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Develop a foundational knowledge of PRICING to understand its role in marketing

4.07. Develop a foundational knowledge of PRICING to understand its role in marketing. IDENTIFY FACTORS AFFECTING PRICING and PRICING ISSUES OF SEM PRODUCTS. FACTORS AFFECTING PRICING OF SEM PRODUCTS. LEAD TIME MARKET DEMAND

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Develop a foundational knowledge of PRICING to understand its role in marketing

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  1. 4.07 Develop a foundational knowledge of PRICING to understand its role in marketing

  2. IDENTIFY FACTORS AFFECTING PRICING and PRICING ISSUESOF SEM PRODUCTS

  3. 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

  4. 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 sales • ELASTIC DEMAND • Small price changes have big impact on sales

  5. Ticket Demand

  6. 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

  7. 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 PERCIEVED 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?

  8. DIFFERENT PRICING OBJECTIVES

  9. Kid Rock

  10. 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

  11. Dynamic Ticket Pricing http://www.youtube.com/watch?v=gSXqF1h_Dx4

  12. Should the NFL jack ticket prices up to eliminate secondary market?

  13. Elastic and Inelastic Worksheet • Pricing Match-Up

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