Download Sports and Entertainment Marketing

Sports and Entertainment
Marketing
 Businesses
struggle with this
same questions everyday.
 “How
much will someone pay for
______?”
Pricing goes by many names:
• Tuition for college
• Interest on a loan
• Fee for a service
• Toll for a roadway
• Rent for an apartment
• Fare for a bus or train ride
Price – the value placed on
the goods or services
being exchanged
 Price
helps a company determine its
profit or loss
 Each item sold carries a price….
Sales revenue = items sold x sales price
Profit or loss = cost of goods – company
expenses
 Remember
that PRICE is one of the 5 P’s
A company must make sure the price of their
product is acceptable for their target market
 Example
– A bicycles company makes 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
WAL-MART BIKE FOR VALUE
–ORIENTED CUSTOMERS
HIGH END BIKE SOLD FOR
SERIOUS BIKER
Several factors affect pricing decisions
 Consumer perceptions
 Demand
 Cost
 Product Life Cycle stage
 Competition
 Prestige
pricing
• based on customer perception
• many consumers believe that the
higher the price, the better the quality
 Odd-even
pricing
• pricing goods with either an odd or and even
number to match a product’s image
Odd - $25.99 – Bargain
Even - $100 – More expensive
 Target Pricing
• pricing goods according to what the
customer is willing to pay
• Manufacturers estimate the target price and
work backward to determine what retailers
should charge
 MSRP
Price
– Manufacturers Suggested Retail

If a product is in high demand and low supply
then the price will be high

Example
• Capitals Tickets
 When the team is performing poorly ticket prices drop

 when team is performing well ticket prices go up
WHY?
Companies can generate this themselves by offering a
“limited edition” of a product
• Example : UGG Boots only releasing limited amount of
sparkly UGG boots at Nordstrom and their stores
As a general rule,
demand will be low for
higher priced items
because less people will
be able afford it
Example: racing bike, top
of the line golf clubs

Demand may be inelastic
if consumers feel there is
no substitute
Example: Nike – Air
Jordan’s

All businesses are out to make a profit!!
The price of the product will always be more
than what it costs to manufacture it
 Markup
– the difference between the retail or
wholesale price and the consumer cost
 Cost-plus
– pricing products by calculating
all costs and expenses and adding desired
profit
Introduction Stage
 They may price the item very high to
recover the costs of development
(Skimming pricing)
– OR –
 They may price it below the competitors to
create immediate demand (Penetration
pricing)
 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 competition, basing the competition on
quality or consumer benefits
Loss-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 pricing – pricing items
at different prices to maximize revenue
when limited capacity is involved
Example – arena seats (better seats are priced
higher to increase overall revenue)
May be offered for …..
 Buying
larger amounts
 Buying before popular season
 To get rid of older merchandise
Price fixing – competitors conspire to set
the same price
Predatory pricing – setting a very low
price in order to drive competitors out of
business
BOTH ARE ILLEGAL
Both or Illegal