Pricing Specialization Overview

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From the course by University of Virginia

Customer Value in Pricing Strategy

100 ratings

University of Virginia

Customer Value in Pricing Strategy

100 ratings

Course 2 of 4 in the Specialization Pricing Strategy Optimization

The traditional approach to pricing based on costs works to pay the bills, but it leaves revenue on the table. You can, in fact, price your products in a way that increases sales--if you know what your customers are willing to pay and can leverage psychology to create better deal and discount plans. In this course, we'll show you how to price a product based on how your customers value it and the psychology behind their purchase decisions. Led by Darden faculty and Boston Consulting Group global pricing experts, this course provides an in-depth understanding of value-based pricing and how to use it to capture more revenue. By the end of this course, you'll be able to... -- Apply knowledge of customer value to price products -- Leverage core value-based pricing techniques to inform pricing decisions -- Measure customer willingness to pay using models (surveys, conjoint analysis, other data) -- Use knowledge of consumer psychology to set prices beneficial to both consumers and sellers

From the lesson

Understanding Customer Value

Welcome to Week 1! We kick off the week with an overview of the course so that you'll know what to expect with an optional review of the specialization and three pricing lenses (watch these if you want a refresher). Then we'll dive into the content! This week, you'll learn about customer value--what it is and its relevance to pricing. You'll see how consumers make decisions--and why knowing consumers' willingness to pay is so important when setting a product's price. Next, we'll take a look at customer value in developing economies and how and why companies succeed (or not!) with value-based pricing in these markets. You'll finish the week with a solid understanding of "customer value" and how that impacts pricing strategy.

Pricing Specialization Overview2:37

Three Lenses4:58

Meet the Instructors

Jean Manuel Izaret
Senior Partner and Managing Director, Leader of BCG’s Global Pricing Practice
Thomas Kohler
Associate Director, Pricing
Marketing, Sales & Pricing Practice
Ronald T. Wilcox
NewMarket Corporation Professor of Business Administration & Senior Associate Dean for Degree Programs
Marketing

Hi, everybody, and welcome to the pricing specialization.

>> Hello, my name is JMI, or Jean-Manuel Izaret is the long version.

I lead BCG's pricing practice globally, which means I've been working for

25 years across industries all around the world,

with companies to help them with their pricing decisions.

I am really looking forward to sharing with you the essence of what we learned so

that you too can make the best pricing decisions for your company.

>> And I'm Ron Wilcox.

I'm on the marketing faculty here at Darden and

I teach the pricing elective to our MBA students.

This is really a unique partnership between the Darden School and BCG.

We're presenting material to you that the Darden School couldn't do on our own and

BCG could not do on their own.

But together, we can bring you up to speed in the best of pricing practice.

>> So, pricing can be quite complicated, but we're going to make it simple.

We're going to start by talking about the economics.

It's the first thing you need to think about, how are you going to make money?

The second is about customer value.

What is important to customers?

How much are they willing to pay?

The third point is about competitors.

Where are their prices and how should you place your price point versus that.

>> And we're going to do this via four courses.

So in the first course, we're really going to hone in on

economic principles and how they inform pricing decisions.

After all, pricing is an economic concept.

In the second course, we're really going to focus on customer value.

How much are those customers willing to pay for that product or

service that you're offering?

And, can that be measured?

And, how can those measurements be used to inform pricing practice?

>> And then on the third course,

we'll talk about how should you move your price depending on your competitors.

When they lower their prices, should you match them?

When they increase their prices, should you also match them or not?

All sorts of different situations can drive different decisions.

We will go through them one after the other.

Then in the course number four, we put it all together and

help you make the best decisions using all of the three lenses we talked about.

So you can optimize the profit you get from the market.

>> So, what are you going to get from this specialization?

You're going to get the skills fundamental to running the pricing function

in your organization.

And, finally, you're going to get a portfolio building project

that will demonstrate your pricing expertise to the outside world.

We're so excited to be working with you.

>> Practically, that means you'll have the tools, you'll have the experience,

you'll be able to react to any kind of situations.

We're really glad to get started.

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