PRICING SPORTS AND ENTERTAINMENT MARKETING

PRICING IN SER INDUSTRIES Pricing in SER is largely dependent on consumer perception and demand Taylor Swift Concert TicketsNFL Game Tickets 2013 Red Tour: $ : $ Tour: $ : $86 As fan base increases, so does the price of tickets

WHAT IS PRICE? The value placed on the goods or services being exchanged The amount required as payment for a product or service

ALL BUSINESSES UTILIZE PRICING 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 vs. PROFIT Profit: the revenue left over after all business expenses have been paid Breakeven Point: the point at which a business begins to make profit on the sale of goods and services Relationship: The higher the price, the higher the profit

PRICING DOES MANY THINGS It creates a competitive edge Affects profits and company image Establishes value

HOW TO DETERMINE PRICE Several factors affect pricing Consumer perception Demand for product or service Cost of production Competition

CONSUMER PERCEPTION Prestige Pricing Many customer believe that the higher the price, the better the quality “You get what you pay for” Businesses take advantage of this customer mindset if they believe they have a higher quality product than competitors Odd-Even Pricing Pricing goods with either an odd or and even number to match a product’s image Odd - $25.99 – BargainEven - $100 – More expensive

DEMAND FOR PRODUCT OR SERVICE If a product is in high demand and low supply then the price will be high Companies can generate this themselves by offering a “limited edition” of a product As a general rule, demand will be low for higher priced items because less people will be able afford it

COST OF PRODUCTION All businesses are out to make a profit The price of the product will always be higher than the 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

COMPETITION Before determining the price of a product or service, businesses need to examine competitors pricing If competition is priced lower, demand will be low Price Competition: when businesses use the price of their products to position themselves in the market and attract customers Non-price Competition: when businesses focus on product features, value, or quality to attract customers

SPECIAL PRICING STRATIGIES Loss-leader pricing: pricing and item at or below cost to draw customers into the store They will shop and buy other products Ex: Black Friday 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)

SPECIAL PRICING STRATEGIES Promotional Pricing: A special offer that entices customers to buy Group Sales: discounted prices when purchased in larger quantities Used a lot in SERM

GOVERNMENT REGULATION Federal and state governments have enacted laws controlling prices Businesses must be aware of their rights and responsibilities in regards to Price Fixing Predatory Pricing Price Discrimination Unit Pricing

REGULATING PRICING Price fixing: competitors conspire to set the same price Illegal because it eliminates competition Predatory pricing: setting a very low price in order to drive competitors out of business

REGULATING PRICING Price Discrimination: when a business charges different prices to similar customers in similar situations Unit Pricing: forces businesses to provide price per unit so that consumers can easily compare prices of goods that come in different sizes Provides a standard unit of measure

WHY IS PRICING SO IMPORTANT? If the price of a product or services is too high you could lose customers If it’s too low you could miss out on profit Once pricing decisions are made it is hard to undo them Impacts company image right away