Thomas T. Nagle - The Strategy and Tactics of Pricing: A Guide to Growing More Profitably

The Strategy and Tactics of Pricing explains how to manage markets strategically and how to grow more profitably. Rather than calculating prices to cover costs or achieve sales goals, students will learn to make strategic pricing decisions that proactively manage customer perceptions of value, motivate purchasing decisions, and shift demand curves.

This edition features a new discussion on harnessing concepts from behavioral economics as well as a more streamlined value cascade structure to the topics. Readers will also benefit from:

• Major revisions to almost half of the chapters, including an expanded discussion of big data analytics and a revised chapter on Specialized Strategies, which addresses timely technical issues like foreign exchange risks, reactions to market slumps, and managing transfer prices between independent profit centers.
• A completely rewritten chapter on Creating a Strategic Pricing Capability, which shows readers how to implement the principles of value-based, strategic pricing successfully in their organizations.
• In-chapter textboxes, updated to provide walk-through examples of current pricing challenges, revenue models enabled by an increasingly digital economy, and advances in buyer decision-making, explained through classic principles that still apply today.
• Chapter summaries and visual aids, which help readers grasp the theoretical frameworks and actionable principles of pricing analysis.

This comprehensive, managerially-focused text is a must-read for students and professionals with an interest in strategic marketing and pricing. A companion website features PowerPoint slides with instructor notes, discussion questions, and exercises, as well as suggested readings and cases with separate teaching notes for instructors.

Thomas T. Nagle , Ph.D., is a Senior Advisor in the Pricing and Profitability Management practice at Deloitte Consulting, USA. For over 30 years, he has developed many of the most popular analytical tools and conceptual frameworks for strategic pricing and profit improvement.

Georg Mller , Ph.D., is a Managing Director in the Pricing and Profitability Management practice at Deloitte Consulting, USA. He focuses on driving top-line margin improvement through strategic pricing for companies representing multiple sectors. He also leads executive development on strategic pricing at the University of Chicago, Booth School of Business, USA.

The principles of business profitability stressed in The Strategy and Tactics of Pricing make it an absolute must-read for all business professionals who care about creating value and profitability for their organization. I have personally practiced the knowledge gained from The Strategy and Tactics of Pricing , operating in hyper-competitive business environments, with great success.

Lynn Guinn, Global Strategic Pricing Leader at Cargill, USA

For over three decades, this book has been the most influential and highly regarded reference for pricing professionals. New sections on todays most pressing business topics make it an indispensable tool to improve your companys performance.

Kevin Mitchell, President of The Professional Pricing Society, Inc., USA

The best pricing book on the planet! The go-to resource for pricing successpowerful, practical, and profitable!

Mark Bergen, James D. Watkins Chair in Marketing, Carlson School of Management, University of Minnesota, USA

Sixth Edition

A Guide to Growing More Profitably

Thomas T. Nagle
Georg Mller

Sixth edition published 2018
by Routledge
711 Third Avenue, New York, NY 10017

and by Routledge
2 Park Square, Milton Park, Abingdon, Oxon, OX14 4RN

Routlegde is an imprint of the Taylor & Francis Group, an informa business

2018 Taylor & Francis

The right of Thomas T. Nagle and Georg Mller to be identified as authors of this work has been asserted by them in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988.

All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers.

Trademark notice : Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe.

First edition published by Prentice Hall 1987
Fifth edition published by Routledge 2016

Library of Congress Cataloging-in-Publication Data
A catalog record for this book has been requested

ISBN: 978-1-138-73750-1 (hbk)
ISBN: 978-1-138-73751-8 (pbk)
ISBN: 978-1-315-18530-9 (ebk)

Typeset in Palatino
by Apex CoVantage, LLC

Visit the companion website: www.routledge.com/cw/nagle

Since the first edition of this book over 30 years ago, our goal has been to rebut the common misperception that pricing is an afterthought to a growth strategy: a simple process of calculating the right price for a product or transaction. Over those years, both marketing practitioners and academics have largely come to recognize that a profitable pricing strategy requires proactively managing much more than just price. It requires thoughtful and proactive management of choices about what to offer, how information about price and value is communicated, perceptions created in the process of price negotiation, and choices about when, where, and how to compete for market share. Today leading organizations are leveraging the principles of strategic pricing described in this book to actively influence willingness-to-pay. They are, in effect, shifting demand curves as opposed to just reacting to them.

To influence demand and willingness-to-pay, profitable pricing requires looking beneath simple concepts like demand and demand elasticity to understand and manage the perceptions of monetary and psychological value that motivate purchase decisions. Mastering the value proposition enables a firm (i) to segment prices to reflect differences in value and cost; (ii) to communicate the value of its offers to customers unfamiliar with the market; and (iii) to create pricing policies for managing pricing issues fairly and consistently. In short, this book shows managers how to move from tactically optimizing prices in markets where they seemingly exercise little control to managing the market strategically. When that happens, pricing becomes an integral part of a strategy to grow profitably , rather than just a blunt instrument to drive sales and market share.