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THE UNIVERSITY OF CONNECTICUT

SEQ CHAPTER \h \r 1THE UNIVERSITY OF CONNECTICUT

SCHOOL OF BUSINESS ADMINISTRATION

PRICING STRATEGIES(final version dated 1/1/2014)Course Number:

MKTG 5655Pre-requisite:

MKTG 5115

Classroom:

TBA (Hartford Campus)

In-Class Hours:

Jan 24 (5:00pm to 9:00pm), Jan 25 (9:00am to 5:00pm)*

Jan 31 (5:00pm to 9:00pm), Feb 1 (9:00am to 5:00pm)*

Feb 14 (5:00pm to 9:00pm), Feb 15 (9:00am to 5:00pm)*Course Ends On:

March 31, 2014Term:

Spring 2014Instructor:

Dr. Girish Punj

Professor of Marketing

Office:

BUSN 351 (Storrs Campus)

E-mail:

[email protected]

*Feb 22 (9:00am to 5:00pm) is our snow date in case any regularly scheduled class is canceled due to a weather event. COURSE OBJECTIVES: The objective of this course is to give you an in-depth exposure to the strategy and tactics of pricing. The materials to be used in this course are designed to provide you with a comprehensive guide to making a pricing decision for a product or service. The course will have a Marketing focus while drawing on theoretical principles from Economics and Psychology.

REQUIRED COURSE MATERIALS: The course materials listed below are available for online purchase and electronic delivery from Harvard Business School Publishing for an estimated investment of $52 through the two web links shown below. In an effort to reduce costs, printed versions of the course materials will not be available for sale through the MBA Shop (UConn Coop) on the Hartford Campus.

Harvard Business Review Articles (HBR):

What is the Theory of Your Firm?

Should You Punish or Reward Current Customers?

Competing Against FreeKnow What Your Customers Want Before They Do

Ditch the DiscountsCompeting in the Age of Omnichannel Retailing

Pricing to Create Shared Value

Which Products Should You Stock?

Smarter Information, Smarter Consumers

Harvard Business School Case (HBS):

Chateau Margaux: Launching the Third WineRegister and Purchase the 9 HBR Articles and the 1 HBS Case at the following link:

https://cb.hbsp.harvard.edu/cbmp/access/23287554Simulation: Universal Rental Car Pricing:

Register and Purchase the Simulation at the following link:https://cb.hbsp.harvard.edu/cbmp/access/23287606Mini Cases:

Mini cases (typically 1-3 pages in length) depicting pricing practices and scenarios that have been reported in the business press will be used to supplement the above course materials. The mini cases have been collated together and posted as a single PDF file on our HuskyCT course website. The Harvard Business Review (HBR) articles are intended to provide you with theories, concepts and best practices that relate to pricing. The Simulation and the Harvard Business School Case (HBS) are intended to provide you an opportunity to apply these theories and concepts. The mini cases are intended to provide you exposure to the pricing challenges and opportunities faced by companies today. HIGHLY RECOMMENDED TEXT BOOK:

The highly recommended text book listed below will dramatically add to your learning experience in the course and potentially enable you to earn a higher course grade. Please give serious consideration to purchasing it from your preferred online bookstore.

Thomas T. Nagle, John E. Hogan and Joseph Zale (2010)

The Strategy and Tactics of Pricing: A Guide to Growing More Profitably (5thedition)

Prentice-Hall (referred to as NHZ in the syllabus)

OTHER OPTIONAL TEXT BOOKS:

In addition to the highly recommended text above, there are three other optional text books--- which considered together---will enable you to become the pricing go-to person (i.e. the pricing guru) in your organization, thereby enhancing your career and job prospects. Please consider purchasing them.Reed K. Holden and Mark R. Burton (2008)Pricing with Confidence: 10 Ways to Stop Leaving Money on the Table (1st edition)

Wiley Julie M. Meehan, Michael G. Simonetto, Larry Montan, Jr. and Christopher A. Goodin (2011)

Pricing and Profitability Management: A Practical Guide for Business Leaders (1st edition)

Wiley

Tim J. Smith (2012)

Pricing Strategy: Setting Price Levels, Managing Price Discounts, & Establishing Price Structures (1st edition)

South-Western

EVALUATION:

The evaluation system is designed to encourage advance reading of all assigned material, regular attendance in class, well prepared presentations and active participation in class discussions.

