TEACHING PLAN FOR
• PRICING POLICIES
1. Basic description of the course
Name of the course: Pricing Policies
Profile: Marketing Market Research
Academic year: 2015-2016
Term: 1st
Degree / Course: Bachelor’s Degree in International Business and Marketing
Code: 40114
Number of credits: 4
Total number of hours committed: 100
Teaching language: English
Lecturer: Silvia Cambra
Timetable:
GROUP 1 (Plenary Session)
Tuesday, 13.00 – 15.15
GROUP 101 (Seminar Session)
Thursdays, 13:00 – 13:55
GROUP 102 (Seminar Session)
Thursdays, 14:00 – 14:55
OFFICE HOURS: Thursday 15:00 by appointment
2. Presentation of the course
“Pricing is the moment of truth – all of marketing comes to focus in the pricing
decision.” (Raymond Corey)
Price setting is probably the most crucial of all marketing mix decisions. It involves
an understanding of both supply side factors (e.g. costs) and demand side factors
(e.g. consumer willingness to pay). While traditional approaches to pricing theory
have revolved around an economic and financial framework, a broader and more
pragmatic view entails a comprehensive understanding of the demand side; both at
the level of individual customer values, and the more aggregate level of price
sensitivities of the market. In this course, we will approach the pricing decision as
an intersection of economic, strategic and behavioral considerations. Using
industries as diverse as wireless communication, pharmaceutical, medical services,
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industrial products and consumer packaged goods, we will study economic and
behavioral approaches to pricing, dynamic of pricing, value pricing, price
customization, price bundling and multi-part tariffs, menu costs and price
stickiness, price presentation strategies, sales promotions, and the effect of pricing
formats on consumption and customer value.
Although this course has a significant QUANTITATIVE component, required
mathematical skills do not go beyond basic calculus (e.g., derivative of a linear
function). However, solid control of the basic algebra is mandatory. Fluency in use
of EXCEL software application is mandatory. Students MUST bring their
laptops to every class.
3. Competences to be achieved in the course
General competences:
Instrumental competences
Specific competences:
Disciplinary competences
G.I.2. Ability to relate concepts and
knowledge from different areas.
G.I.3. Ability to organize and plan.
G.I.5. Ability to take decisions in
complex and changing situations.
G.I.8. Oral and written competence in
communicating in English.
E.D.8. Analyze the organization of
businesses based on economic
principles that make it possible to
identify the most determining factors in
results.
General personal competences
E.P.2. Ability to analyze economic and
market indicators when taking
decisions within the organization.
E.P.5. Ability to take strategic business
decisions that take into account
economic, cultural, social, and political
determinants specific to each area.
E.P.7. Illustrate the reality of business
by using activities such as visits and
lectures given by executives or by
preparing case studies.
E.P.8. Be able to take functional
decisions within an organization with
international activity.
E.P.17. Be able to express oneself and
understand spoken and written
communication in English at an
advanced level to apply it to the
international business area.
G.P.1. Ability to adapt and work in and
lead international, multicultural,
interdisciplinary, competitive, changing
and complex groups.
Generic systemic competences
G.S.4. Entrepreneurial ability.
G.S.7. Promotion of and respect toward
multicultural values: respect, equality,
solidarity, commitment.
G.S.8. Promotion and respect for
gender, environmental and safety at
work issues.
Competences for applicability
Professional competences
G.A.4. Ability to understand and apply
the network concept.
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The above abilities interrelated with the basic abilities set out in Royal Decree
1393/2007, namely:
a. Competence to understand knowledge, on the basis of general secondary
education
b. Competence to apply knowledge to day-to-day work in international
management and marketing, in particular, the ability to develop and defend
arguments and to solve problems
c. Competence to gather and interpret relevant data, making it possible to
issue reflective judgments on economic and social reality
d. Competence to communicate and transmit information (ideas, problems,
solutions) to a specialized and non-specialized public
e. Competence to develop learning activities in a relatively autonomous
manner.
Thus, the competences developed in the subject are structured into those that are
seen as a development or specification of basic competences and those that define
the professional profile of the graduate, with respect to general and specific
competences.
Basic competence: understanding of knowledge
General competence: G.I.3
Specific competences: E.D.8
Basic competence: application of knowledge
General competences: E.P.2
Basic competence: communicate and transform information
General competences: G.I.8
Specific competences: E.P.17
Basic competences: develop learning activities
General competences: G.I.3
Competences that define the professional profile which are not included under basic
competences
In general, these competences combine the following key elements for
professionalizing students in the area of international business and marketing:
a. Provide students with the capacity to adapt to dynamic teams and environments
b. Provide students with the capacity to create their own integral vision of the
operation of a business or international marketing project
c. Provide students with the capacity to take complex decisions and carry out
negotiation processes
General competences: G.I.5, G.P.1, G.S.4, G.S.7, G.S.8, G.A.4
Specific competences: E.P.5, E.P.7, E.P. 8
Own competences of the subject
Understanding the fundamentals of how prices are set and the relationship of
pricing process with other functional business activities.
