Question

1. Your company wants to create a strategic pricing team to plan the release of their next model of basketball shoes. Allocate decision rights to the team members and describe what they are and are not allowed to do.

2. Why is pricing considered a “negative-sum” game?

Answer 1

Pricing Team-

Constructing a pricing team does not follow a same set of steps. It depends upon a lot of variables, like Product, Customers, Costs, Clients etc. But as with any other team, pricing team has some critical roles and responsibility. Below are few roles and their responsibilities outlined as per the focus on the product- Basketball shoes.

Role	Responsibilities
Lead	This person is in a leadership role and is the company advocate for margin and profit management. The pricing manager strives to balance growth with profitability—and isn’t afraid to discuss (and defend, if needed) their pricing recommendations.
Analytics Role	The conditions that impact pricing strategy are always evolving, and decisions are only as good as the data analysis behind them. This role is tasked with capturing the data, conducting the analysis and interpreting the story behind the numbers so that the strategic pricing manager can make informed, insightful decisions
Administrative	This role manages the prices in the system. This may range from data entry to actively monitoring and reporting on customer discounts, pricing exceptions and more.

Why is pricing considered a “negative-sum” game?

When in a situation a value created is more than the cost associated with it and the profits, is called negative sum game when you do not ear profit but make values or create values or a brand.

For example – You create a product and cost of manufacturing that product is $ 120 per piece. To make profit you must sale the product at the price point of more than $120, but current supply demand for that product is such that the moment you sale it at less than $90 the demand drops to Zero!

Can you see the scenario? Zero demand, but still you have to sale the product, at loss! But why, it is to create value, brand value and wait till the brand evolve, or has evolved and you create avenues to cash in with the brand value…This also helps in sustainability, you do not want to be out of the market to sale other products.

That is why pricing is considered as a “Negative-sum” game. Sometimes to win you have to lose!