This course prepares students to address strategic and tactical pricing issues and to identify profit-boosting changes in pricing practices across a range of professional contexts – as management consultants, product managers, entrepreneurs, business unit managers, and M&A advisors.
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. Managers often lack a clear understanding of how to improve on historical pricing practices within their companies and industries and how to apply such knowledge to new product settings.
The course will draw on a mixture of analytic marketing techniques, marketing strategy, and economic theory to describe approaches that are useful for optimal pricing decisions. Some examples of questions we will address in the course: How does a firm determine the price for a new product? How does a firm assess whether the current price is appropriate? What is value pricing? Which price segmentation strategy is optimal? How can a firm avoid a price war?
The course will use a mix of lectures, case discussions, in-class simulations, and guest speakers. Mini-cases and problems will also be employed to make students apply their learning to practical situations. The first three weeks of the course will establish a foundation for effective pricing decisions by teaching key economic, analytical and behavioral concepts associated with costs, customer behavior and competition. The rest of the course will (a) introduce students to advanced pricing techniques that aim to create additional value, including segmented pricing, nonlinear pricing, pricing structures, and promotions and (b) highlight practical applications of these approaches within a variety of specific industry contexts.
Brett Gordon was a Columbia Business School faculty member from 2007 to 2014.