Download SEM I 4.07

SEM I 4.07
IDENTIFY FACTORS AFFECTING PRICING OF
SPORT/EVENT PRODUCTS
DESCRIBE PRICING ISSUES ASSOCIATED WITH
SPORT/EVENT PRODUCTS
YIELD MANAGEMENT PRICING
• Yield-management pricing helps sport/event organizations
with limited capacity (e.g., stadiums, arenas) to maximize
revenue. For example, a person who purchases a ticket for
a prime location seat at a later date than a person who
buys a ticket for a similar location at an earlier date might
pay more for the ticket.
• If a facility charged the same amount for each ticket, the
facility limits its revenue potential. Because facilities have
limited seating, tickets are priced differently based on time
of purchase, place of purchase, and seating location.
YIELD MANAGEMENT PRICING
NOT yield management pricing:
A resource is any item that is used to produce goods or services.
Stock refers to shares or units of ownership in a corporation.
Sport/Event organizations are not always legally established as
corporations.
Intermediaries are channel members operating between the
producer and the consumer or industrial user to help in the
movement of goods and services. The use of intermediaries
does not always affect product pricing issues.
WHAT MARKET WILL BEAR
• In sports and entertainment marketing, the concept of
price centers on what the organization believes the
customer is willing to pay for the good or service.
• Costs of any renovations would certainly need to be
considered though this element would be long term.
Customers do look at the total cost of the experience
when making decisions about participating in these
activities. Demand for skiing would be elastic, as it is
not considered a necessity; therefore, pricing
would not be based on this concept.
TOTAL COST
• Price is the amount of money paid for a good, service,
or resource. However, in the entertainment industry,
price is often more complicated and includes the costs
of additional goods and services. The cost of a ticket is
the main price for attending a concert, but customers
usually consider the total cost when evaluating price.
• In some cases, the price of a ticket may be only a small
part of the overall cost which may include the price of
parking, food, drinks, programs, and souvenirs.
TOTAL COST
• Concerts set the price of tickets but also consider
these other factors because they have an effect
on whether customers will attend. If customers
think that the overall price is too high, they might
not buy tickets.
• A benefit is an advantage that a good or service
can provide the customer. A goal is an
objective. Value is the amount of satisfaction
a good or service will provide a customer.
VALUE OF OVERALL EXPERIENCE
• In sports and entertainment marketing, the cost of a ticket often is
only a small part of the price of attending an event. Frequently, there
are many other costs associated with an event such as parking, food,
drinks, programs, and souvenirs.
• When considering price, it is important to consider all the costs to
determine if customers will think that the value of the overall
experience is worth the total price. If customers link the total price
with value, they will be willing to pay for the event.
• For example, if customers see value in attending a major-league
baseball game, they will buy tickets and pay for the additional goods
and services. The location of the facility is a factor in distribution or
place. The quality of the media advertising is a promotional factor.
TANGIBLE BENEFIT
• A tangible benefit of purchasing a surfboard is it
has a wrist strap to keep it connected to you in
the water. It is a tangible benefit because it can
be measured by the five senses.
• Owning a popular board, spending time with
friends at the beach, and joining a surfing club
are all intangible benefits because they are
measured by the way one feels.
PRICING – ENHANCING IMAGE
• Pricing products in a way that will enhance their
image is a company-focused pricing objective
because it is concerned only with what the
company is trying to achieve for itself.
• Other company-focused pricing objectives include
covering costs and creating profits. Offering the
lowest prices is a competition-focused pricing
objective. Offering the most discounts and
achieving prices that customers consider "fair" are
customer-focused pricing objectives.
PRICING BELOW NORMAL RATE
• A sport/event organization might price entry
fees for a marathon below the normal rate to
encourage maximum participation in the race.
• Lower fees would not meet competitors' prices
since the fees would be less expensive than for
other marathons. Also, lower fees would not
establish the event as "luxury" or create profits.
Only higher fees would do that.
PRICE ELASTICITY
• Price elasticity is a measure of how sensitive customers
are to changes in price. It gauges the relationship
between market demand and price.
• "Total cost" is a concept that customers' perception of
overall value is linked to all the expenses involved in
attending an event, including expenses that are not
under marketers' control.
• Market segmentation is the process of dividing the
market into groups of people who share common
characteristics.
PENETRATION PRICING
• Penetration pricing refers to setting prices lower
than those of the competition. Sport/Event
marketers mainly use it to introduce a new
product or to gain a greater share of the market.
