MAYNARD – Sports & Entertainment Marketing
TOPIC
Pricing
ESSENTIAL
QUESTION
NAME
How are we influenced? How can I satisfy customers?
AIM:
Competencies &
Related SOLs
MKTG8175.030 Explain pricing
MKTG8175.031 Identify pricing strategies as they relate to the SER industries
VUS.14 demonstrate knowledge of economic developments in contemporary U.S.
HW:
Do Now 1:
DATE
Study notes for quiz on Pricing
Take Pricing preassessment
SCORE _____________________
Do Now 2
Create a wordle at www.wordle.net using your pricing notes
1. Type the word Pricing at least 5 times
2. Type your name at least 3 times
3. Use important words from your notes
4. Create
5. Print
Do Now 3
Pricing concepts review: True or False
1. Price is important in a business because it helps determine a company's profit or
loss.
2. Many consumers believe that the lower the prices the better the quality.
3. A very good quality product at a low price may not sell as it would at a high price.
4. $100 is an example of odd pricing.
5. $25.99 is an example of even pricing.
6. Pricing a new item high is called skimming.
7. Pricing a new item low is called penetration pricing.
8. Market share is the percentage of total sales of all companies that sell the same
type of product.
9. Loss leader pricing is selling goods in a product line at specific price points.
10. Yield management pricing involves pricing items at different prices due to limited
capacity.
Short Answer
11. If an item is sold at a retail price of $49.99 and the cost is $25.00 what would the
markup be?
Do Now 4
Vocab Sketches.
Choose 1 term and draw a simple sketch to explain it: markup or market share
1
CLASS LECTURE NOTES
NOTES 1 - pg 108 in text
Price
Is defined as the value placed on the goods or services being exchanged
Price is important in a business
Because it helps determine a company’s profit or loss
All four P’s of the marketing mix
Product, price, place, promotion
Many consumers believe that
The higher the price, the better the quality of an item
What do you think?
Prestige pricing
A very good quality product at a low price:
a. May sell better than at a higher price
b. May sell less than at a higher price
Is pricing based on consumer perception
Examples of prestige pricing
Very expensive sports watches, sports equipment, and apparel
Odd-even pricing
Pricing foods with either an odd number or an even number to match image
Odd pricing example
25.99 suggest a bargain
Even pricing example
$100 reflect a quality item
Target pricing
Pricing goods according to what the customer is willing to pay
Think, Pair, Share
What price are most people willing to pay for an I-phone app?
NOTES 2 - Page 109 in text
Think, Pair, Share
If a product is in high demand
And there is a limited supply, its price will be: high or low
2
Example
Popular sporting events with a limited number of seats or limited edition
Think Pair, Share
Whenever, there is a large supply of an item and demand is not great,
dealers may
a. Raise prices to increase demand for that item
b. lower prices to increase demand for that item
Example
Retailers may do this at the end of a season when there is still a supply of
merchandise that did not sell at a regular price (clearance)
Why can Nike charge high prices
and keep demand high?
Since a business needs to make a
profit,
Markup
Brand loyal customers feel there is no substitute for Nike products
Example
Cost-plus pricing
$49.99 retail price - $25 cost = $24. 99 markup
Pricing products by calculating all costs & expenses & adding a desired
profit
The price of an item must be higher than the cost a business paid for it
Is the difference between retail or wholesale price and the cost of an item
NOTES 3 - Page 111 in text
When introducing a new product,
Marketers may decide to price the item very high to recover the costs of
development – or they may price it low to create immediate demand for the
product
Pricing a new item high is called
Skimming pricing
Pricing a new item low is called
Penetration pricing
3
Non-price competition
Competition between businesses based on quality, service and relationships
Market share
The percentage of the total sales of all companies that sell the same type of
product
Example
Gatorade may have an 80% market share for sports drinks
NOTES 4 - Page 112 in text
Price lining
Selling goods in a product line at specific price points
Example
Warm up suits - $39.99, $59.99, $79.99
Bundle pricing
Selling several items as a package for a set price
Loss-leader pricing
Pricing an item at cost or below cost to draw customers into the store
Yield-management pricing
Pricing items at different prices to maximize revenue when limited capacity
is involved
Think, Pair, Share
When the New York Mets have tickets to home games against more
competitive opponents that might draw more attendance they should charge
a. More for the tickets
b. Less for the tickets
Price fixing
An illegal practice whereby competitors conspire to set the same prices
Predatory pricing
Is setting a very low price in order to drive competition out of business
NOTES 5 - Page 278 in text
Revenue is
The total income brought in through the sales of goods and services
Product placement
The appearance of a product as a prop in a film or TV show in exchange
for a fee paid by the product’s advertiser
4
Example
BMW paid 15million to MGM to have its cars in the James Bond movies
Most CD’s released by record
companies
One successful album
Do not recover the cost of production and distribution
A local ad broadcasted on a small
town tv station at 2 am
Reach
Could cost as little as $50 for 30 seconds
frequency
the number of times they are exposed to it
On average it takes
3 exposures to have a successful ad
May have to pay for 20 unsuccessful albums and make a profit
The number of people exposed to an advertisement
NOTES 6 - Page 280 in the text
For producing TV shows, the
general rule is
That if a series can stay on for 3 years and or complete production of 60
episodes it is a financial success
The real profits are generated in
Reruns because most production costs have already been paid
Think, Share
How much do you think that $6 box of popcorn might cost the theater?
Only 30 cents
Draw
audience
Gate
Ticket sales
Think, Share
Which movie had the highest draw ever?
5
Google.com Price Comparison Activity
Go to www.google.com
Click on Shopping
Research each of the brand name items below
List the prices at 2 different stores:
Item
Brand
1. basektball
Wilson NCAA
2. Baseball glove
AND-96
3. Tennis racket
Wilson Nano
4. Tennis balls
Penn 3 Pack
5. Football
Wilson NCAA
6. Soccer ball
Adidas Euro
7. Ice skates
Nike Bauer
8. Rollerblades
K2 Inline Skates
9. Volleyball
Tashikara
10. Hockey stick
Easton Synergy
11. Swimming goggles Speedo
12. Baseball bat
Louisville TPX
13. Exercise mat
Aeromat
Shakespeare Ugly Stick
14. Fishing rod
15. Golf balls
Titleist 12 Pack
YOUR CHOICE:
YOUR CHOICE:
16.
17.
18.
19.
20.
Store 1
Price 1
Store 2
Price 2
MKTG8175.031 Identify pricing strategies as they relate to the SER industries
PRICING POWERPOINT PROJECT
- create a powerpoint with pictures to describe each pricing strategies
- see example on page 113
*Print as Handout 6 slides per page
1.
Intro – name, date, title, period
2.
Prestige Pricing
3.
Odd Pricing
4.
Even Pricing
5.
Skimming Pricing
6.
Penetration Pricing
7.
Price Lining
8.
Bundle Pricing
9.
Loss-Leader Pricing
10.
Yeild-Management Pricing
6