Download Develop a foundational knowledge of PRICING to understand its

4.07
Develop a foundational knowledge of
PRICING to understand its role in
marketing
IDENTIFY
FACTORS AFFECTING PRICING
and PRICING ISSUESOF SEM
PRODUCTS
FACTORS AFFECTING PRICING
OF SEM PRODUCTS
• LEAD TIME
• MARKET DEMAND
– How much of a product customers will buy at a certain price
• MARKET SEGMENTATION (TARGET MARKET)
• SMOOTHING
– Dividing product into different segments:
• Time: Pay more money for “Prime time”
• Place: Pay more money for Court-side seats and less for nosebleed
• RESPONDING TO COMPETITORS
– Non-price: Charge higher prices than competitors for unique
product
– Price: Encourage sales with lower prices than competitors
MARKET DEMAND
PRICE ELASTICITY:
– Measure of how sensitive customers are to changes in
price
• Gauges relationship between market demand and price
– INELASTIC DEMAND
• Price changes have little to no impact sales
– ELASTIC DEMAND
• Small price changes have big impact on sales
RESPONDING TO COMPETITORS
• 2 Types of Pricing Strategies:
– PENETRATION PRICING
• Setting prices lower than the competition
– Used to introduce a new product or to encourage maximum
participation
– SKIMMING
• Setting prices higher than the competition
– Used to keep new competitors out of market or promote “high-class”
image of product
PRICING ISSUES
• COST
– Cost of production for good/service
• If cost more to produce an event then revenue from ticket sells prices =
have no business
• VALUE
– What are the PERCIEVED BENEFITS to consumers?
• Unique perception of each person
• PERCEIVED BENEFITS:
– TANGIBLE: Physical benefits (i.e.: Buying a surfboard with an ankle-band)
– INTANGIBLE (i.e.: Buying a surfboard to spend time with friends at the beach)
• OBJECTIVES
– What are the goals of the good/service?
• Do you want it to seem “high class” or affordable?
• What type of attendees do you want?
DIFFERENT PRICING OBJECTIVES
Company-Focused
Competitor-Focused
•Pricing products to •OFFER LOWEST
ENHANCE THEIR
PRICES
IMAGE
•COVERING COSTS
•CREATING PROFITS
Customer-Focused
•Offering the MOST
DISCOUNTS
•Offer “FAIR” PRICE
IN CONSUMER’S
MIND
TICKET PRICING STRATEGIES
• SCALING THE HOUSE
– Pricing tickets differently based on
• Location of seat
• Time of purchase
– YIELD-MANAGEMENT PRICING
• Maximize revenue with venues with limited capacity
– Venues with limited seating price tickets differently to have
greater revenue potential
“You Do”
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Article Activity : LAP
Mrs. Byers will hand you selections from an
article about pricing
You will read the selection and then create a
poster showcasing what you learned from
your selection
You will present this to the class
You will answer questions about each
selection