(2006), THE STRATEGY AND TACTICS OF PRICING: A

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1 BM632 Product and Price Management Course Syllabus Lecturer: Phone Number: Course Schedule: Room: Office Hours: All course days and by appointment Recommended Core text: o Nagle, Thomas and Hogan, John (2006), THE STRATEGY AND TACTICS OF PRICING: A Guide to Growing More Profitably. Prentice Hall, 4 th Edition. o Trott, Paul (2005), INNOVATION MANAGEMENT AND NEW PRODUCT DEVELOPMENT. FT/Prentice Hall, 3 rd Edition. OR o Baker, Michael and Hart, Susan (2007), PRODUCT STRATEGY AND MAN- AGEMENT. FT/Prentice Hall, 2 nd Edition. Supplementary Reading: o Lehmann, D. R. and Winer, R. S. (2004), PRODUCT MANAGEMENT. McGraw-Hill International, 4th Edition. o De Chernatony, L. and McDonald, M. (2004), CREATING POWERFUL BRANDS, Butterworth Heinemann, 3 rd Edition. o Monroe, Kent (2002), PRICING: MAKING PROFITABLE DECISIONS. McGraw-Hill, 3 rd Edition. Supplements: Handouts, press clips and assigned readings will be provided. Please note, however, that at this level of study no single source of reading will suffice. Therefore, a much wider reading is advised. In particular, look out of contemporary journal articles, especially those that are contextually relevant to the advancement of your knowledge. So many of the relevant journals are now available electronically and easily downloadable.

2 COURSE DESCRIPTION: The purpose of this course is to provide an in-depth understanding of the issues and considerations in the management of pricing of products, illustrate the role of pricing and product management in achieving strategic business goals, demonstrate the link between pricing and product management within the context of the marketing mix and the marketing management process. It seeks to develop the student s managerial skills for strategic product and pricing planning, positioning and product development. The emphasis is not only in understanding the embedding principles and frameworks but also the practical applications. The course on Product and Pricing Management is intended to develop an understanding of and competence in dealing with problems relating to management of existing products, formulation of product-market strategy, planning and execution of new product decisions, brand management strategies and pricing policies. In order to be able to analyze marketing opportunities and formulate effective marketing strategies, an understanding of product and pricing management is a sine qua non. With markets around the world opening up to competition and becoming demand-driven, it is the management of products that is central to the understanding of markets. Developing new products and successfully introducing them in the market is emerging as a critical challenge to survival. In recent years, there has been a growing interest in the study of brand management in the marketing profession the world over. Therefore, a thorough understanding of product and pricing management is critical to the success of a firm competing in the marketplace. Whether an organization is a business or non-business, it exists because there are products that the organization "produces" for people who "consume". Yet, in most cases the product and pricing decisions are made in an ad-hoc manner and it is assumed that the marketplace dynamics are best understood intuitively when they probably are not. Such organizations eventually suffer and go out of existence when competing organizations take away their customers. Product and pricing management is the central issue in the field of Marketing. However, the subject has its foundations in the fields of marketing, economics, psychology, sociology, social psychology, demographics, finance and human resources. Theories drawing from these fields will be utilized in the course for designing and implementing strategies. Participants will be expected to become familiar not only with the theories reviewed, but also with their managerial applications. The applications include market research, environmental analysis, segmentation, positioning and differentiation, and marketing and business strategy. The course is organized and conducted in a manner that it is a core foundation and strong support to other courses in Marketing. As theoretical understanding of product and pricing management develops during this course, concurrent relation to important marketing issues in the real-life context will be discussed. Communication skills are an important part of an MBA curriculum, and an objective of this course will be to help participants develop their analytical, writing, and presentation skills through the use of group presentations, class discussions, and report writing. Therefore the course objectives are two-fold:

