Pricing Extra Resource
OBJECTIVE A
1. Pricing is the most critical element of the marketing mix because it is the most visible element to
customers. Price communicates to customers even more than advertising does. Price can be changed
instantly. And to customers, price is always a top concern.
2. Value is subjective because the same product can have varying values to different people. One person
might think a $150 ticket to a football game is worth the money, but another person might not agree. The
reason that value is unique to each customer is that the benefits of purchasing the product are based on
that individual’s perception.
3. Answers may include tickets, concessions, equipment, souvenirs, clothing, media, and memberships.
4. Pricing the sport/event product is unique because the widespread popularity of sports and
entertainment has created an extremely high demand for sport/event products. This great demand,
combined with other factors, has pushed ticket prices for sports and events sky-high in recent years.
Pricing the sport/event product is also unique because of “total cost.” The total cost of attending an event
is often much more than just the price of the ticket. Marketers
must factor in costs that are not under their control, such as gas, parking, and lodging.
5. Pricing objectives are important because different pricing objectives will call for different pricing
strategies. Pricing objectives line up with all other marketing objectives, which in turn line up with the
overall objectives and mission of the entire sport/event organization.
6. Sometimes pricing objectives focus on what the company is trying to achieve for itself. Other times,
pricing objectives focus on the customer. Competition sometimes becomes the focus of pricing objectives,
as well goal. Distribution plays a large role in pricing because price must cover the various costs of each
channel member.
OBJECTIVE B
1. Distribution also affects pricing because customers pay more for better facilities and convenience.
Product greatly influences price depending on quality and perceived quality. Product life cycle also affects
pricing (low or high at the beginning, deeply discounted at the end). Promotion can affect price through
discounts, coupons, or rebates.
2. Costs are the expenses involved with manufacturing, promoting, and distributing the sport/event
product. Costs affect pricing because the price of a product must at least cover costs for the organization
to survive.
3. Fixed costs are expenses that stay the same no matter how much of the product is being produced.
These costs include expenses such as rent, equipment, salaries, and maintenance. Variable costs are
the expenses that change along with the amount of production. These costs include expenses such as
materials, packaging, and advertising.
4. Market demand is the amount of the product that customers are willing to purchase at a certain price.
5. Price elasticity is a measure of how sensitive customers are to changes in price. It gauges the
relationship between market demand and pricing. An inelastic demand means that price changes have
little to no impact product sales. An elastic demand means that small price changes have a big impact on
product sales. A unitary demand means that changes in price create proportionate changes in product
sales.
6. Answers may include The Sherman Antitrust Act, The Consumer Goods Pricing Act, The Clayton Act,
The Robinson- Patman Act, and The Wheeler-Lea Act.
7. The more technologically advanced a product is, the higher its price usually is. But sometimes
technology can make prices lower, such as when customers buy sport/event products over the Internet,
on auction sites or directly from wholesalers.
8. Some target markets are segments of people who share the same demographic characteristics, such
as age, ethnicity, gender, religion, family size, education, income, or occupation. Some target markets are
segments of people who live in the same geographic area. Some target markets are people who share
common psychographic characteristics, such as needs, motives, lifestyle choices, perceptions, attitudes,
opinions, or interests.
9. Smoothing is very similar to market segmentation, but it groups the product into different segments for
customers, rather than grouping the customers into different segments for the product. Time smoothing
involves charging different prices for “prime” and “nonprime” hours. Place smoothing involves charging
different prices for different sections of the sport/event venue.
10. Sport/Event products are usually priced according to a penetration strategy or a skimming strategy.
Penetration pricing refers to setting prices lower than the competition. Price skimming refers to setting
prices higher than the competition.