Marketing Mix: Price Setting

Lesson Content

• Lesson Plan Template:

  CTE Lesson Plan

• CTE Course Info and Benchmark Notes

  
  

  Program Title:

  Business Management and Analysis

  Course Title:

  Business and Entrepreneurial Principles

  Course Number:

  8215120

  Career Cluster:

  Business Management and Administration

  CIP Number:

  0552070110

  Course Type:

  Career Preparatory

  CTE Standard(s) or benchmarks

  Focus

  24.01 Employ critical thinking skills independently and in teams to solve problems and make decisions.

  25.02 Analyze and apply data and measurements to solve problems and interpret documents.

  Supporting

  27.01 Identify ways in which businesses compete with each other (e.g., quality, service, status, price).

  30.05 Identify and describe examples of diverse marketing activities.

• Unit Outline

  
  

  This lesson is designed to be used with the case study, “Colossal Cookie Profit Dilemma.” See CPALMS resource ID#209640.

• Career Connection

  
  

  This lesson supports the career building skills of critical thinking, problem solving, researching, analyzing, decision making, oral communication, presentations, collaboration, and use of technology. In addition, this lesson provides an opportunity to identify and apply various product pricing factors and strategies, an essential competency for business entrepreneurs.

• Learning Objectives

  
  

  Students will be able to:

  • Use data to collaboratively analyze the price of products and services for a competitive market.
  • Discuss factors to consider when pricing products and services.
  • Describe various pricing strategies as part of diverse marketing activities.
  • Discuss pricing objectives when making business decisions.
  • Solve a given real-world problem by calculating profits, costs, and revenues using spreadsheets.

• Prior Knowledge

  
  

  Students should be familiar with/able to:

  • The 4 Ps of marketing (marketing mix) concepts.
  • The concept of target market.
  • Conducting online research using a variety of sources.
  • Collaborating with team members.
  • Creating spreadsheets and applying basic formulas.
  • Using digital technology to share information.

• Guiding Questions

  
  
  • What should be considered when setting prices for products?
  • What data and information are important to a business when making decisions about product pricing?
  • What are various pricing strategies that are relevant to businesses when product pricing?

• Procedure

  
  
  1. To introduce the lesson, pose the following guiding question, using available technology: What should be considered when setting prices for products?
     • Ask students to brainstorm and share out.
     • Record student responses using available technology.
     • Assist and redirect students if any class responses are not related to product price determination.
  2. Distribute Graphic Organizer Price Setting handout (optional, see attachments).
     • Ask students to record terms and definitions and then create examples for each term, using graphic organizer handout. Terms listed on the handout are: revenue, fixed costs, variable costs, net profit/loss, break-even point, demand-based pricing, cost-based pricing, competition-based pricing
     • Briefly review the 4 Ps of marketing (Product, Price, Place, and Promotion), also known as marketing mix, target market, revenue, fixed costs, variable costs, net profit/loss, break-even point, demand-based pricing, cost-based pricing, competition-based pricing
  3. Distribute only the case study, "Colossal Cookie Profit Dilemma" (see CPALMS Resource ID# 209640). It is suggested not to distribute Ella’s recipes at this time.
     • Provide students with sufficient time to read the case study.
  4. Ask students to form small teams and discuss the questions listed below, then ask teams to share out and record responses using available digital technology:
     • Why is Ella’s business struggling?
     • What are pricing objectives for Ella’s business?
     • What are various pricing strategies that would be relevant for Ella’s business?
  5. Distribute Ella’s recipes from the case study, "Colossal Cookie Profit Dilemma" (see CPALMS Resource ID# 209640) and organize students into small teams (see Teacher Notes). Assign one of Ella’s recipes to each team.
     
     • Electronically share the Data Collection Organizer spreadsheet (see attachment) template with teams.
     • Ask teams to identify Ella’s fixed and variable costs, research relevant prices of ingredients required for one of Ella’s recipes, research average profit margin for Ella’s type of business, and calculate price per item.
  6. Instruct students to create a proposal with their pricing suggestions and justifications using any available presentation software that will be shared during a gallery walk.
     
     • Students will create at least 2 slides with the name of the cookie recipe and pricing recommendations along with data collected via Data Collection Organizer (see attachment) and incorporate their findings including fixed costs, variable costs, profit margins.
  7. Have teams do a digital gallery walk and vote on the best pricing proposal for each item in Ella’s product mix.
     • Have students vote on the best price for each cookie and share results using available technology.
  8. To bring the lesson to a close, facilitate a class discussion on the best pricing strategies and factors for Ella’s business.

• Teacher Notes

  
  
  • For the opening activity, it is recommended to write the guiding question on the white board or display on the screen using a projector, prior to the students’ arrival, to use as a bell-ringer activity to activate student learning.
  • Other suggested terms related to pricing can also be covered, if time permits,: time-based pricing, introductory pricing, prestige pricing, promotional pricing, multiple-unit pricing, bundling, and discount pricing.
  • Prior to this lesson, it is recommended to teach lessons on:
    • the 4 Ps of marketing (Product, Price, Place, Promotion), the marketing mix, and related concepts, such as target market
    • pricing strategies and real-life applications
    • creating a basic business budget.
  • It is recommended to teach Marketing Mix: Product Development Lesson (see CPALMS resource ID#209696) and Colossal Cookie Product Quest Case Study (see CPALMS resource ID#209601) first, to follow the marketing mix sequence (Product, Price, Place, Promotion).
  • It is recommended to limit small group size to 3-4 students per team and quick-assign students using one of the team assignment methods, such as count off 1-8, then 1s become Team 1, 2s become Team 2, etc. This will increase heterogeneity of teams, resulting in varying abilities and contributions, thus encouraging creativity and quality of team outcomes.
  • Suggested pacing (more time can be provided as needed)
    • Step 1: 5 mins
    • Step 2: 5 mins
    • Step 3: 5-10 mins
    • Step 4: 5 mins
    • Step 5: 10 mins
    • Step 6: 15 mins
    • Step 7: 5 minutes
    • Step 8: 5 minutes

• Optional

  
  

  Formative Assessment Ideas:

  • Use the graphic organizer to assess prior knowledge of pricing vocabulary concepts.
  • Use individual student and/or team share-out after reviewing the case study to assess student's ability to identify and apply pricing concepts.

  Extension Ideas:

  • Have students create a budget for Ella’s business using spreadsheets.
  • Have students brainstorm ideas for informing customers and taking other steps to maintain customers when prices are raised.
  • Invite a guest speaker to discuss pricing strategies and factors.