are assigned as required readings in the class schedule below. Please read the chapters
before coming to class for an engaging classroom discussion. Cases and any other reading material assigned for
reading will be uploaded on the e-learning platform.

CLASS SCHEDULE# (Each session is of 90 minutes’ duration)

(Feb 3, 2020 to March 15, 2020) – PART- I

Session No-1, 2 Introduction to the Course and the Class

Objective of the Role of pricing in value creation
session Importance of pricing in today’s competitive markets.
 Concepts of Economic value to the consumer
Readings Chapter 1, 2
Readings “The Price is Really Right,” Business Week, March 2003.
“Setting Value, not Price,” Leszinski and Marn, McKinsey Quarterly 1997
“The Price is Wrong”, Economist, May 23, 2002.
Case Title / Number -
Pedagogy Lecture and class discussion

Session No-3-5 Price and Value Communication

Objective of the Strategies to influence willingness to pay.
session Strategies for value communication.
Price sensitivity and factors impacting price sensitivity
Readings Chapter 3 and 8
Readings Choi, W. J., Sun, H., Liu, Y. L., & Chen, H. A. Guess Who Buys Cheap? The effect of
consumers’ goal orientation on product preference. Journal of Consumer Psychology.
Lee, C. Y., Morewedge, C. K., Hochman, G., & Ariely, D. (2019). Small Probabilistic
Discounts Stimulate Spending: Pain of Paying in Price Promotions. Journal of the
Association for Consumer Research, 4(2), 160-171.
Case Title/ Number -
Pedagogy Lecture and class discussion

Class Schedule (Part -II) due to Covid- 19

Session No-6,7 Price structure

Objective of the Pricing across customer segments
session Price metrics, price fences, peak pricing and yield management
Readings Chapter 4
Readings Cachon, G. P., & Swinney, R. (2011). The value of fast fashion: Quick response, enhanced
design, and strategic consumer behavior. Management science, 57(4), 778-795.
Roma, P., Zambuto, F., & Perrone, G. (2016). The role of the distribution platform in price
formation of paid apps. Decision Support Systems, 91, 13-24.
Case Title/ Number Will be announced in class
Pedagogy Lecture, class discussion and case presentation
Session No-8,9 Pricing Policy
Objective of the Influencing customer expectations and purchase behaviors
session Pricing policies and price expectations
Policies for price negotiation
Policies for managing price increases
Readings Chapter 5
Readings Video discussion of “Sasta versus Mahanga” from OUTMM
Why drug companies are betting big on ‘pharmerging’ countries
https://fortune.com/2015/08/14/drug-companies-pharmerging-countries/
Tesla's Elon Musk directs staff to give no more discounts on new cars
https://tech.economictimes.indiatimes.com/news/technology/teslas-elon-musk-directs-
staff-to-give-no-more-discounts-on-new-cars/54596279
Case Title/ Number Will be announced in class
Pedagogy Lecture, class discussion and case presentation

Session No- 10, 11 Competition-Driven Pricing

Objective of the Role of competition in pricing strategy.
session Price wars and how to get out of price wars
Readings Chapter 7
Readings “Airlines Can Offer Lessons for Online Newspapers,” Gordon, Forbes.com, Feb. 23, 2010.
“Saks Upends Luxury Market with Strategy to Slash Prices,” WSJ, Feb. 9, 2009.
Case Title/ Number Will be announced in class
Pedagogy Lecture, class presentations and class discussion

Session No-12 Internet-Based Pricing Models

Objective of the Role of technology in pricing decisions
session
Readings
Readings “Pricing and Market Making on the Internet” HBR
Case Title/ Number Will be announced in class
Pedagogy Lecture, class discussion and case presentation

Session No- 13 Course summary and wrap up

 Objective of the Evaluation and feedback on the pricing problems
session
Readings
Readings
Case Title/ Number
Pedagogy Class discussion and doubt clearing

# This is a tentative course outline. I may modify the course outline, change the case study (based on class profile) and
add a few additional readings as the class progresses.
DELIVERY DEADLINES FOR Assessments/Assignments
As mentioned in the assessment details