Case Workshop Series

Session 2 - Pricing
Aviral Bhatnagar (Monitor Deloitte)
Ketav Mehta (McKinsey & Company)

Session Overview
1.

Profitability case solved in an interview setting by the speakers (We could not do
this last time due to lack of time)

2.
3.
4.
5.
6.

Introduction to Pricing cases

Framework to solve pricing cases
Pricing case solved in an interview setting by the speakers
Audience case solving session
Live project to consult a startup and solve its problem

Profitability Mock Case

Our client is a pharma company. It is a market leader, but has been

experiencing declining growth since the past few quarters. They
have hired you to investigate this problem and give suitable
recommendations.

Pricing - Introduction

Topics covered within this framework:

Cost based pricing

Value based pricing
Competition based pricing

Pricing Case

Your client is a local ice-cream manufacturer and wishes to bid for the rights of
selling ice-cream at Mohali Cricket Stadium. He wishes to know if he should
participate in the bid and if yes, what should be his bid price?

Pricing Introduction and Framework

Background Questions:
Understanding the company, the market and the product

Company:

What is my companys main objective and its quantification: To make profits, to enter the market safely, to gain market
share or maintain a brand value/premium product? Payback period, RoI, etc.
Brand value of the company in the specific market

Market

What is the type of market : Monopolistic, Oligopolistic or highly competitive

Primary purchase driver (brand, quality, price, etc.)
Growth rate and stage of market (growth, maturity, decline)

Product:

What is the type of product : High Price High Value, Low Price High Value, Low Price Low Value?
Patent/USP/Differentiator
Switching costs

Using these three we can understand what is our optimal pricing strategy

Pricing Introduction and Framework

Pricing

Competition

Demand

Finances

Competition

Competitors

Background

Substitutes

Products

Products

Size

Pricing

Pricing

Growth

Portfolio

Suitability

Profitability

Mix

Brand Value

USP/Differentiator

Switching Costs

Demand
Need
Fulfilment

Willingness
to Pay

Value
Creation

Type of
need

Purchasing
Power

Product

Timeline

Brand
Value

Service

Finances
Market
Sizing

Costs

Profits

Company

Sales
estimates

Fixed
Costs

Historical

Balance
Sheet

Revenue
estimates

Variable
Costs

Future

Outlook

Break costs
easily via
Value Chain
Raw Materials

Manufacturing

Value Chain

Transport

Inventory

Distribution

Pricing

Competition

Competitors

Background

Demand

Substitutes

Products

Products

Size

Pricing

Pricing

Growth

Portfolio

Suitability

Profitability

Mix

Brand Value

Need
Fulfilment

Willingness
to Pay

Finances
Value
Creation

Costs

Profits

Company

Type of need

Purchasing
Power

Product

Fixed Costs

Historical

Balance
Sheet

Timeline

Brand Value

Service

Variable
Costs

Future

Outlook

Process Overview

Background
Information
Product
Company objectives

Market
Competitive
Landscape

Customers
Market Sizing

Profit
Estimation
Revenues
Costs

Final Price

Pricing strategies
Competitive Based Pricing : Objective to gain market share; highly
competitive market, Low Price markets

Value Based Pricing: Objective to maintain brand image/ roll out a premium
product, not a very competitive market, High Price High Value markets

Cost Based Pricing: Objective to safely cover costs and enter market, almost
nascent markets, new product new market roll outs

Pricing Audience Case

Our client is General Electric and has invented a new light

bulb. This revolutionary bulb runs for 500 years. Estimate the
market size and what should be the price of the bulb?