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Pricing

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					Pricing

HSS 3000/5263
Sport Marketing
Dr. Brian Turner
             Basics of Pricing
• Vast range of product elements that require
  pricing
  –   Tickets
  –   Hard and soft goods
  –   Memberships
  –   Concessions
  –   Information
  –   Signage
             What is Price?
• “… statement of value for a sports product”
• Value is the central tenet of pricing
• Price is a critical element of the sport
  marketing mix
     Determinants of Pricing -
         Internal Factors
• Other marketing mix variables
• Costs
     Determinants of Pricing -
         Internal Factors
• Costs
  – Satisfaction =
  – Cost vs. Price
     • Fan Cost Index (FCI)
          –   4 average price tickets
          –   4 small soft drinks
          –   2 small draft beers
          –   4 hot dogs
          –   Parking for 1 car
          –   2 game programs
          –   2 adult-size hats
     Determinants of Pricing -
         Internal Factors
• Organizational Objectives
     Determinants of Pricing -
         External Factors
• Consumer demand
  – Elasticity of demand =

     • Elastic demand

     • Inelastic demand

     • Unitary demand
     Determinants of Pricing -
         External Factors
  – Estimating Demand

• Economy
• Competition
• Others
  – Legal issues

  – Technology
   Differential Pricing Strategy
• One of the most common practices
• “… selling the same product or service to
  different buyers at different prices”
• Second-market discounting
    New Sports Product Pricing
• Penetration pricing
  – “… pricing in the lower range of expected
    prices, in the belief that an elastic market exists
    and the lower price will increase the quantity
    purchased.”
• Skim pricing
  – “… pricing high in the expected range of
    prices, in the belief that demand is price
    inelastic”
     New Sports Product Pricing
•   Production capacity
•   Rate of technological change
•   Barriers to entry
•   Economic conditions
•   Desired image
    Psychological Pricing Strategies
•   Prestige Pricing
•   Reference Pricing
•   Odd-Even Pricing
•   Customary (or Traditional) Pricing
  Cost-Based Pricing Strategies
• Break Even Analysis
  – Fixed Costs (FC); Variable Costs (VC)
  – TC (total cost) =
Cost-Based Pricing Strategies
– For 10,000 soccer balls




               Break Even Point
  Cost-Based Pricing Strategies
• Cost-Plus Pricing
  – Costs + Desired Profit = Price




• Target Profit Pricing
            Price Adjustments
• Price Reductions
  – Risky
     • May associate multiple price reductions with
       inferior product quality
     • May associate price reductions with price gouging
     • May “wake a sleeping dog”
     • Makes it more difficult for the consumer to establish
       a frame of reference for the true price of the product
• Price increases
          Price Adjustments
• Price discounts

				
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posted:9/1/2011
language:English
pages:17