1. The Economics of Supply and Demand9
The Economics of Supply and Demand
9.1 Supply and Demand
9.2 Pricing Strategies
9.3 Market Conditions

2. Winning Strategies Cereal Stars Wheaties cereal discovered by accident
first featured star was fictitious
Lou Gehrig was first actual star featured
many athletes make it a career goal to be featured on the box
in 1999, women in sports were featured
Chapter 9

3. Lesson 9.1 Supply and Demand
Goals
Explain the relationships between supply, demand, and price.
Discuss the government’s influence on pricing.
Chapter 9

4. Terms law of demand law of supply scarcity equilibrium price fixing
bait and switch
price discrimination
Chapter 9

5. THE LAWS OF SUPPLY AND DEMAND
the relationship between the quantity of a product that consumers are willing and able to purchase and the price
Chapter 9

6. producers
businesses that use resources to develop products and services
supply
the relationship between the quantity of a product that producers are willing and able to provide and the price
Chapter 9

7. Price-Demand Relationships
law of demand
an inverse relationship
when the price goes up, demand goes down
when the price goes down, demand goes up
Chapter 9

8. Price-Supply Relationships
law of supply
when the price goes up the supply produced goes up
when the price goes down the supply produced goes down
Chapter 9

9. Scarcity
scarcity
consumers have limited money to spend
producers have limited resources to use for production
Consumers and producers must decide how to use their limited resources to meet unlimited wants and needs.
Chapter 9

10. Equilibrium equilibrium
the point where the supply and demand curves intersect
indicates the best quantity and price for goods and services
Chapter 9

11. Chapter 9

12. Concerts in the Spotlight
Concert prices can be set high.
limited supply
high demand
If demand is high enough, supply can be increased by adding a second show.
Chapter 9

13. How does price affect demand?
Chapter 9

14. GOVERNMENT INFLUENCE ON PRICING
private-enterprise system
based upon independent decisions made by consumers and businesses
Chapter 9

15. The U.S. government has an influence on prices charged for merchandise directly and indirectly through antitrust laws, taxation, and various consumer protection laws.
Chapter 9

16. Benefits of Competition
monopoly
where one business controls the entire market
Antitrust laws encourage competition and help avoid monopolies.
Chapter 9

17. Taxation
Taxation can be used by the government to encourage or discourage sales.
Chapter 9

18. Illegal Pricing price fixing
when related businesses conspire to charge high prices
illegal in U.S.
Chapter 9

19. bait and switch price discrimination
when a product that is advertised at a great price is “out of stock”
salesperson tries to sell customer a higher-priced alternative
advertised prices cannot be misleading
price discrimination
occurs when one individual, group, or business is charged a higher price than others purchasing the same product or service
Chapter 9

20. List three ways the government influences pricing.
Chapter 9

21. Lesson 9.2 Pricing Strategies
Goals
Discuss pricing strategies used by businesses to increase sales.
List five steps for determining price.
Chapter 9

22. Terms operating expenses markup price lines loss-leader pricing
Chapter 9

23. PRICING CONSIDERATIONS
price
the amount that customers pay for products and services
Chapter 9

24. pricing operating expenses markup
the process of establishing and communicating the value of goods and services to customers
operating expenses
all the costs associated with running your business
markup
the amount that is added to the cost of an item to cover operating expenses and allow for a profit
Chapter 9

25. pure competition market price many companies offering the same product
customers do not recognize major differences in the brands
the market will drive the prices low as businesses compete for consumers’ business
market price
determined by laws of supply and demand
if not sufficient to cover costs and allow for a profit, the business will cease production of the product
Chapter 9

26. Pricing Policies one-price policy flexible pricing policy
all customers pay the same price for a product
flexible pricing policy
allows customers to negotiate a price within a range
Chapter 9

27. price lines geographic pricing
distinct categories of merchandise based upon price, quality, and features
geographic pricing
allows pricing variations based upon geographic location
Chapter 9

28. A Variety of Pricing Strategies
Psychological Pricing
creating an illusion for customers
Prestige Pricing
higher-than-average pricing
targets customers seeking status and quality
Chapter 9

