4.07 Develop a foundational knowledge of PRICING to understand its role in marketing IDENTIFY FACTORS AFFECTING PRICING and PRICING ISSUESOF SEM PRODUCTS 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 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 on sales – ELASTIC DEMAND • Small price changes have big impact on sales 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 PRICING ISSUES • COST – 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 PERCEIVED 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? DIFFERENT PRICING OBJECTIVES Company-Focused Competitor-Focused •Pricing products to •OFFER LOWEST ENHANCE THEIR PRICES IMAGE •COVERING COSTS •CREATING PROFITS Customer-Focused •Offering the MOST DISCOUNTS •Offer “FAIR” PRICE IN CONSUMER’S MIND 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 “You Do” • • • • Article Activity : LAP Mrs. Byers will hand you selections from an article about pricing You will read the selection and then create a poster showcasing what you learned from your selection You will present this to the class You will answer questions about each selection