Is the Price Right? A Marketing Exercise in Setting a Selling Price

Introducing marketing students to the intricacies of pricing decisions may be facilitated by means of an interdisciplinary, experiential exercise outlined here that combines supply and demand theory from economics, income statement and cash flow analysis from finance and accounting, and pricing principles and consumer analysis from marketing. Student teams determine price levels and product amounts to sell followed by iterations allowing for price changes after examining the decisions of other competing teams. Students are given the opportunity to actually make pricing decisions in a competitive market and come to understand how companies must react quickly to changes in competitor prices, product supply on the market, and consumer demand.