3 1. To develop the participant s basic analytical skills, conceptual abilities and substantive knowledge in the field of product and pricing management from a variety of perspectives (multicultural, interdisciplinary, etc.) 2. To develop an appreciation and understanding of how marketing research, marketing strategy and basic research on intra- and interpersonal processes influence and are influenced by product and pricing decisions. LEARNING OUTCOMES By the end of the module students should be able to: o Have an in-depth critical understanding of the nature of pricing and product strategies and how they may be characterised and classified by marketers. o Review the strategic importance for organisations of managing pricing and product strategies. o Analyse and apply various key concepts and tools to pricing and product planning and management processes. o Analyse the new product development process and how pricing might impact the process o Analyse the importance of branding and the issues involved in managing brands and in an international context. o Critically review the different methods of pricing and how appropriate pricing strategies can be developed for different marketing situations. INDICATVE MODULE CONTENT The module will cover: o Product Concepts: The nature of products; product management in the context of business strategy; the relationship of product management to the marketing concept, the marketing management process and other elements in the marketing mix. o Key Product Management Concepts and Tools: The product life cycle model and its implications and application; product portfolio decisions, the BCG matrix and other product management tools, their uses and limitations. o The New Product Development Process: The importance of innovation; the stages in the NPD process and their financial and risk implications; test marketing and commercialisation; the role of marketing research. o Branding: The role and strategic importance of branding in different product categories; branding, differentiation and added value; the growing importance of brand equity o Service Based Product Marketing: The importance of service industries; differences

4 and linkages between goods and services; implications for the marketing of services and organisational issues in successful service delivery. o Product Management in an International Context: The growing internationalisation of many consumer industries and markets; barriers to internationalisation of product strategies; key implications for the marketing of products and brands across different markets; the growth of international and global brands. o Pricing Strategies: o The strategic importance and role of pricing; pricing objectives and their relationship with overall business objectives; key considerations in developing a pricing strategy including cost, demand and competitive factors. Pricing for new products, tactical approaches to pricing, other strategic pricing considerations and strategic marketing implications. TEACHING & LEARNING METHODS: The module is delivered by a series of lectures and seminars. The seminars, usually based on case studies, are designed to link to and reinforce the material covered in the lectures, giving students the opportunity to explore and evaluate the concepts and ideas covered. The case study approach helps develop students ability to analyse a situation and critically consider alternative approaches to future strategy. Students will usually work in groups and are expected to contribute to seminar discussions and other activities in terms of their own study and work experience. MODULE STRUCTURE COURSE DAILY SCHEDULE o 9:00 A.M. - 12:00 NOON. Lecture & seminar o 12:00 NOON - 1:00 P.M. LUNCH o 1:00 P.M. - 2:00 P.M. Case analysis, video discussions, group-based projects o 2:00 P.M. - 4:00 P.M. Lecture and seminar.

5 TENTATIVE SCHEDULE: WEEK TOPIC READINGS WK 1 (June 9 & 10) WK 2 (June 16 & 17) WK 3 (23 & 24) WK 4 (June 30 & July 1) Course overview (introduction) Overview of pricing & product management The fundamentals of pricing - Strategic pricing & costs - Customer value pricing - Determinants of pricing - Behavioural aspects pf pricing Strategic Management of Pricing: - Life cycle pricing - Competition - Pricing in the marketing mix Product Policy & Brand management - Product policy & planning - Product life cycle & portfolio analysis - Product and brand strategy - New product development Product Management - Behavioural aspects of product management - Packaging & market research - Competitive positioning Nagle & Hogan: Ch. 1 8 Ch. 6, Trott: Ch. 11 & 12 Baker & Hart: Ch. 1,2, 4, 6-12 Trott: Ch 13 & 14 Baker & Hart: Ch. 3, 19 ASSESSMENT The course will be assessed by three pieces of work: ASSIGNMENT 1: COURSEWORK (GROUP PROJECT) The coursework project is a group assignment. A group should consist of three to five students. All group members will receive the same mark. Working as a group, the task is to prepare a proposal for a new product concept in a form suitable for presentation to and approval for funding by the senior management of a company. You are to assume that the product has bee developed up to the stage where it is ready to be put into a test market. The aim of your proposal should be to present the viability of your new product idea by demonstrating the rationale for its development so far, as well as for investing in its test launch and any further development and marketing.

