15.818  Pricing

Signode case write ups have been graded and they are in your mailboxes.

We were thrilled to see many great papers this time around.

Sahver

 

Dear all,

For those of you who are planning to sit in for the final test, please send me an email by the end of the day tomorrow (3/14) so that we have test materails ready for you on Friday.

Final test will take place on 3/16/2007 between 1:00 PM and 2:30 PM in the same room. 

Please make sure you have your calculator with you during the test.

All final test administrative questions should be directed to me at sbinici@mit.edu. Please do NOT contact Prof Tucker about the final test.

Thank you,

Sahver

15.818 TA

It appears that Stellar neglected to convert the lecture notes properly for tomorrow.

My apologies.

The file should be close to 1MB and have over 30 slides. If you have less perhaps you could re-download.

For the Keurig Case there are two questions I would like you to answer. This is a nice case because there are actual numbers which can help the precision of your pricing recommendations.

1. What price for a brewer and for the portion pack (K‐cup/Keurig‐Cup) do you recommend?

2. Under your pricing strategy, how profitable are coffee sales and brewer sales for Keurig?

One of the tricks to this case is thinking about how to use the EVC framework when there are complementary goods. There are two possible ways of proceeding, and you will have to frame your value communication strategy appropriately depending on your choice.

For the purposes of the case write-up you can and should ignore the material in the case on distributor/channel relations and which cup design to choose.

For the Signode Case you have two questions to answer... 1. Should Gary Read pass on raw material costs? Should he institute or reject the price‐flex program? 2. Is there an appropriate price-customization strategy that could be used? The good news is that the EVC analysis should be pretty simple in this case (maybe a line or two). The fact it is simple should color your thinking about the two questions. For question 1, focus on whether Gary Read should institute or not institute the price-flex program. In your discussions, think about the positives and negatives of giving the sales force flexibility over pricing decisions. For question 2, think about the way that Signode is currently segmenting the market and whether it is successfully distinguishing betweeen customers with different EVCs. Think about the conditions we discussed for a successful volume discounting program and whether these are satisfied by the current volume discounting program.