sports and entertainment marketing pricing. how much would you pay for tickets to see your favorite...
Post on 16-Jan-2016
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Sports and Entertainment MarketingPricing Pricing
How much would you pay for tickets How much would you pay for tickets to see your favorite football team or to see your favorite football team or
musician?musician?
Businesses struggle with this same questions everyday.
“How much will someone pay for ______?”
All types of businesses use All types of businesses use pricing in their business pricing in their business exchangesexchanges
Pricing goes by many names:TuitionTuition for collegeInterestInterest on a loanFeeFee for a serviceTollToll for a roadwayRentRent for an apartmentFareFare for a bus or train ride
So what is priceprice?
PricePrice – the value placed on the goods or services being exchanged
Pricing and ProfitPricing and Profit
Price helps a company determine its profit or loss
Each item sold carries a price….
Sales revenueSales revenue = items sold x sales priceProfit or lossProfit or loss = cost of goods – company expenses
Pricing and the Pricing and the Marketing MixMarketing MixRemember that PRICEPRICE is one of the
5 P’s5 P’sA company must make sure the price of their product is acceptable for their target target marketmarket
ExampleExample – A bicycles company – A bicycles company makes a wide range of bicyclesmakes a wide range of bicycles
Lower priced bike sold at Wal-Mart – for value-oriented customers
High end bike sold at specialty bike shop – for serious bicyclists
Pricing ConsiderationsPricing ConsiderationsSeveral factors affect pricing
decisionsConsumer perceptionsDemandCostProduct Life Cycle stageCompetition
Consumer PerceptionConsumer PerceptionPrestige pricingPrestige pricing based on customer perception
Many consumers believe that the higher the price, the better the quality
Odd-even pricingOdd-even pricing pricing goods with either an odd or and even number to match a product’s image
Odd - $25.99 – BargainEven - $100 – More expensive
Consumer PerceptionConsumer Perception
Target PricingTarget Pricingpricing goods according to what the customer is willing to pay
Manufacturers estimate the target price and work backward to determine what retailers should charge
MSRPMSRP – Manufacturers Suggested Retail Price
Demand Demand If a product is in high demand and low supply
then the price will be high
ExampleExample
Capitals Tickets when team is performing poorly ticket prices dropwhen team is performing well ticket prices go up
WHY?WHY?Companies can generate this themselves
by offering a “limited edition” of a product
DemandDemandAs a general rule, demand will be low for
higher priced items because less people will be able afford itExample: racing bike, top of the line golf clubs
Demand may be inelastic if consumers feel there is no substitute
Example: Nike – Air Jordan’s
CostCostAll businesses are out to All businesses are out to
make a profit!!make a profit!!The price of the product will always be more
than what it costs to manufacture it
MarkupMarkup – the difference between the retail or wholesale price and the consumer cost
Cost-plusCost-plus – pricing products by calculating all costs and expenses and adding desired profit
Newness of the ProductNewness of the Product(Product Life Cycle Stage)
Introduction StageIntroduction Stage They may price the item very high to
recover the costs of development (Skimming pricingSkimming pricing)
– OROR – They may price it below the
competitors to create immediate demand (Penetration pricingPenetration pricing)
CompetitionCompetition
Businesses find out what competitors are charging…..
If they want to compete on price they will set their price lower
If they do not want to compete on price they use non-price competitionnon-price competition, basing the competition on quality or consumer benefits
Special Pricing Special Pricing StrategiesStrategies
Loss-leader pricingLoss-leader pricing – pricing and item at or below cost to draw customers into the store
(then they will shop and buy other products)EX: XM Radio ad
Yield-management pricingYield-management pricing – pricing items at different prices to maximize revenue when limited capacity is involvedExample – arena seats (better seats are
priced higher to increase overall revenue)
DiscountsDiscounts
May be offered for …..Buying larger amountsBuying before popular seasonTo get rid of older merchandise
Regulatory FactorsRegulatory FactorsPrice fixingPrice fixing – competitors conspire to
set the same price
Predatory pricingPredatory pricing – setting a very low price in order to drive competitors out of business
BOTH ARE ILLEGALILLEGAL
NOW FOR SOME NOW FOR SOME FUN!!FUN!!
The Price is Right!!
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