PRICING IN SPORTS &
ENTERTAINMENT
MARKETING
WINNING STRATEGIES
What cereal is associated with
using athlete endorsers to
help market the product?
Explain the benefit to Wheaties of having a star
athlete on its box.
. . . to the athlete.
Name some risks to Wheaties in having real people
on its boxes.
MARKETERS AT WORK
Assume you work for a major cereal
manufacturer. You plan to adopt a strategy
similar to Wheaties, but for either the music or
entertainment industry.
Which industry do you
choose? Music or
entertainment? Why?
Which cereal will you market
with endorsers from that industry? Why?
Who will you choose for endorsers? Why?
THE ECONOMICS OF
PRICING
The relationship between the quantity of a product that
consumers are willing and able to purchase is the
Demand
The relationship between the quantity of products that
producers are willing and able to provide and its price is
the
Supply
A balancing act between what producers make and what
consumers want?????????
LAW
OF
SUPPLY
AND
DEMAND
Law of Demand:
If customers know about it
If it’s a desirable product
If its readily available
When Price is ___________, Demand is _______________
OR
When Price is ___________, Demand is _______________
LAW
OF
SUPPLY
AND
DEMAND
Law of Supply
Producers are in business to make a profit
They are willing to invest
time
money
resources/materials
When Price is ___________, Supply is _______________
OR
When Price is ___________, Supply is _______________
SCARCITY
Consumers have limited money to
spend on sports and entertainment
Producers are limited resources to use
in production
Both producers and consumers deal
with the problem of scarcity . . . But for
different reasons
SUPPLY
AND
DEMAND CURVE
Price
Quantity
RELATE IT . . .
Choose a popular rock concert.
Relate the terms of supply and
demand to the factors associated
with the pricing of the concert
tickets.
GOVERNMENT INFLUENCES
ON PRICING
COMPETITION
Encouraged
Why
competition with antitrust laws
is competition encouraged?
TAXATION
To
encourage or discourage
What
do we know about cigarette and alcohol taxes?
What
about the taxation to encourage production?
GOVERNMENT INFLUENCES
ON PRICING
ILLEGAL PRICING
Price Fixing
competing businesses conspire and
both raise prices
Bait ‘n Switch
advertising cannot be
misleading or deceptive
Price Discrimination
Differences in distribution costs
Differences in volume of sales
Changing market conditions
Partner Activity:
Answer questions
Due . . .
PRICING CONSIDERATIONS
Define Price:
Amount customers pay for products and
services
Communicating value of goods and services
Cost not only consideration—what is the consumer’s
perception
What are some examples of products that are priced
higher because that is consumer’s perceptions of the
VALUE of the product
COST DOES MATTER
FACTORS USED TO DETERMINE PRICES
COGS
Cost of Merchandise
Operating Expenses
Markup
Consumer’s perception
BREAK-EVEN POINT
The price at which you will cover your costs and then
make profit
Determine Break Even for the Mr. Viking Pageant
What factors do we need to know
Expenses/COGS
Where does revenue come from?
Break even fails to consider consumer perception
PRICING POLICIES
1.
One Price vs. Flexible Pricing
Target
2.
Zimbrick
Price Lines
Distinct categories of merchandise based on
price, qualities, and features
High
Medium
Low
PRICING STRATEGIES
1. Psychological Pricing
Create an illusion
Odd pricing
Even Pricing
2. Prestige Pricing
Charge higher-than-average prices for
merchandise and target customers seeking:
status
high quality
PRICING STRATEGIES
3. Volume Pricing
Passed on pricing due to buying in high volumes
from suppliers
Walmart is notorious for this type of pricing
strategy
4. Promotions
Door busters
Limited time pricing (2 day sale, Early Bird Sale)
Loss Leaders
Coupons and Rebates
PRICING STRATEGIES
6. Quantity Discounts
aka Multiple Unit pricing
Theme Park: $60 for single day
$120 for three day pass
Power Bars: $2 each OR 3/$5
7. Trade-in Allowances
When trading in old merchandise for new
merchandise
Trek Bikes
PRICING STRATEGIES
8. Captive Product Pricing
Companies that make products that must be
used with a main product
Main product may be priced lower—but higher
profit margins are used on the product
needed
Razor Blades
Cell phone Plans
Printers/print cartridges
ACTIVITY
Pricing in Action
With a partner, find examples of different
pricing strategies and provide a visual
representation of each of the strategies
1.
Label poster: Pricing Strategies
2.
List each (8) of the pricing strategies
on poster
3.
Find an example to represent each (8)
pricing strategy
4.
Provide an explanation of how this
strategy is effective