Identify a business that could profit from an overhaul of their pricing strategy.
The ideal would be a real-world company who would like your help. Second best is a real-world company that you think needs your help. Be prepared to embrace sectors that have until now not thought hard and strategically about pricing (for example, consultants, lawyers, health providers, massage therapists, tax experts etc.).
Think about how you would revolutionize pricing in this industry. Demonstrate (with numbers and real-world data) how this would increase profits.
Prepare a 10 minute presentation designed to persuade the Chief Marketing Officer/Chief Financial Officer in that industry that this pricing strategy will revolutionize their profit model.
Try to split your presentation up so that you each speak for 3 minutes.
You should submit a separate 2-page technical appendix outlining the steps you took and the data you used to reach your conclusions.
This is my suggested step-by-step process for writing a great group project.
Step 1: Choose the industry.
Think of an industry area or product that inspires and interests your group. Ideally, you will work with a real company to improve their pricing. However, given our time constraints, I expect most teams to choose the second-best option, and identify an industry where there is room for pricing improvement. Sources of inspiration could be times when you have being frustrated by the pricing scheme for a product, or a time when, as an employee at a firm, you were confronted with what seemed like an insurmountable pricing problem. Be prepared to embrace sectors that have until now not thought hard and strategically about pricing (for example, consultants, lawyers, health providers, massage therapists, tax experts).
Example: I start off with the idea that I am interested in how to price dating services.
Step 2: Choose the sub-industry.
Pricing in a whole industry, like the automotive industry, would be far too big a project to take on. Therefore, identify a manageable sub-industry where pricing can be easily discovered.
Example: Identify a specific sub-industry within dating services to work on, namely speed-dating services in major cities.
Step 3: Choose a specific question.
Having identified an industry or product, your task is now to orientate your pricing project around a pricing question that you can hope to tackle within the confines of a 10-minute presentation. The secret to doing this is to make the question as narrow and as focused as possible around a very specific sub-industry.
Example: Specify a particular question about pricing within speed-dating services. I might ask:
- Can we improve pricing performance for speed-dating by charging people for contact details of potential dates after the event is over, rather than charging a fee up front?
- Can we improve pricing performance for speed-dating by charging a different entrance price to men and women? If so, should we charge men or women more?
- Can we improve pricing performance in speed-dating by raising our prices and explicitly limiting the number of speed-dating slots available?
Notice how specific these questions are. Even in the very narrow area of speed-dating, you will have time to consider in depth only one dimension of pricing improvement.
Step 4: Find data that can answer the question.
Having posed your pricing question, the next task is to come up with a way of testing the hypothesis with real-world data. Three potential sources are:
- Historical data on sales and prices that is publicly available.
- Hypothetical price surveys
- Google™ Marketing Challenge keywords (if you are working with a real company).
Example: I get from different speed-dating services in the Boston area historical data on the prices of their services.
Step 5: Write up your results.
After testing your hypothesis with data, and finding evidence to recommend for or against a particular pricing improvement, it is time to write up your results, producing two different forms of work product:
- A 10 minute presentation that communicates the question you asked, how you used data to ask it, and what you found. Assume your audience is upper management at a firm that operates in this industry. This means that you will have to work hard to convey complex and sometimes technical pricing points to a non-technical audience. You have probably received a lot of advice about presentations. I like the book “Presentation-Zen” by Garry Reynolds. When conveying complex pricing ideas, simplicity is key. Try and split your presentation up so that you each speak for 3 minutes.
- A two-page summary handout that summarizes your presentation and includes all the technical details of your calculations. There can be extra tables/figures etc to this hand-out as an appendix. This can be as technical as you like!