[MUSIC] Hi, I would like you introduce you today to the pricing strategy part of the marketing plan and to do so we have here today Professor Martin Boehm which is Professor of Marketing at iBusiness School and an expert in pricing strategy. So I would like to ask Martin a few questions in order to begin the discussion of pricing strategy. Martin, what do you think, why pricing is so relevant in the marketing plan? >> [LAUGH] So I'm going to guess it probably doesn't come to a surprise, Raymond, that I believe that pricing is the most essential driver in any marketing plan. And actually there's multiple studies out there that clearly prove as well that pricing is the most important driver in terms of profitability. So for instance, McKinsey a couple of years ago published a study and it looked at cost reduction or actually volume increase or price changes are the most profitable driver. And without any surprise, actually pricing is the most important one. But I think that's not all. Fundamentally, I think we, at the same time, have to consider that pricing essentially defines the old world business model. So we really have to understand how can we actually capture the value from the customers that we're actually offering them. And pricing is always at the most fundamental part in designing this strategy to capture the value. >> Good, very interesting. So, it seems that pricing is going to be key here. Martin, can you give us a checklist of things that we should consider when defining the pricing strategy in the marketing plan? >> Obviously, I'm not going to give you an extensive checklist here. Let's just maybe do this a little bit step-by-step. My first suggestion would be to actually try to understand, or try to focus, on pricing from three different perspectives. Typically, the simplest one is looking at this from a cost perspective. So essentially trying to understand what is actually my cost of delivering my product or service to the customers. And hence, establishing to some extent, the lowest ceiling or the floor, that I actually have to set for my pricing. The second step would be looking into the competition. Trying to see In a competitive set, what are the prices being charged by other players out there in the market. And that gives me yet another reference point. But I believe the most important approach is really looking at the customers and trying to understand how much customers value our product. And here, obviously, we will have to understand a little bit more, using, for instance, surveys, experiments or other methodologies in order to understand really what is the willingness to pay of these customers? And that really gives me the deepest insight about how to price my product. Once I have established this, I can actually play around, and I can complicate things. I can then think about whether I should be reaching out to different customer segments or different types of customers. And hence, adjustments for my pricing in order to match their value perception, and at the same time as well to match their willingness to pay. And the final step I would say, or the final step on this checklist would be to think a little bit more about tactical issues and pricing. I think all of us have heard about 99 cent pricing, right? So these are then the tiny little details that I can play around with, maybe moving up the price, lowering the price slightly in order to really create a certain pricing image that I would like to convey to the market in order to further drive my sales. >> Very interesting. So it's going to be probably the customer, your cost and finally the competition defining your pricing strategy you're interested in. Like I was saying nothing I think it's going to be a very challenging part of the marketing plan, absolutely key probably in terms of succeeding and actually, we want to know more about pricing strategy. I recommend that you review Professor Martin Boehm's course on pricing strategy, which is part of the specialization in Marketing Mix Implementation. Thank you very much, thank you [CROSSTALK]. >> Thank you. [MUSIC]