The Strategy and Tactics of Pricing: A Guide to Profitable Decision Making (3rd Edition) [Hardcover]

Thomas Nagle (Author), Reed Holden (Author)

Book Description

Publication Date: November 10, 2001

"The best book ever written about pricing is The Strategy and Tactics of Pricing by Tom Nagle and Reed Holden-these guys know their stuff and it works!" - Guy Kawasaki, CEO, Garage Technology Ventures "For more than a decade, this book has been the most influential and highly regarded reference among pricing professionals." - Eric G. Mitchell, President, The Professional Pricing Society "Most executives name pricing as their major challenge and major weakness. This book is an answer. It is full of new ideas arid insights." - Philip Kotler, S.C. Johnson & Son Distinguished Professor of International Marketing, Northwestern University "An investment in Tom and Reed's book will give you the highest return you've ever had. It's an investment you can't afford not to make." - Dan Nimer, President, DNA Group

Editorial Reviews

From the Back Cover

"The best book ever written about pricing is The Strategy and Tactics of Pricing by Tom Nagle and Reed Holden—these guys know their stuff and it works!" — Guy Kawasaki, CEO, Garage Technology Ventures

"For more than a decade, this book has been the most influential and highly regarded reference among pricing professionals." — Eric G. Mitchell, President, The Professional Pricing Society

"Most executives name pricing as their major challenge and major weakness. This book is an answer. It is full of new ideas arid insights." — Philip Kotler, S.C. Johnson & Son Distinguished Professor of International Marketing, Northwestern University

"An investment in Tom and Reed's book will give you the highest return you've ever had. It's an investment you can't afford not to make." — Dan Nimer, President, DNA Group

Excerpt. © Reprinted by permission. All rights reserved.

"Pricing is the moment of truth—all of marketing comes
to focus in the pricing decision."

When Raymond Corey wrote these words at the Harvard Business School in the early 1960s, marketing was just coming into its own as a strategic discipline that could drive the direction of a business. Unfortunately, few marketing practitioners actually took Corey's words to heart. Enjoying their new prestige and power to influence corporate strategy, they were reluctant to let financial considerations constrain their "strategic" thinking.

Instead, they focused on achieving market share and customer satisfaction, believing that high profitability would somehow naturally follow. Marketing academics also slighted pricing, offering little research and few courses on the subject. Whenever the subject of pricing problems did arise, professors assured their students that all could be solved indirectly by redoubling efforts to differentiate products and services.

These attitudes toward pricing changed radically when marketers encountered the challenges of the 1980s. Companies with leading brand names saw brand loyalty and their power over distribution erode from years of price "promotion" to defend market share. Even large companies often found profits unattainable, as smaller firms targeted and lured away the most profitable customers (a practice labeled "cream skimming" by the victims). Successful corporate raiders then showed that they could increase cash flow and profits, often by raising prices, even as they lost some share. In the 1990s, a brief counterrevolution took place, as e-competitors bought market share from more efficient bricks and mortar competitors. By the end of 2000, most e-competitors went bankrupt, while the remainder looked for ways to charge prices consistent with financial viability.

Not only marketing practitioners are now under the gun to show that their efforts can ultimately pay off at the bottom line. So also are marketing theorists. Companies have become almost maniacal in their focus on increasing shareholder value. Strategies defined in terms of market share or customer satisfaction alone get short shrift. For marketers to achieve respect and influence, the key is to show how their ideas can generate profitability. As a result, creative thinkers are integrating marketing thought with financial concepts.

Successfully making that integration requires understanding not only what creates value for customers, but also how and when that value can be transformed into earnings per share. This does not mean that companies should regress to the days when they naively tried to increase profits by marking up costs with higher margins. It means understanding that strategic pricing is about much more than setting prices. It is about targeting markets that can be served profitably, communicating information that justifies price levels, and managing pricing processes and systems to keep prices aligned with value received.

These are not skills that have traditionally resided in finance or marketing departments. Strategic pricing is becoming a profession in its own right that bridges marketing, finance, sales, and top management. The Professional Pricing Society reported in a survey of its members that pricing decisions were principally made by a pricing manager in 25 percent of the companies and by a cross-functional team in another 20 percent. Others cited were the marketing department (15 percent) and product manager (15 percent). Decentralized pricing by the sales organization was practiced in only 11 percent of these companies, and none had pricing principally made by finance. Although this is a biased sample, it is indicative that price in the most sophisticated companies is being proactively managed.