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4. Contents
1. Costs
2. CVP Analysis
3. Microeconomics of pricing (demand, supply, elasticities)
4. Pricing discrimination
5. Pricing strategies
6. Value and pricing
7. Pricing psychology
8. Pricing over the product lifecycle
9. Competitive pricing
10. Ethical and legal issues in pricing
5. Assessment
Regular Term Evaluation
During the regular term you will be evaluated as indicated in the table below.
Assessment elements
CONTINUOUS EVALUATION (Minimum 4.0 out of 10.0 on overall continuous
evaluation grade required to be allowed to take the final exam)
Assessment
Elements
Freque
ncy
Time
Period
Submit
ted
week
Type of
assessm
ent
Obligato
ry
Assessment
agent
Grouping
Teac
her
Indivi
dual
X
X
Coevalua
tion
Weight
Gro
up
Quizzes
1
X
Seminar
Discussions
and Case
Presentations
Final Exams
8
X
X
1
X (Min.
40%)
X
X
50%
X
X
X
10%
bonus
X
X
20%
X
30%
BONUS EVALUATION
Participation
bonus grades
Ongoin
g
a. Each assessment element (the first column) is scored with a grade
between 0 and 10 with one decimal point precision. Zero is the lowest
grade and ten is the highest grade.
b. The final grade for the course is calculated by adding grades obtained in
each element multiplied by their assigned weights (the last column).
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c. The final grade of the course is reported on the scale from 0 to 10 with
one decimal point precision. The course will be considered as “passed”
if the final grade is equal to or greater than 5.0.
d. In addition to numeric final grades, you are also given descriptive
grades:
No presentat
0.0 – 4.9 Suspens
5.0 – 6.9 Aprovat
7.0 – 8.9 Notable
9.0 – 10.0 Excel.lent
e. International students: Please DO NOT BOOK tickets for your flights home in
December before the dates for the final exams are announced (usually at the
end of the week 5). Even if you have a ticket and a valid reason, ESCI will NOT
PROVIDE ALTERNATIVE DATES for the final exam.
f. To be allowed to take the final exam your continuous evaluation grade (quizzes
+ seminar preparation and participation) must be 4.0 or greater
g. In order to pass the course, you must take the final exam. If you do not take
the final exam, your final course grade will be “No presentat” (“No show”),
irrespective of your grades in other evaluation elements.
h. To obtain a passing course grade, you must obtain the final exam grade that is
equal to or greater than 4.0. If the final exam grade is less than 4.0, the final
exam grade becomes the final course grade irrespective of other grades.
i. The final exam is cumulative – it covers all material covered during the term.
Quiz 1 includes only material covered before the Quiz 1.
j. There will be neither individual make-up work nor extra credit work assigned if
you fail any of obligatory grading elements, you are unable to attend the final
exam or quizzes, or if you obtain a grade below your expectations.
k. All students in a group receive the same grade for any group work. However,
during the final exam, you will have to perform peer evaluation that will be used
to adjust group grades for individuals who have contributed more than their fair
share of work (their grades will be higher than the grade given to the rest of the
group members) and those who didn’t contribute their fair share of work (their
grades will be lower than the grade given to the rest of the group members).
l. Participation in this course is evaluated as an extra credit that can contribute to
10% of your final grade (default is zero). If you don’t say a word during the
classes or you have irregular attendance (below 80%), your participation grade
will be zero. However, you still may obtain a maximum final course grade.
Participation grade is based exclusively on your CONTRIBUTION during class
discussions. My experience is that in the courses that are evaluated on the
continuous basis like this one, it is hard to fail but it is also hard to obtain a very
high mark. So, if you are concerned with your average grade, take this element
seriously as it can compensate for losses of grades in other elements.
Furthermore, do not think of this grade as an entitlement or a gift – it has to be
EARNED. Finally, do not confuse attendance with participation.
m. A student can have a perfect attendance record and still have zero participation
grade. Some of the behaviors that contribute to effective class participation are
captured in the questions that follow:
1. Is the participant a good listener?
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2. Are the points that are made relevant to the discussion? Are they linked to
the comments of others?
3. Do the comments add to our understanding of the situation?
4. Do the comments show evidence of analysis of the case?
5. Does the participant distinguish among different kinds of data (that is, facts,
opinions, beliefs, concepts, etc.)?
6. Is there a willingness to share?
7. Is there a willingness to test new ideas, or are all comments "safe"? (For
example, repetition of case facts without analysis and conclusions or a
comment already made by a colleague.)
8. Is the participant willing to interact with other class members?
9. Do comments clarify and highlight the important aspects of earlier
comments and lead to a clearer statement of the concepts being covered?