One of the assignments is team-based (4 students in each team) while others are individual-based. In-class time will be made available to work on the team-based assignment when possible. Timely completion of all course assignments (described in the next section) is expected. Attendance in all class sessions is required.

COURSE ASSIGNMENTS:Pricing Simulation (individual-based): Each student will participate in a web-based pricing simulation exercise and write a 6-8 page report. The simulation is intended to provide a real-world learning experience on how pricing decisions are made by a company. The written reports should be sent to me electronically as a single Word or PDF file no later than 8:00pm on March 10, 2014. Details on the simulation exercise are provided toward the end of the course outline.

HBR Article Presentation (team-based): Each team (consisting of 4 students) will present a pre-assigned article from the Harvard Business Review article set being used in the course. The class session during which a particular HBR article is scheduled for presentation is listed in the Schedule of Activities section of the course outline. Article Presentation assignments will be finalized during the first in-class meeting on January 24, 2014. The typical article presentation should be of 12-16 minutes in duration using 8-12 PowerPoint slides. Please provide me with a printed copy of your slides immediately prior to your presentation.

Mini Case Presentation (individual-based): Each student will present and act as a discussion leader on a pre-assigned mini case that depicts pricing practices and scenarios that have been reported in the business press. The mini cases available for presentation have been collated together and posted on HuskyCT as a single PDF file. The class session during which a particular mini case is scheduled for presentation is listed in the Schedule of Activities section of the course outline. Mini case assignments will be finalized during the first in-class meeting on January 24, 2014. The mini-case presentation should use 3-4 PowerPoint Slides and be of 5-7 minutes duration. Please provide me with a printed copy of your slides immediately prior to your presentation. Written Case (individual-based): Each student will write a 6-8 case page report that analyzes HBS Case Chateau Margaux: Launching the Third Wine The purpose of the case write-up is to enhance your ability to analyze a pricing situation and recommend a pricing strategy. The write-up should focus on how the theoretical concepts learned in the course may be applied in practice. The written case report should be sent to me electronically as a single Word or PDF file no later than 8:00pm on March 31, 2014. Details on the written case are provided toward the end of the course outline.

Class Participation (individual-based): Due to the intensive nature of the course, you are required to attend all classes and actively engage in all in-class activities and discussions. Opportunities for enhancing your class participation grade will be made available to interested students. GRADING:

The above activities shall be weighted as follows in determining your course grade:

Individual-based work

Pricing Simulation

25 percentMini Case Presentation

10 percent

Written Case

25 percentClass Participation

10 percentTeam-based work

HBR Article Presentation

30 percent

SCHEDULE OF ACTIVITIES: Please note that the schedule below is subject to change depending upon the pace at which we cover the course material and your interest in a particular topic(s). Hence, it is possible that an activity scheduled for a particular session gets re-scheduled to a later time. The mini cases listed below have been posted as PDF files on HuskyCT. The HBR articles mentioned below are available for purchase from the electronic link listed earlier. Key:

L=Lecture

HBR=HBR Article Presentation and Discussion

V=Video

MC=Mini Case Presentation and DiscussionSM=Simulation Exercise

Jan 24 (Evening Session)

Team formation and Sign-ups for HBR Article and Mini Case PresentationsIntroduction to the course

L: Strategic Pricing

(NHZ Chap 1)

L: Costs

(NHZ Chap 9)

L: Financial Analysis

(NHZ Chap 10)

Jan 25 (Morning Session)

9:00am-9:30am: In-Class preparation time for HBR Article and Mini Case Presentations

MC: Southwests influence on lowering airfares waning; JetBlue, Allegiant, Spirit have

MC: Reporters Journal: As Baggage Fees Soar, Thrifty Fliers Get Creative---Travelers Pack

L: Value Creation & Price Sensitivity (NHZ Chap 2)

MC: New York Fashion Week: The Fashion Sweet Spot: The $400 Dress

MC: Sweater Sticker Shock --- Why Luxury Clothing Costs Even More; A Run on Mink Vests

L: Price Structure & Price Segmentation (NHZ Chap 3)

V: American Airlines

Jan 25 (Afternoon Session)

MC: Mercedes Lifts Veil on S-Class

MC: Cadenza burnishes Kia image; Low-key sedan adds some class to a brand known for low

MC: How to save at Disney theme parks; Avoid the ticket price hikes without wishing upon a

MC: What would make you pay $50 to see a movie? Studio experiments with mega-ticket for...

