1. 4.07
Develop a foundational knowledge of PRICING to understand its role in marketing

2. IDENTIFY FACTORS AFFECTING PRICING and PRICING ISSUESOF SEM PRODUCTS

3. FACTORS AFFECTING PRICING OF SEM PRODUCTS
LEAD TIME
MARKET DEMAND
How much of a product customers will buy at a certain price
MARKET SEGMENTATION (TARGET MARKET)
SMOOTHING
Dividing product into different segments:
Time: Pay more money for “Prime time”
Place: Pay more money for Court-side seats and less for nosebleed
RESPONDING TO COMPETITORS
Non-price: Charge higher prices than competitors for unique product
Price: Encourage sales with lower prices than competitors

4. MARKET DEMAND PRICE ELASTICITY:
Measure of how sensitive customers are to changes in price
Gauges relationship between market demand and price
INELASTIC DEMAND
Price changes have little to no impact sales
ELASTIC DEMAND
Small price changes have big impact on sales

5. RESPONDING TO COMPETITORS
2 Types of Pricing Strategies:
PENETRATION PRICING
Setting prices lower than the competition
Used to introduce a new product or to encourage maximum participation
SKIMMING
Setting prices higher than the competition
Used to keep new competitors out of market or promote “high-class” image of product

6. PRICING ISSUES COST VALUE OBJECTIVES
Cost of production for good/service
If cost more to produce an event then revenue from ticket sells prices = have no business
VALUE
What are the PERCIEVED BENEFITS to consumers?
Unique perception of each person
PERCEIVED BENEFITS:
TANGIBLE: Physical benefits (i.e.: Buying a surfboard with an ankle-band)
INTANGIBLE (i.e.: Buying a surfboard to spend time with friends at the beach)
OBJECTIVES
What are the goals of the good/service?
Do you want it to seem “high class” or affordable?
What type of attendees do you want?

7. DIFFERENT PRICING OBJECTIVES
Company-Focused
Competitor-Focused
Customer-Focused
Pricing products to ENHANCE THEIR IMAGE
COVERING COSTS
CREATING PROFITS
OFFER LOWEST PRICES
Offering the MOST DISCOUNTS
Offer “FAIR” PRICE IN CONSUMER’S MIND

8. TICKET PRICING STRATEGIES
SCALING THE HOUSE
Pricing tickets differently based on
Location of seat
Time of purchase
YIELD-MANAGEMENT PRICING
Maximize revenue with venues with limited capacity
Venues with limited seating price tickets differently to have greater revenue potential

9. Elastic or Inelastic Winter Jacket New Video Game Super Bowl Tickets
Socks
Toilet Paper
Vacation

10. Elastic or Inelastic Substitutes Brand Loyalty Income
Easily available, demand is elastic
Brand Loyalty
Inelastic
Income
Small increase – inelastic
Large increase – elastic
Luxury vs. Necessity
Luxury – elastic
Necessary - inelastic
Urgency