Brief of the course

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From the course by IE Business School

Pricing Strategy

432 оценки

IE Business School

Pricing Strategy

432 оценки

Course 2 of 5 in the Specialization Marketing Mix Implementation

Pricing is one of the most important but least understood marketing decisions. Learn and practice concepts, techniques, and get to grips with the latest thinking on assessing and formulating pricing strategies. Analyze how firms attempt to capture value, as well as profits, in the revenues they earn. After this course, you will be able to contribute to the process of formulating pricing strategies for your own products and services, or those of your firm. This course has an additional focus on pricing dynamics and the reaction to and by competitors, taking a highly pragmatic approach and one that is directly applicable to your day-to-day professional life. Martin Boehm - IE Professor and Dean of the Business School with over 10 years experience - will guide you through four modules. We begin with the importance of pricing and how it ultimately can affect the bottom line. Then, we move on to methods to help you decide what is the optimal price for your product; and then price discrimination - should all your products follow the same pricing strategy or should you differentiate depending on the customer segment? Finally, we look at pricing psychology and how you can manipulate customers in order to drive the highest possible price for your product.

From the lesson

Pricing Psychology

In this final module we will look at pricing psychology. You will then be able to "manipulate" customers so they perceive a higher value in the products and services that you deliver, or so that they feel less pain by paying the price of purchasing your products. You will have in your toolkit multiple ways to maximize your sales, revenues, and profitability. We will also conduct a couple of experiments with volunteer customers to see how price affects perceptions, and how you can profit from it.

Brief of the course3:26

Ready to continue on this journey?0:50

Meet the Instructors

Martin Boehm
Professor of Marketing
Dean of IE Business School

[MUSIC]

In this course we covered quite a lot of ground.

In week number one we looked specifically at the importance of pricing.

I wanted to transmit especially the importance for

pricing on the bottom line and I hope you kept in your mind that clearly pricing is

the most important driver of profitability for any organization.

At the same time we looked as well at the complexity of pricing and

especially our interview with Felix

I think enlightened us a little more about

the difficulty of implementing pricing decisions in the real world.

We have looked as well at some more basic concepts of pricing, or

fundamental concepts of pricing, such as price elasticity.

A concept that is very often used as well in the economics literature.

In the second week we then focused on different methodologies on

how to determine prices.

More specifically we looked at cost based pricing competition and

customer based pricing.

I hope it has become clear, as well, that cost and

competition pricing is used quite often in industry.

Nevertheless, there are significant shortcomings as well,

to both of these methodologies.

Hence, we focus the rest of this week primarily on customer-based pricing and

more specifically, try to identify.

Different ways in order to figure out, what is the willingness to pay

of our customers, or said differently, what is the perceived value for

the products and services that we are offering, by our customers.

This obviously gives us way in order to figure out what is the optimal price, and

optimal price might be the one that actually maximizes our volume or

market share.

It might be the price that maximizes our revenue or sometimes,

it might be the price that actually maximizes our profitability.

And yeah, we should always keep in mind, but companies are out there

in order to typically maximize the profits, at least in the long run.

In the third week, we then looked at playing the pricing piano or

said differently, price discrimination.

Because what we see in the real world is that companies don't only charge one price

for all their products, but typically they set different prices for

different products with respect to different customer segments.

We try to look at benefits of price discrimination and

we have seen that obviously there's significant revenue and

profit potential behind price discrimination.

We then try to figure out what are the different ways in order to ensure

to implement price discrimination.

And we have seen multiple approaches in order to do this,

in order to make sure that it can charge one price to one segment.

But at the same time, another price to another customer segment.

In the last and fourth week we looked at pricing psychology.

Essentially who could say this is the way how we can manipulate customers.

Manipulate customers in a way that they perceive a higher value in the products

and services that we deliver or the same time that they feel less pain in

purchasing our products or paying a certain price.

So again, in this week,

we looked at multiple ways in order to influence our customers so

that in the end, we can maximize our sales, revenues, and profitability.

I really hope that you enjoyed this course and

hopefully going to enjoy some of our other courses in this specialization.

[MUSIC]

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