Question

Critically analyze, how any University should price its MBA program given its dual aim of brand building and profitability by using Pricing Strategies and Program?

Answer 1

Universities providing MBA programs have many factors on which they could decide the price factor of their sevice. The strategies that could be used by the universities to create a brand and profitability both at the same time would be the :

1. Cost Plus Strategy: As the course itself provides with a number of services and offers, the university would first add up the total cost of the total course to create a profit. For example, the cost of the tuition fees, building fees, hostel mess, food etc would all be joined to make an average cost of the course offered. On reaching upon the cost by combining of the expenses at large, the organisation would then add some % on it to earn some profit over the cost. That % is not decided by any number. It depends upon various factors: the value in the market, the value for the customers, the value compared to competitiors etc are considered to decide the % increase over the cost.

2. Value based strategy: Now, profitability is acheived by setting the % bar. But what about branding? The brand name is created out of the goodwill in the market. The organsiation have to take initial cost of researching and knowing their target customer and provide them the world class facilities to make them enrol for your MBA program. You should be able to calculate the value shared by the market about your brand. Once calculated, that % would be increased over the cost which would now be also happily paid by the customers because customer see that brand with that value. Thus, the price of the course is determined by both cost analysis and the value shared.