MC: The Met Will Lower Ticket Prices

L: Competition

(NHZ Chap 11)

MC: Whole Foods Battle for the Organic Shopper; Upscale Grocer Aims to Shed Pricey

MC: Volt Falls to Electric-Car Price War --- General Motors Lops $5000 Off Sticker

SM: Universal Rental Car: Scenario B (Intermediate Phase) opens for play

4:30pm-5:00pm: In-Class preparation time for HBR Article and Mini Case Presentations


HBR: What is the Theory of Your Firm? (relates to NHZ Chap 3)

HBR: Should You Punish or Reward Current Customers? (relates to NHZ Chap 11)

MC: Why some Redskins season ticket holders are seeing a 57 percent price increase

MC: The best baseball teams for your buck; see how your club ranks by using the fan version...

MC: Bay Area: Warriors Go On Offense to Fill Seats --- Team Uses Data to Refine Ticket

Feb 1 (Morning Session)

HBR: Competing Against Free (relates to Chap 11)

L: Value Comm. & Pricing Psychology (NHZ Chap 4)

MC: Corporate News: For Tide, a New Wave --- P&G Tests Waters Again for Bargain

MC: P&G to Cut Package Sizes for Diapers

MC: Black Friday: A Retail Illusion

MC: Sometimes, We Want Prices to Fool Us

MC: MANSION---Spread Sheet: Price High or Go Low? --- Its the home-sellers dilemma

Feb 1 (Afternoon Session)

L: Price in the Marketing Mix

& Pricing over the Product Life Cycle (NHZ Chap 7)

MC: Corporate News; GM Tries to Curb Discounting

MC: Say Goodbye to the Car Salesman --- Armed with prices from the Web, Customers Dont

MC: Follow the Bouncing Prices

MC: J. C. Penney Returns to Coupons and Marks Up Prices

MC: How a great sale affects your brain

HBR: Know What Your Customers Want Before They Do (relates to (NHZ Chap 7)

Feb 14 (Evening Session)

HBR: Ditch the Discounts (relates to NHZ Chap 7)

HBR: Competing in the Age of Omnichannel Retailing (relates to NHZ Chap 7)

L: Pricing Policy

(NHZ Chap 5)

L: Price Level

(NHZ Chap 6)

MC: Home & Digital: Calling Upstarts: Small Cell Carriers Offer Deals

MC: Retailers Cut Apple iPhone 5C Price; Wal-Mart, T-Mobile to Offer Discounts on

MC: Cracking the Apple Trap


HBR: Pricing to Create Shared Value (relates to NHZ Chap 5 & 6)

L: Pricing Strategy Implementation

(NHZ Chap 8)

MC: How Ticketmaster ruined the concert going experience, and how it might be saved

MC: Forum Theatre will let theatergoers decide what to pay

MC: Economics, Sliced --- 99-Cent Price War Puts Pressure on Manhattan Pizzerias

MC: Dry Cleaner hopes to clean up // Chicago-based CD One Price Cleaners HBR: Which Products Should You Stock? (relates to NHZ Chap 8)


MC: U.S. News: Life in Fast Lane, at a Cost --- States Are Adding Express Toll Portions to

MC: On Sale: The $1,150-per-Hour Lawyer---Legal fees Keep Rising

MC: Luxury-Goods Firms Little China Secret

MC: Hamburgers Come to Africa

HBR: Smarter Information, Smarter Consumers

Discussion of the Simulation Exercise assignment

Discussion of the Written Case assignment

Course Evaluations (official UCONN and on www.ratemyprofessors.com)

V: Dont Just Set Prices, Manage Them Strategically

SM: Universal Rental Car: Scenario C (Advanced Phase) opens for play

DETAILS ON THE HBR ARTICLE PRESENTATIONS

The purpose of the HBR article presentations is to introduce important theoretical pricing concepts and pricing practices to the class and show how they integrate with the course material. The articles have been selected to highlight pricing decisions and scenarios that are normally encountered by firms. The typical HBR article presentation should draw attention to the key ideas mentioned in the article and the examples used to reinforce them. It should provide a basis for class discussion.