As in the first edition, the primary objective of this edition is to develop a practical and readable manager's guide to pricing, not a textbook. Our references are not necessarily to the seminal articles on the subject, but to those that are most managerially relevant and accessible. Professors will be happy to learn that an expanded Instructor's Manual for this edition includes new classroom exercises. We expect that the combination of clear writing and current, relevant examples will continue to make this the most popular reference on pricing for managers as well as the most popular text in the classroom.

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Product Details

• Hardcover: 398 pages
• Publisher: Prentice Hall; 3 edition (November 10, 2001)
• Language: English
• ISBN-10: 013026248X
• ISBN-13: 978-0130262486
• Product Dimensions: 9.1 x 6 x 0.9 inches
• Shipping Weight: 1.5 pounds
• Average Customer Review: 4.9 out of 5 stars  See all reviews (19 customer reviews)
• Amazon Best Sellers Rank: #355,678 in Books (See Top 100 in Books)
  • #43 in Books > Business & Investing > Management & Leadership > Pricing

Customer Reviews

Most Helpful Customer Reviews

58 of 65 people found the following review helpful:

5.0 out of 5 stars Awesome - and I am NOT a finance guy, March 28, 2002

By 

kent dahlgren (Portland, Oregon United States) - See all my reviews

This review is from: The Strategy and Tactics of Pricing: A Guide to Profitable Decision Making (3rd Edition) (Hardcover)

Yes, I admit. I'm the guy who slouched in the back row of accounting classes, honestly never scoring higher than maybe a "D". Accounting is hard, dude. TCP/IP is fun; credits and debits aren't.

Eventually, however, life dragged me into situations that required an understanding of this stuff...not general theory: I needed to intelligently price my products and services. A friend recommended the book, and even though I initially found it hard, I can't stop referencing and re-reading it.

I had to re-read the first three chapters, to gain a growing awareness of just what the hell these guys were talking about, because at first their flavor of English was as impenetrable as legalese.

But man, what got me to re-read these chapters was a clear understanding that this book was going to provide immediate applicable benefit. It was therefore well worth the investment.

Now that I'm acquainted with what they call English I've found the book wicked powerful. The book features so many math tools I've found myself pulling this book off the shelf, sometimes daily when need be. And I sound smart, which is good for my fragile ego.

My friends have given me a rich share of hell for reading this baby. You may consider putting another cover on the book so you don't look like a goon, boning up on pricing strategies while your friends are fishing.

18 of 20 people found the following review helpful:

5.0 out of 5 stars Buy this book!, July 4, 2002

By 

Mr. A. Pickering (Nisantasi, Istanbul Turkey) - See all my reviews
(REAL NAME)   

This review is from: The Strategy and Tactics of Pricing: A Guide to Profitable Decision Making (3rd Edition) (Hardcover)

For anyone involved in business this book gives very practical advice on not only the methodology for pricing new products but also changing the strategy of one's existing pricing policy.

Look for a sustainable competitive advantage, maximise contribution margin, concentrate on value and profitability and then market share will follow are some of the key philosophies contained in the text. Concerning the value of this book, it is worth the price alone just for the chapter on costings and formula for calculating what level of sales a company can afford to lose/must gain after a price increase/decrease in order to break even.

A common complaint about business books is that they are all OK in theeory but contain little in the way of explanations of how to implement - this book however offers not only theory and case study examples but also practical instructions on what needs to be done to improve pricing strategy. Overall very, very impressive and a must read for anyone involved in finance, sales or marketing functions. As someone has already said these guys really know their stuff and it works!!

13 of 14 people found the following review helpful:

5.0 out of 5 stars A must-have for any serious marketing professional, July 26, 2004

By 

P. Mykleby (Memphis, TN) - See all my reviews
(REAL NAME)   

This review is from: The Strategy and Tactics of Pricing: A Guide to Profitable Decision Making (3rd Edition) (Hardcover)

The Strategy and Tactics of Pricing stands out as one of the best business books I've read. The Nagle book elevates the subject of pricing to the level it deserves, and moves it from the realm of art, to science.

Oftentimes, business texts will represent themselves as technique guides, when in reality, they do nothing more than introduce concepts. Not true here. There's nothing fluffy or superficial about Strategy and Tactics of Pricing. You'll want to immediately put this stuff into practice. Loads of solid, thought-provoking material.

The authors move methodically through the subject matter, which contains both exhaustive explanations and formulas that the reader can apply when analyzing or setting price. There's even a chapter devoted to the legal aspects of pricing.

This is a practical text that the marketing pro will reference again and again.