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Pricing. HSS 3000/5263 Sport Marketing Dr. Brian Turner. Basics of Pricing. Vast range of product elements that require pricing Tickets Hard and soft goods Memberships Concessions Information Signage. What is Price?. “… statement of value for a sports product”

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Presentation Transcript
pricing

Pricing

HSS 3000/5263

Sport Marketing

Dr. Brian Turner

basics of pricing
Basics of Pricing
  • Vast range of product elements that require pricing
    • Tickets
    • Hard and soft goods
    • Memberships
    • Concessions
    • Information
    • Signage
what is price
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
Determinants of Pricing -Internal Factors
  • Other marketing mix variables
  • Costs
determinants of pricing internal factors1
Determinants of Pricing -Internal Factors
  • Costs
    • Satisfaction =
    • Cost vs. Price
      • Fan Cost Index (FCI)
        • 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 external factors
Determinants of Pricing -External Factors
  • Consumer demand
    • Elasticity of demand =
      • Elastic demand
      • Inelastic demand
      • Unitary demand
determinants of pricing external factors1
Determinants of Pricing -External Factors
    • Estimating Demand
  • Economy
  • Competition
  • Others
    • Legal issues
    • Technology
differential pricing strategy
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
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 pricing1
New Sports Product Pricing
  • Production capacity
  • Rate of technological change
  • Barriers to entry
  • Economic conditions
  • Desired image
psychological pricing strategies
Psychological Pricing Strategies
  • Prestige Pricing
  • Reference Pricing
  • Odd-Even Pricing
  • Customary (or Traditional) Pricing
cost based pricing strategies
Cost-Based Pricing Strategies
  • Break Even Analysis
    • Fixed Costs (FC); Variable Costs (VC)
    • TC (total cost) =
cost based pricing strategies1
Cost-Based Pricing Strategies
  • For 10,000 soccer balls

Break Even Point

cost based pricing strategies2
Cost-Based Pricing Strategies
  • Cost-Plus Pricing
    • Costs + Desired Profit = Price
  • Target Profit Pricing
price adjustments
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 adjustments1
Price Adjustments
  • Price discounts