Download Emergence of Sport Marketing

Pricing
HSS 3000/5263
Sport Marketing
Dr. Brian Turner
Basics of Pricing
• Vast range of product elements that require
pricing
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Tickets
Hard and soft goods
Memberships
Concessions
Information
Signage
What is Price?
• “… statement of value for a sports product”
• Value is the central tenet of pricing
• Price is a critical element of the sport
marketing mix
Determinants of Pricing Internal Factors
• Other marketing mix variables
• Costs
Determinants of Pricing Internal Factors
• Costs
– Satisfaction =
– Cost vs. Price
• Fan Cost Index (FCI)
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4 average price tickets
4 small soft drinks
2 small draft beers
4 hot dogs
Parking for 1 car
2 game programs
2 adult-size hats
Determinants of Pricing Internal Factors
• Organizational Objectives
Determinants of Pricing External Factors
• Consumer demand
– Elasticity of demand =
• Elastic demand
• Inelastic demand
• Unitary demand
Determinants of Pricing External Factors
– Estimating Demand
• Economy
• Competition
• Others
– Legal issues
– Technology
Differential Pricing Strategy
• One of the most common practices
• “… selling the same product or service to
different buyers at different prices”
• Second-market discounting
New Sports Product Pricing
• Penetration pricing
– “… pricing in the lower range of expected
prices, in the belief that an elastic market exists
and the lower price will increase the quantity
purchased.”
• Skim pricing
– “… pricing high in the expected range of
prices, in the belief that demand is price
inelastic”
New Sports Product Pricing
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Production capacity
Rate of technological change
Barriers to entry
Economic conditions
Desired image
Psychological Pricing Strategies
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Prestige Pricing
Reference Pricing
Odd-Even Pricing
Customary (or Traditional) Pricing
Cost-Based Pricing Strategies
• Break Even Analysis
– Fixed Costs (FC); Variable Costs (VC)
– TC (total cost) =
Cost-Based Pricing Strategies
– For 10,000 soccer balls
Break Even Point
Cost-Based Pricing Strategies
• Cost-Plus Pricing
– Costs + Desired Profit = Price
• Target Profit Pricing
Price Adjustments
• Price Reductions
– Risky
• May associate multiple price reductions with
inferior product quality
• May associate price reductions with price gouging
• May “wake a sleeping dog”
• Makes it more difficult for the consumer to establish
a frame of reference for the true price of the product
• Price increases
Price Adjustments
• Price discounts