The questions above deal with both the process of class participation and (of
equal or greater concern) the content of what you say. Please trust that both
quality and frequency are important, but that quantity never can make up for
low quality.
Supplementary Evaluation
For those students who were allowed to take the final exam and during the regular
term evaluation have obtained a final grade below 5.0, there will be a
supplementary evaluation in January according to the ESCI calendar and academic
regulations. Supplementary exam CANNOT be done remotely (i.e. outside of ESCI’s
premises).
Only final exam can be retaken during this session. All other grades stay unchanged
and cannot be compensated by extra work. To pass the supplementary evaluation
exam, a student must obtain supplementary exam grade that is equal or greater
than 4.0. If a student obtains a passing supplementary exam evaluation grade, the
final grade will be determined using the regular course assessment rules as outlined
above. If a student obtains the supplementary exam grade below 4.0, the
supplementary exam grade becomes the final course grade. Bonus participation
grade is set to zero if a student has to take supplementary evaluation.
Evaluation of the competences:
G.I.2
Class
Participation
Seminar
preparation
Participation
Quizzes
Final Exam
G.I.3
G.I.8
E.D.8
E.P.2
X
X
X
X
X
X
X
X
X
E.P.1
7
X
PROFI
LE
X
X
X
X
X
X
X
X
X
X
&
X
X
X
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6. Bibliography and teaching resources
•
Basic REQUIRED bibliography
o Nagle T., Hogan, J., and Zale, J. (2010). “The Strategy and Tactics of
Pricing: A Guide to Growing More Profitably” (5th Ed.) Upper Saddle
River, NJ: Prentice Hall
•
Supplementary bibliography
o Baker, R. J. (2006). “Pricing on Purpose: Creating and Capturing
Value.” Hoboken, New Jersey: John Wiley & Sons
o Dolan, R. and Simon H. (1997). “Power Pricing: How Managing Price
Transforms the Bottom Line.” New York, NY: The Free Press [Dolan &
Simon]
o Wilson R. (1997). “Nonlinear Pricing.” New York, NY: Oxford
University
•
Teaching resources:
Posted on the course Intranet site:
o Supplementary teaching cases
o Power point slides
o Supplementary articles
Students are required to read all assigned cases and articles. The required reading
text used in this class is Nagle and Holden’s book listed in the bibliography section.
In addition, above are listed some of the books that you might want to refer to
during the course or after for further reading on the topics covered during the class.
7. Methodology
The course is composed of a mixture of lectures and case discussions. The purpose
of the lectures is to present and discuss theories, concepts, analytical techniques
and empirical findings. We will supplement lectures with tutorials that will allow us
to practice the analytical techniques introduced during the lectures. Furthermore,
we will discuss a number of comprehensive business cases. The goal of the case
discussion is to apply the concepts to the context provided by the case and to make
decisions based on both qualitative and quantitative analysis.
These teaching methods require intensive students’ involvement and therefore it is
important that students read the assigned material prior to each class. As the class
is offered in English, all reading material will be provided in English only. Students
will be provided with the cases, readings, exercises and power point presentations
either before or after the class via the Intranet site (“Aula”).
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Face-to-face
(in the classroom)
- Lectures
- Tutorials
- Discussion of cases and
articles
-
- Participation in
discussions
- Quizzes
- Final exam
-
Directed
(outside the
classroom)
Professor
Prepare classes
Prepare tutorials
Prepare cases and
articles
Student
Prepare seminars
Prepare cases and
articles
Independent
(outside the
classroom)
- Class preparation and
readings
- Independent study
- Exam preparation
MY EXPECTATIONS:
Class Preparation: I expect you to come to classes prepared. This includes
reading of the assigned cases, articles, reviewing of the power point slides and
exercises. Your preparation will make a significant part of your marks in
participation and seminar preparation and participation evaluation elements. While
participation during the classes is predominantly voluntary, I also practice “cold
calling”. This means that anyone can be asked to answer any question. Fear of
public speaking will not be accepted as an excuse.
Punctuality and Deadlines: I expect you to be on time for classes. I understand
that due to unforeseen circumstances, you may be occasionally late. If possible,
please let me know in advance if you are going to be late. Being habitually late is a
good way of losing goodwill. Deadlines will always be strictly enforced and no
exceptions of any kind will be made without prior approval.
Attendance: I expect you to attend classes regularly. I understand that due to
unforeseen circumstances, you may be occasionally absent. If possible, please let
me know in advance if you are going to be absent. Being habitually absent and/or
being absent without a valid reason is a good way of losing goodwill. Being absent
does not excuse you from the deadlines. It is your responsibility to ensure that I
receive required material by the given deadline, in the specified format, even if you
are not present. If your attendance is below 80% (6 or more hours lost), your
bonus participation mark is set to zero independent of your actual participation.