• Price skimming refers to setting prices higher
than those of the competition. Smoothing refers
to grouping a sport/event product into different
segments for customers.
REVIEW
4 (2).
Yield management is a way that
sport/event marketers address product
pricing issues when they want to maximize
revenue but have:
•
•
•
•
A.
B.
C.
D.
Below market stock value
Unallocated resources
Limited capacity
Few distribution intermediaries.
4. Yield management is a way that
sport/event marketers address product
pricing issues when they want to maximize
revenue but have:
•
•
•
•
A.
B.
C.
D.
Below market stock value
Unallocated resources
Limited capacity
Few distribution intermediaries.
5 (2).
Wintergreen Ski Area knows that
the area will be most successful if it bases
its pricing structure on:
•
•
•
•
A.
B.
C.
D.
Costs associated with renovations
What the market will bear
Total cost of the experience
Inelastic demand for skiing
5 (2).
Wintergreen Ski Area knows that
the area will be most successful if it bases
its pricing structure on:
•
•
•
•
A.
B.
C.
D.
Costs associated with renovations
What the market will bear
Total cost of the experience
Inelastic demand for skiing
6 (2).
The additional cost of paying for
parking & buying refreshments & programs
is part of the overall __________ of
attending a concert:
•
•
•
•
A.
B.
C.
D.
Benefit
Price
Goal
Value
6 (2).
The additional cost of paying for
parking & buying refreshments & programs
is part of the overall __________ of
attending a concert:
•
•
•
•
A.
B.
C.
D.
Benefit
Price
Goal
Value
7 (2).
In sports & event marketing, the
concept of price includes not only the cost
of a ticket to an event but also the:
•
•
•
•
A.
B.
C.
D.
Value of the overall experience
Quality of the media advertising
Elements of the marketing plan
Location of the facility
7 (2).
In sports & event marketing, the
concept of price includes not only the cost
of a ticket to an event but also the:
•
•
•
•
A.
B.
C.
D.
Value of the overall experience
Quality of the media advertising
Elements of the marketing plan
Location of the facility
8 (2).
Which of the following is a
tangible benefit of purchasing a surfboard:
• A. It is the most popular brand on the market
• B. It gives you the opp. to join a surfing club
• C. It allows you to spend time with friends at
the beach
• D. It has a wrist strap to keep it connected to
you in the water
8 (2).
Which of the following is a
tangible benefit of purchasing a surfboard:
• A. It is the most popular brand on the market
• B. It gives you the opp. to join a surfing club
• C. It allows you to spend time with friends at
the beach
• D. It has a wrist strap to keep it connected to
you in the water
9 (2).
Which of the following is a
company-focused pricing objective for
sport/event products:
•
•
•
•
A.
B.
C.
D.
Offering the most discounts to customers
Offering the lowest prices
Enhancing image
Achieving a price customers feel is fair
9 (2).
Which of the following is a
company-focused pricing objective for
sport/event products:
•
•
•
•
A.
B.
C.
D.
Offering the most discounts to customers
Offering the lowest prices
Enhancing image
Achieving a price customers feel is fair
10 (2). Why might a sport/event
organization price entry fees for a
marathon below the normal rate:
•
•
•
•
A.
B.
C.
D.
To establish their event as “luxury”
To encourage maximum participation
To create profits
To meet competitors prices
10 (2). Why might a sport/event
organization price entry fees for a
marathon below the normal rate:
•
•
•
•
A.
B.
C.
D.
To establish their event as “luxury”
To encourage maximum participation
To create profits
To meet competitors prices
11 (2). When prices go up or down, the
change can affect how much of the
sport/event product customers want to
purchase. This is the general principle of:
•
•
•
•
A.
B.
C.
D.
Elasticity
Market segmentation
Smoothing
“total cost”
11 (2). When prices go up or down, the
change can affect how much of the
sport/event product customers want to
purchase. This is the general principle of:
•
•
•
•
A.
B.
C.
D.
Elasticity
Market segmentation
Smoothing
“total cost”
12 (2). Which pricing strategy sets prices
lower than those of the competition:
•
•
•
•
A.
B.
C.
D.
Smoothing
Stretching
Penetration
Skimming
12 (2). Which pricing strategy sets prices
lower than those of the competition:
•
•
•
•
A.
B.
C.
D.
Smoothing
Stretching
Penetration
Skimming