MSCI 583: Pricing Analytics and Revenue Management
(Phase 2 – Spring Term)
Tutors: Dr Zhan Pang
Pricing is crucial for most of the businesses to manage their profitability. This course is designed to introduce various pricing mechanisms in practice and the analytics techniques to set the optimal prices. It provides a framework for understanding pricing strategies and tactics and pricing decision making processes. It also introduces analytical tools to model the customer behaviour and optimize the pricing decisions. Topics cover the theory and applications of pricing in varieties of contexts: consumer market (online or offline marketing), financial services and investments, supply chain management and public services. It is an inter-discipline subject linking to marketing, finance, operations management (logistics and supply chain management) and service management. It also provides the foundations for the popular profession – pricing analyst – in varieties of industries.
Revenue Management (or yield management) integrates demand-side management (e.g., segmentation, pricing and availability) and supply-side management (e.g., capacity allocation and inventory control) in uncertain market environments. Starting from Airline industry in 1970’s, it has grown into a mainstream business practice in varieties of service industries (e.g., Walt Disney Land, hotels, car rentals) and some manufacturing industries (e.g., Ford). It has also created its own supporting industry with established consulting firms, IT solution providers. Major airlines (e.g., AA and BA) have large numbers of staffs of IT and OR analysts working on revenue management. It has gained great attention in academics as one of most influential areas of operations management and marketing analytics. This course aims at introducing the relevant modelling and optimization techniques with their applications in pricing and revenue management.
Learning Outcomes
By the end of the module you should be able to:
- Understand strategic and tactic roles of pricing in complex business contexts
- Model real-world pricing decision making processes
- Calibrate pricing models from raw data
- Optimize pricing decisions
- Provide managerial insights with pricing analytics
Outline Lecture Plan
- Economics Foundation of Pricing
- Calibrating Price-Response Demand Model
- Value-based Pricing
- Behavior-based Pricing
- Risk-based Pricing
- Auctions and Bidding Strategies
- Revenue Management and Dynamic Pricing
- Capacity Rationing
- Overbooking
- Guest lecture (TBD)
Assessment
100% Coursework
Core Texts
There is no a single text to be used in the course – instead, chapters from selected texts will be recommended at various points in the course. Texts will be chosen to provide the best coverage of a particular topic. Journal papers will also be part of the reading list and will play an important role in preparing for seminars.
