Comprehensive Firm Pricing Policy Assessment
Budget: $30 – $250 USD
Analyze the pricing policies of a specific firm. Write up your analysis in a short memo. A proposal (1 page maximum), an outline (2 page maximum) and a final deliverable (8 pages maximum, given some standard 12-point font, double-spaced, including tables and figures in the page limit) are due on the dates listed at the top of the syllabus. Your report must begin with an executive summary that articulates your problem statement and your findings/conclusions up front. Precise articulation of your findings in the
executive summary is extremely important. What is most important in the project is that you have identified an interesting problem and used concepts from the class to make recommendations. Note that the recommendations may be contingent upon specific information that you identify as pivotal to the decision but which you do not currently have. Consider including the following elements in your project. For most projects, all of these elements will be appropriate to include:
• A qualitative assessment of the market demand for the firm’s products (e.g., elasticity of
demand relative to comparable products, degree of product differentiation relative to
competitors, etc.).
• A qualitative characterization of the firm’s cost structure (e.g., high fixed cost, low marginal
cost, etc.). Consider factors that might cause the firm’s marginal costs to change. A
quantitative analysis is not required.
• A description of the firm’s current pricing strategy. This means a qualitative assessment of
the firm’s approach to pricing rather than a quantitative overview of its actual current prices.
• An assessment of the usage of (or potential for) advanced pricing methods by this firm
(e.g., price discrimination, versioning, etc.).
• Address any special considerations that impact the firm’s pricing strategy (e.g., reputation
concerns, learning by doing, etc.), as relevant.
• Include recommendations about the firm’s pricing strategy. Should they stay the course
or should they adopt a different strategy? If they should change, how?
How to pick a good company: your project will be more successful if the company has these
characteristics:
1. You can readily obtain information about the prices of its products.
2. The firm has the ability to charge different prices to different consumers, or to use some
other advanced pricing strategies. There are many examples of this: bulk discounts,
infrequent sales, discounts for advanced purchases, student discounts, etc.
3. The firm does not sell commodity goods directly into a perfectly competitive market.
That is, a firm may face competition, but other companies do not sell a perfectly identical good (like crude oil, or wheat). This need not be very restrictive. For example, even two firms that sell identical goods in different locations have differentiation. Most firms sell many products. You are not compelled to describe all products but should instead focus on a subset of products that keep the analysis tractable but allow you to articulate the strategic concerns listed above.
executive summary is extremely important. What is most important in the project is that you have identified an interesting problem and used concepts from the class to make recommendations. Note that the recommendations may be contingent upon specific information that you identify as pivotal to the decision but which you do not currently have. Consider including the following elements in your project. For most projects, all of these elements will be appropriate to include:
• A qualitative assessment of the market demand for the firm’s products (e.g., elasticity of
demand relative to comparable products, degree of product differentiation relative to
competitors, etc.).
• A qualitative characterization of the firm’s cost structure (e.g., high fixed cost, low marginal
cost, etc.). Consider factors that might cause the firm’s marginal costs to change. A
quantitative analysis is not required.
• A description of the firm’s current pricing strategy. This means a qualitative assessment of
the firm’s approach to pricing rather than a quantitative overview of its actual current prices.
• An assessment of the usage of (or potential for) advanced pricing methods by this firm
(e.g., price discrimination, versioning, etc.).
• Address any special considerations that impact the firm’s pricing strategy (e.g., reputation
concerns, learning by doing, etc.), as relevant.
• Include recommendations about the firm’s pricing strategy. Should they stay the course
or should they adopt a different strategy? If they should change, how?
How to pick a good company: your project will be more successful if the company has these
characteristics:
1. You can readily obtain information about the prices of its products.
2. The firm has the ability to charge different prices to different consumers, or to use some
other advanced pricing strategies. There are many examples of this: bulk discounts,
infrequent sales, discounts for advanced purchases, student discounts, etc.
3. The firm does not sell commodity goods directly into a perfectly competitive market.
That is, a firm may face competition, but other companies do not sell a perfectly identical good (like crude oil, or wheat). This need not be very restrictive. For example, even two firms that sell identical goods in different locations have differentiation. Most firms sell many products. You are not compelled to describe all products but should instead focus on a subset of products that keep the analysis tractable but allow you to articulate the strategic concerns listed above.