A recommended format for these presentations is given below. The typical article presentation should be of 12-16 minutes in duration and use 8-12 PowerPoint slides. No additional research on the companies or organizations mentioned in the article is needed. Please provide me with a printed copy of your PowerPoint slides immediately prior to the presentation.

RECOMMENDED SLIDE TITLES & SEQUENCE:

The Pricing Situation or Issue or Problem (1 slide):

Relevant Article Facts (3-4 slides): Present a summary of key points in the article. Communicate the general content and tone of the article to the audience. Emphasize those facts which you believe are particularly relevant for class discussion.

Recommendations in the Article (3-4 slides): Highlight the recommendations made by the authors in the article. Relate them to pricing actions that could be taken by firms.

Discussion Questions (1 slide): List 3-4 thoughtfully worded questions that you believe provide a basis for evaluating the recommendations made in the article Form opinions on the questions you select, but do not reveal them till you have heard from the rest of the class.

HBR ARTICLES AVAILABLE FOR PRESENTATION


HBR: What is the Theory of Your Firm?

HBR: Should You Punish or Reward Current Customers?


HBR: Competing Against Free


HBR: Know What Your Customers Want Before They Do

Feb 14 (Evening Session)HBR: Ditch the Discounts

HBR: Competing in the Age of Omnichannel Retailing

Feb 15 (Morning Session)HBR: Pricing to Create Shared Value

HBR: Which Products Should You Stock?


HBR: Smarter Information, Smarter Consumers

DETAILS ON THE MINI CASE PRESENTATIONS

The purpose of the mini case presentations is to attempt to relate theoretical pricing concepts to the pricing practices of firms or organizations. The mini cases are based on news reports that have appeared in business and general interest publications in the preceding 1-3 years. The typical mini case presentation should evaluate the soundness of a particular pricing strategy and provide a basis for discussion that enables the rest of the class to do the same. Since our analysis is post-hoc, and with the benefit of hindsight, there is no assurance that the company or organization used a similar analysis (or any analysis at all). The typical mini-case presentation should use 3-4 PowerPoint Slides and be of 5-7 minutes duration. In rare instances, it may be necessary to do a limited amount of online research (30 minutes maximum) to update the content of the mini case or provide additional background information. Please provide me with a printed copy of your PowerPoint slides immediately prior to the presentation.

MINI CASES AVAILABLE FOR PRESENTATION

Jan 25 (Morning Session)

MC: Southwests influence on lowering airfares waning; JetBlue, Allegiant, Spirit have

MC: Reporters Journal: As Baggage Fees Soar, Thrifty Fliers Get Creative---Travelers Pack

MC: New York Fashion Week: The Fashion Sweet Spot: The $400 Dress

MC: Sweater Sticker Shock --- Why Luxury Clothing Costs Even More; A Run on Mink Vests

Jan 25 (Afternoon Session)

MC: Mercedes Lifts Veil on S-Class

MC: Cadenza burnishes Kia image; Low-key sedan adds some class to a brand known for low

MC: How to save at Disney theme parks; Avoid the ticket price hikes without wishing upon a

MC: What would make you pay $50 to see a movie? Studio experiments with mega-ticket for...

MC: The Met Will Lower Ticket Prices

MC: Whole Foods Battle for the Organic Shopper; Upscale Grocer Aims to Shed Pricey

MC: Volt Falls to Electric-Car Price War --- General Motors Lops $5000 Off Sticker


MC: Why some Redskins season ticket holders are seeing a 57 percent price increase

MC: The best baseball teams for your buck; see how your club ranks by using the fan version...

MC: Bay Area: Warriors Go On Offense to Fill Seats --- Team Uses Data to Refine Ticket


MC: Corporate News: For Tide, a New Wave --- P&G Tests Waters Again for Bargain

MC: P&G to Cut Package Sizes for Diapers

MC: Black Friday: A Retail Illusion

MC: Sometimes, We Want Prices to Fool Us

MC: MANSION---Spread Sheet: Price High or Go Low? --- Its the home-sellers dilemma


MC: Corporate News; GM Tries to Curb Discounting

MC: Say Goodbye to the Car Salesman --- Armed with prices from the Web, Customers Dont

