Pricing it Right: Three Caselets in Pricing
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Case Details:
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Price: |
| Case Code |
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MKTG187 |
For delivery in electronic format: Rs. 300;
For delivery through courier (within India): Rs. 300 + Shipping & Handling Charges extraThemesPricingStrategy/ Dynamic Pricing |
| Case Length |
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13 pages |
| Period |
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2006-2008 |
| Pub Date |
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2008 |
| Teaching Note |
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Not Available |
| Organization |
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Priceline.com; Apple, Inc.; F. Hoffman-La Roche Ltd. |
| Industry |
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Travel; Consumer Electronics; Pharmaceutical |
| Countries |
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Global |
Abstract:
This is a collection of three caselets that would help
highlight the issues involved in pricing a product or service.
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The first caselet is about Priceline.com (Priceline) and its revolutionary 'Name Your Own Price'pricing system. Some analysts had raised
concerns that a business model based on the path-breaking NYOP system might not be sustainable. Priceline had since moved beyond the NYOP system
by providing customers with the option of choosing from a list of published prices for its travel products and services as well. In a bold move in
end2007, the company permanently eliminated all booking fees on published airfares taking the analysts and competitors by surprise.
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The second caselet is about Apple
Inc.'s (Apple) pricing of iPhone in the US. In 2007, Apple
raised many eyebrows by reducing the price of its much hyped
iPhone by one-third within 10 weeks of the launch. While some
analysts felt that adoption of such market skimming strategies
and subsequent price cuts by companies selling technological
devices was nothing new, others felt that Apple's decision to
reduce the price so drastically just a few weeks after the
launch was a public relations fiasco.
The third caselet is about F. Hoffman-La Roche's
(Roche) pricing strategy for its path-breaking anti-AIDS drug,
Fuzeon. Despite being a major innovation Fuzeon has consistently
failed to match up to the initial sales expectation since it was
launched in 2003. Some analysts felt that Roche's strategy of
launching Fuzeon at a premium price, almost twice the price of
the next high priced anti-AIDS drug, was partly responsible for
the company's woes. The company had also faced a lot of social
criticism for setting such a high price for the drug, taking it
out of reach of people who needed it the most.
Issues:
• Understand the issues and challenges in Pricing a product or service (pricing decisions, premium pricing, market skimming, etc).
• Analyze dynamic pricing systems such as the Name Your Own Price (NYOP) pricing system.
• Understand how pricing could affect product adoption and diffusion.
Contents:
Keywords:
Pricing, Pricing strategy, Pricing policy, Premium price, Market skimming strategy, Name Your Own Price, NYOP, Threshold price, Demand and supply, Business model, e-commerce, Priceline, Early adopter, Public relations, iPhone, Apple, Fuzeon, Roche, Innovation
Caselet 1: Priceline's Pricing Strategy: Name Your Own Price (NYOP) & Beyond
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