6 Your proposal should be written as a report and should consist of three main parts: - Market analysis of the opportunities and threats that you perceive for your product - Demonstration of the stages of the development of the new product concept itself that you would have gone through, including reject ideas, together with justifications for the decision taken throughout this process and - Outline marketing plan including details of the product and pricing strategies you are proposing and, in less detail, plans for the distribution and promotion aspects of the marketing mix. If your product idea is service based, you should also include your proposals for the management of people, processes and physical evidence elements of services marketing mix as much as you consider relevant. You can choose to base your hypothetical new product in any industry you wish. You must also choose a role: you can be part of an organisation large or small or you may adopt the role of entrepreneurs seeking financing for this project. It may be easier to choose an industry or company where you can obtain market and other information relatively easy and you may want to use the organisation that you work in for this purpose. If you this however, make sure that you do not access or use information which is in any way restricted or sensitive. The product idea you choose must be technologically feasible using an existing or emerging technology although you do not need to go into technical details of design or how it will work. What is important is the concept and the justification you make that it will fill a market need or gap based on your analysis of the market. Remember that new products that are successful usually answer the needs of a market better (by being faster, cheaper, more convenient, smaller, etc) than what went before or satisfy needs that are yet unrealised or unfulfilled. A new product idea could, for example, be one of the following: - An exploitation or application of a new or emerging technology - An innovative product or brand that exploits a market opportunity for your company - A significant modification to an existing product to update it or extend its life - The introduction of an existing product or brand into a new market or segment - An existing product offered through a new distribution channel - A combination of two or more existing products into one product forcing - mobile phones with camera or alarm clock radios are examples.

7 New product ideas should take advantage of a market opportunity which you should demonstrate from secondary research. Avoid a project which simply repositions an existing product through communication. Whatever your new product, remember that your proposal must seek to justify the current and future financial investment in it. In more detail, your proposal should include: Market analysis, including: - An analysis of the opportunities presented by your proposed target market and any other significant factors based on a PEST analysis as relevant and an analysis of growth trends etc of the market sector you have chosen - An analysis of threats posed by existing or future competitors, substitutes or any other factors - Relevant secondary market research data to support your analysis. You do not need to do any primary research. - An analysis of how the new product relates to the existing product portfolio, if applicable. Demonstration of the stages new product development process that you consider would have taken place if this were a real-lifer exercise and the reasons for the decisions taken at each of the various stages. Obviously this will not have actually happened and will be fictional you will have to briefly say what you would have done at each stage in the NPD process, including the kinds of research which could have been carried out if this were a real-life product. Outline marketing plan containing: - Description and justification of the product concept and any source of competitive advantage it has over competitors or substitutes, the target market positioning of the product and brand strategy as appropriate - Detailed pricing proposal for test launch and later, including a justification for pricing objectives, strategies and tactics. You should try and include some realistic outline projections for expected revenues and profitability if possible. - Less detailed proposal for the distribution and promotion elements of the marketing plan. If the product is service based, you should also include proposals for the people, processes and physical evidence elements of the services marketing mix

8 Although your proposal should adopt a practical approach, you should refer to and use theoretical marketing concepts and frameworks as appropriate. Required Outcomes: Your proposal should be presented in two forms: A report (40% of module marks) of 2000 words, excluding appendices, word processed and written and presented to a professional standard. A presentation (10% of module marks) of minutes to which all group members should contribute in some way, although not all actually need to present. All group members must attend the presentation on the allocated date and time in order to receive a mark: if a group member does not attend, they will receive a mark of 0% for the presentation. Assignment 2: Literature critique Read and critique the journal article assigned to you (if you prefer, choose any other). This is a group-based task (discussion) but individual submission is expected. (1000 words). An additional feature of this course is the literature critique/study group presentation (note assignment 2). Presentations will be based on syndicate groups of roughly 3 to 4 students per group. Each group will be allocated a journal article to read, analyze and present. Your aim is to extract from the paper those observations and conclusions which are most worthwhile. The word worthwhile tell you that you have two key problems: - How to you judge the worth of an observation (this is a problem of deciding value) - How to fit the observation to the outside world (this is a problem of deciding relevance). To critique a paper well, the key questions to bear in mind include: - What are the main theories on which the paper is based? - What are the main stages of the argument? - What evidence is being offered to support the argument? - What conclusions are being reached? - What is your own opinion of the paper, in its entirety? You are encouraged to introduce any innovative ideas and/or new materials, concepts, and theories that you have come across either in the literature or practical contexts that you consider would help expand the scope of the discussion.