MC: Follow the Bouncing Prices

MC: J. C. Penney Returns to Coupons and Marks Up Prices

MC: How a great sale affects your brain

Feb 14 (Evening Session)

MC: Home & Digital: Calling Upstarts: Small Cell Carriers Offer Deals

MC: Retailers Cut Apple iPhone 5C Price; Wal-Mart, T-Mobile to Offer Discounts on

MC: Cracking the Apple Trap


MC: How Ticketmaster ruined the concert going experience, and how it might be saved

MC: Forum Theatre will let theatergoers decide what to pay MC: Economics, Sliced --- 99-Cent Price War Puts Pressure on Manhattan Pizzerias

MC: Dry Cleaner hopes to clean up // Chicago-based CD One Price Cleaners Feb 15 (Afternoon Session)

MC: U.S. News: Life in Fast Lane, at a Cost --- States Are Adding Express Toll Portions to

MC: On Sale: The $1,150-per-Hour Lawyer---Legal fees Keep Rising

MC: Luxury-Goods Firms Little China Secret

MC: Hamburgers Come to Africa

DETAILS ON THE WRITTEN CASEPurpose:

The purpose of the written case assignment is to provide you an opportunity to bring together the concepts, theories, and applications learned in the course in formulating a pricing strategy. The specific task at hand is to recommend a pricing strategy for Chateau Margaux with regards to the launching of their third wine. The term pricing strategy is intended to encompass the various pricing-related decisions discussed in the case.

Please use a third-person narrative style of writing. Organize your write-up using headings and sub-headings (and sub-sub-headings if needed). No additional research on Chateau Margaux is necessary or desirable. Base your analysis solely on the information mentioned in the case. Use evidence-based arguments that apply the concepts and theories learnt in the course to the data and the facts mentioned in the case.

The written reports should be sent to me electronically as a single Word or PDF file no later than 8:00pm on March 31, 2014. You are free to use your own format in writing the case report. A suggested length would be 6-8 pages.

Overall Question:

To recommend a pricing strategy for Chateau Margaux with regards to the launching of their third wine.Six Specific Questions to be Answered in the Written Report: DETAILS ON THE SIMULATION EXERCISE

The purpose of the simulation is to apply pricing concepts to a real-world scenario that involves making multi-period pricing decisions. The concepts explored in the simulation are: nature and dynamics of consumer response to price (i.e., price elasticities); importance of understanding differences across customer segments; importance of understanding differences across geographic markets (heterogeneity of demand); importance of accounting for competitive response; impact of price on overall marketplace demand; impact of general economic conditions on the demand function; economics of pricing decisions; and the role of pricing in managing product inventory (e.g., managing excess demand and stock-outs).

The web-based (asynchronous) simulation presents a context in which you develop a pricing strategy for improving performance of a rental car operation in Florida. The simulation involves three regions--Orlando, Tampa, and Miami--which vary in size, market dynamics, and customer mix. The focus is competition between two car rental companies. The simulation lasts up to 12 simulated months. You set weekday and weekend rental prices for each region for each period (a simulated month) and make fleet capacity decisions at several points throughout the simulation. The written reports should be sent to me electronically as a single Word or PDF file no later than 8:00pm on March 10, 2014. You are free to use your own format in writing the simulation report. A suggested length would be 6-8 pages.

Six Specific Questions to be Answered in the Written Report:

Describe the pricing strategy you used during Scenario C of the Simulation Exercise.

What was your highest cumulative profit level attained during Scenario C?How would you characterize the behavior of each type of customers (business/leisure)

responses to changes in price?

What differences did you identify between the three markets -- Orlando, Miami, and Tampa?What differences did you notice between weekdays vs. weekend demand?

What did you think the competition was doing?

COURSE POLICIES

Professional Integrity:

Students in this course are expected to abide by the highest standards of ethics and personal integrity, and to adhere to all university policies regarding academic honesty. Academic misconduct is not acceptable and may result in a failing grade for the course and/or other sanctions based on applicable university policies. A student who knowingly assists another student in committing an act of academic misconduct shall be equally accountable for the violation. Issues of academic misconduct are covered in The Student Code, Part IV: Student Conduct Policies and in Appendix A. (see http://www.dos.uconn.edu/student_code.html).

Special Needs: If you are a student who needs academic accommodations due to a disability, please be in contact at your earliest convenience so that appropriate accommodations can be made.

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