Market and Competition in Pricing Strategy

Overview

Class Central Tips

If you haven’t considered what the competition is charging, you may not be maximizing your revenue. Spend time analyzing the market and you can influence price and improve margins. In this course, we'll show you how to implement competitive pricing and avoid common legal pitfalls of market-based pricing. You will also learn how to predict, influence and respond to competitors’ pricing moves. Developed at the Darden School of Business at the University of Virginia, and led by top-ranked Darden faculty and Boston Consulting Group global pricing experts, this course provides an in-depth understanding of market-based pricing and how to use it to capture more revenue.

Syllabus

Understanding the Playing Field

Welcome! Competitive pricing is all about setting prices based on what companies with similar products and services charge. To use this approach effectively, you have to understand the playing field. In particular, you need to know general legal parameters that guide competition in the market place. In this module, you'll get basic background knowledge so that you can use market knowledge in your pricing strategy and still stay on the right side of antitrust law. Then Thomas will join you to introduce the competitive pricing framework , which you can use to assess pricing options, anticipate your competitors' pricing strategy, and determine whether to price to competition or to elasticity.

Predicting Competitive Reactions

Now that you know more about the playing field, let's take a look at how to predict competitive reactions. Thomas will show you value mapping, a tool that yields valuable insights into the value-price relationship relative to your competitors, and how to apply it in a real-world example. Then you'll dive into game theory, a field with many applications. Here, you'll use it anticipate and respond to price competition so that you can cooperate and compete without colluding.

Disrupting Markets and Engaging in "Coopetition"

Disrupting competition and engaging in "coopetition" can benefit all players in the market--but not all the time. Using knowledge from game theory and pricing models can help you understand when this strategy can be beneficial. Thomas will introduce two competitor pricing models--price moves and price wars--and show you how to use these models to predict and respond to competitors. Then Ron will show you various strategies to optimize prices through the four phases of the product life cycle, from disruptive to declining products. Then you will use the SmartOps case to apply your knowledge of "coopetition" to analyze a real-world pricing decision.

Implementing Price Discrimination in Competitive Markets

Price discrimination -- selling the same product to different market segments at different prices -- allows companies to optimize profits, even in competitive markets. It begins with customer segmentation, and Ron will show you practical segmentation strategies for both B2B and B2C contexts. Then you'll learn how to apply the Weber-Fechner Law, which sounds complicated, but is actually quite intuitive and useful when pricing quality-differentiated product lines. Finally, you'll learn the basics of bundle pricing and how to create economically sound bundles.