Class Discipline: It is of utmost importance that you respect your classmates and
the professor by allowing them to work and study in a professional environment.
Private conversations among students during the class will not be tolerated.
According to ESCI rules, the professor may ask student(s) to leave the classroom.
If you are asked to leave the classroom, your attendance sheet will be marked as
‘expelled’ (counts as two unjustified absences) and you will be asked to meet with
the program coordinator.
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Intranet (“Aula”): It is students’ responsibility to ensure timely access to the
Aula. 1 International students: please talk to exchange program coordinators at your
school and at ESCI in order to obtain Aula access as soon as possible. Until you
obtain the access please ask one of your local classmates for the access to print or
copy the class materials. Not having the access to the Aula will not be accepted as
an excuse for not doing required course work.
Internet Enabled Devices: Students MUST bring some type of Internet Enabled
Device (e.g., laptop, tablet, or smart phone) to the class when instructed. Class
materials (cases, articles, and PP slides), quizzes will be available exclusively online. For the remainder of the class use of any of these devices is allowed ONLY for
the class related activities (e.g., taking notes). If you are found to use these
devices for any other purpose, especially for activities that distract your classmates,
you may be asked to leave the classroom.
YOUR EXPECTATIONS:
Responsiveness and Feedback: You should expect that questions and concerns
that you raise with me would be answered, addressed and responded to. Besides
formal feedback mechanisms, feel free to jot me an e-mail with any question or
feedback. I will try my best to respond as speedily as I possibly can.
If you need to talk to me, you can send me an e-mail requesting to meet during the
office hour or at other time. I will schedule time to sit and talk to you. Although I
am usually available before and after the class for impromptu questions and
consultations, unless you previously request to meet, you need to be prepared for
the possibility that I may ask you to postpone the conversation for another day due
to my previously scheduled obligations.
Punctuality: You should expect me to start and finish classes on time. If we need
extra time to cover materials, or need to organize an extra session, I will only do so
if the majority of the class agrees.
Preparation and Rigor: You should expect the most up-to-date and rigorous
materials to be covered in class.
Guidelines and Expectations: For all assignments, exams and other course
materials, I will state my expectations as clearly as possible.
If either of us finds that the other party has been violating expectations, it is our
duty to inform the other party as promptly, and in as fair a manner as possible.
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https://aula.esci.upf.edu/login/index.php?lang=en
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8. Scheduling activities:
Note: Seminars are starting on Thursday, October 8, 2015
PRICING
(Consumer
Perspective)
(Fin. perspective)
Mod.
Wk
1
2
3
4
5
(Strat. Mark.
perspective)
6
7
8
Lecture topics
Seminar topics
Pricing introduction. Cost
Analysis
CVP & Profit Analisis.
Pricing approaches: Cost
based pricing, demand
oriented & Units forecasting
Microeconomics of pricing:
Price promotion
Market & Willingness to pay
Demand / Supply & Elasticity
Price Discrimination
Pricing Strategies
Pricing for new markets
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Pricing & Product Lifeycle.
Value in use pricing
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Auctions & Legal issues
Lectures: Nagel CH 2
Case: BEAUREGARD TEXTILES
Lectures: Nagel CH 10
Case: HEINZ ketchup
Lectures: Nagel CH
Case: METABICAL
Lectures: Nagel
Case: CULINARIAN COOKWARE
Lectures: Nagel
Case: PEPITA DISCO
Lectures: Nagel
Case: THE SPRINGFIELD
Lectures:
Case: VIRGIN MOBILE USA
Lecture: Nagel
Case: ATLANTIC COMPUTER
/BIOPURE CORPORATION
EXAM WEEK 13
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9. Case preparation questions
Below you may find a list of cases with matching preparation questions. Once you
read the case use these questions for seminar preparation that you should do in
groups of exactly three students. The questions that are marked in red need to be
responded in writing and uploaded to the Aula before the deadline. Assignments
that do not clearly indicate the names of 3 students that worked on the assignment
will receive a zero grade.
Case 1: Beauregard Textile Company (HBS 191-058)
Case 2: Heinz Ketchup - Pricing the product line (UV5142)
Case 3: Metabical - Pricing, packaging, and demand forecasting for a new weightloss drug (HBS Brief Case 4183)
Case 4: Culinarian Cookware: Pondering price promotion (HBS Brief Case 4057)
Case 5: Pepita Disco PPM – Margins and elasticity (KEL692)
Case 6: The Springfield Nor’easters: Maximizing Revenues in the Minor Leagues
(HBS Brief case 2510)
Case 7: Virgin Mobile USA - Pricing for the very first time (HBS 504-028)
Case 8: Atlantic Computer – A bundle of pricing options (HBS Brief Case 2078)
Case 9: Biopure Corporation (HBS 599-094)
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