29. Volume Pricing Promotional Pricing
when a supplier provides a lower price to a customer who buys a high volume of product
Promotional Pricing
offering customers an incentive to get them in the store
two-hour/ 50% off sale
Chapter 9

30. special event promotion
Loss-Leader Pricing
the willingness to take a loss on the reduced prices of selected items in order to create more customer traffic
special event promotion
associates a special sale with a major event
Chapter 9

31. rebates multiple-unit pricing trade-in allowance
coupons on products that customers can mail in for a refund
depends upon further action by the customer
multiple-unit pricing
a volume based discount
trade-in allowance
giving a store your old product when purchasing a new product
usually results in a discount on the new product purchase
Chapter 9

32. List and describe five pricing strategies to increase sales.
Chapter 9

33. DETERMINING THE PRICE
There are five steps to determining the price to charge for a product or service.
Chapter 9

34. Establish the price objectives.
Determine the cost of the product or service.
Estimate consumer demand for your product or service.
Study the competition.
Decide on a pricing strategy.
Chapter 9

35. List the five steps for determining price.
Chapter 9

36. Lesson 9.3 Market Conditions
Goals
Define the business cycle and describe its impact on sports and entertainment.
Discuss the importance of monitoring consumer trends.
Chapter 9

37. Terms
business cycle
inflation
shoulder periods
Chapter 9

38. IMPACT OF THE BUSINESS CYCLE
business cycle (economic cycle)
the ups and downs of the economy
Chapter 9

39. Chapter 9

40. Expansion expansion peak the upside of a business cycle
highest point of growth in the economy
Chapter 9

41. Contraction contraction inflation the downside of a business cycle
recession or depression
inflation
when prices for goods and services rise faster than consumer income
Chapter 9

42. Business Reaction trough recovery prosperity
lowest point of contraction
recovery
economy shows signs of improving
prosperity
the period of business expansion following recovery
Chapter 9

43. Seasonal Cycles
For some businesses, demand fluctuates with the seasons.
high season
the season with the highest demand
low season
the season with the lowest demand
Chapter 9

44. shoulder periods
periods of moderate demand
Sports and entertainment marketing strategies must be developed to help even out the fluctuations created by changing seasonal demands.
Chapter 9

45. What is inflation and how does it contribute to recession?
Chapter 9

46. IMPACT OF CONSUMER TRENDS
Trends are dictated by
television revenue
sponsors
consumer demand
Chapter 9

47. Retro Television
Retro show fans like to relive the good old days and recall positive memories of growing up watching the stars in the sitcoms.
Popular show reruns are inexpensive to show on television.
Chapter 9

48. Game Shows There are game show channels that rerun old favorites.
New game shows are being produced to meet demand.
Chapter 9

49. Audience Ratings Speak
Television networks cannot afford the risk of having viewers switch channels to watch a more exciting show on a competing network.
Some series do not last more than six airings due to flat ratings.
Chapter 9

50. Socio-Culture Issues Socio-culture issues include trends in
customer attitudes
lifestyles
opinions
demographics
Assessing consumers’ ever-changing needs and wants is the bottom line for the success or failure of a product or service.
Chapter 9

51. Why must sports and entertainment marketers pay careful attention to consumer trends?
Chapter 9

52. PERFORMANCE INDICATORS EVALUATED
Demonstrate an understanding of the economic challenges facing television network programming.
Demonstrate critical thinking and problem-solving skills.
Chapter 9

53. Describe promotions appropriate for the target market that will result in increased ratings for the bowl game.
Describe advertisements that will attract the attention of your target market.
Develop a strategy to encourage viewers of the Price Is Right to watch the bowl game.
Chapter 9

54. THINK CRITICALLY
How have the number of bowl games affected the television ratings for the games?
Why are the scheduled date and time of the game important factors for ratings and promotions?
Chapter 9

55. Why should television networks pay attention to the programming scheduled around the game and on competing networks when making decisions?
How can an association be made between the game show and the bowl game?
Chapter 9