Hi, my name is Dr. Michael McDonald.
I'm a Professor of Finance
at Fairfield University.
Today, I'd like to talk to you
about "Pricing Strategy
with Business Intelligence".
Let's get started, shall we?
All right, today,
we're going to break the talk up
into four different modules.
First, we're going to talk about,
why product pricing matters.
we're gonna talk about, a background
on what we call price discrimination;
which despite the negative connotation,
around the word discrimination,
it's actually a positive thing
and it's completely legal.
In module three, we're gonna talk about,
different types of price discrimination.
And then finally, in module four,
we're gonna talk about,
how to use price discrimination
to increase profits at a firm.
Module 1: Why product pricing matters?
So you're probably aware
that for businesses pricing
is an enormously important factor
in achieving success and profitability.
In fact, price
is one half of the revenue equation.
People often focus
on increasing sales at a business,
when the truth is, it's frequently
much easier to optimize our price.
The basic idea here
is that different people
are willing to pay different amounts
for the same product.
For instance, I might be willing to pay
a lot for a hamburger,
if I'm very hungry.
In contrast, if you're not very hungry,
you might be willing
to pay very little, right?
It's that old adage about,
water being the most valuable resource
to somebody that
just walked out of the desert.
On the other hand,
if you have water and you live in a city,
or something like that,
the water is worth almost nothing.
And so the idea is that intuitively
different customers are willing
to pay different amounts,
for exactly the same product.
You probably see this
when you go to, say a car dealership.
You haggle with the car dealer
because you are willing
to pay a different amount
than somebody else might be willing to.
This applies in lots
of different contacts,
across lots of different industries.
And if you start looking around,
I bet that you'll find
a few circumstances
where even, in your day-to-day life,
you can observe different prices
for different customers,
based on their level of demand.