9 The seminar will have two parts: - A presentation by the syndicate group covering the key issues and concepts embodied within their assigned reading, and - The involvement of the whole class in discussing and developing the practical themes of each seminar. This will be led and managed by the syndicate group and should be seen as an opportunity to experiment with exercises, activities and ICT. Mark 20% Further emphasis on class participation: As the course is based on both individual study and group interactive learning, participation in classroom discussion is critical and will be assessed throughout the course. This is an important component as it develops analytical thinking, thinking-on-the-feet, and enables participants to develop alternative perspectives. It is essential that all participants bring into the classroom their respective experiences, thoughts and viewpoints, and share them with one another. Qualities of participation that will be looked for will include: i. analytical ability and quality of discussions and comments ii. relevance of issues raised iii. effectiveness of communication Overall, class participation should be constructive and not destructive to the proceedings. Participants should display their name-plates during the sessions to facilitate rapport with the instructor and with each other. Assignment 3: End of course examination: This should be an open book exam based on a pre-seen case study issued on the 24 th of June. Further information will be given when the case study is distributed. Mark 30% COURSE GRADING: ASSIGNMENT GROUP/INDIVIDUAL? WEIGHT Assignment 1 : Group project Group 50% Assignment 2: Literature critique Group/Individual 20% End of course examination Individual 30% SUNDRY MATTERS (course work project) You should get organised into groups of three-five as soon as possible to begin work on the project. Organising the class into groups will usually be done in the fist week of the seminar when the project will also be discussed in more detail in class. The project is a major piece of work and experience shows that groups who get started late or underestimate the amount of work involved often run into problems in meeting the deadline. Bear in mind that you will also probably be working on other module coursework projects at the same time. Remember

10 to allow plenty of time to edit, word process and print your report and avoid leaving it until the last minute as no allowances can be made for late submission because of technical problems. As you will have to spend some time working on the assignment as a group in your own time and out of class, it makes sense to try and choose group members with whom you can communicate and meet relatively easily. In preparing this assignment report you will have to do some basic secondary market research from published sources. Do not just cut and paste from a web page or other sources without acknowledgment or reference as this counts as plagiarism. Be sure to acknowledge and reference your source of data. You can quote data and figures, etc and paraphrase secondary research findings in your own words as log as they are properly acknowledged. If you quote directly from a source, be sure to make it clear that it is a direct quote using quotation marks thus or and reference the source. One of the aims of the group work is to try to replicate so some degree a team approach to project work which is increasingly common in industry. All group members are therefore expected to contribute to and manage the task so as to produce the required outcome by the deadline. You should understand that managing this process and dealing with the disagreements and conflicts that may arise is part of the project and the responsibility of the group as a whole. Occasionally more serious problems can occur within groups and if this happens you should contact the lecturer as soon as possible. To avoid and pre-empt these problems, which can be more difficult to resolve after the event, it is strongly advised that you draw up and keep contact details of group members. FURTHER REFERENCES It is extremely important to bear in mind that students are expected to read widely the various relevant literature that can be discerned from library resources, publications, Internet and other media communications. Some titles are given below (not exclusive) to give you an idea of the sort of sources you would be consulting to broaden your horizons as expected at this level of study. Journal of Marketing Journal of Academy of Marketing Science Journal of Consumer Research Journal of Product and Brand Management Journal of Marketing Research Journal of Product and Innovation Management Journal of International Business Harvard Business Review Sloan Management Review California Management Review Accounting and Business Review Economist Journal of Asian Marketing Singapore Marketer Asian Wall Street Journal Asian Business Singapore Business Singapore Management Review The McKinsey Quarterly Business Strategy Review Fortune Forbes Journal of Business Strategies Marketing Intelligence and Planning Journal of Consumer Marketing European Journal of Marketing I HOPE YOU WILL FIND THIS COURSE/MODULE ENJOYABLE. GOOD LUCK