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

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

2. Why do ticket prices vary? • Seat location • Performance of the team • Popularity of the team/entertainer • Location of the venue • Time of the event • Opponent • Scarcity of tickets • Paying for a new stadium • Ticket discounts • Market segmentation • Top Athletes • Value • Expenses • Production Costs • Discounts • Unsold Tickets “Deadwood”

3. FACTORS AFFECTING PRICING OF SEM PRODUCTS • LEAD TIME • MARKET DEMAND • MARKET SEGMENTATION (TARGET MARKET) • SMOOTHING • RESPONDING TO COMPETITORS

4. 1. Lead Time • Lead Time: The time between customer order and delivery of final product. • Sports and Events will often charge less if tickets are purchased ahead of time. • Ex: “Purchase concert tickets now for $25 or at the door for $35.”

5. 2. MARKET DEMAND What will the market bear? How much of a product customers will buy at a certain price? PRICE ELASTICITY: • Measure of how sensitive customers are to changes in price • Relationship between market demand and price • INELASTIC DEMAND • Price changes have little to no impact on quantity of sales • “Need” items • Ex: Milk, Eggs, Super Bowl Tickets, Gasoline? • ELASTIC DEMAND • Small price changes have big impact on quantity of sales • “Want” items • Ex: Ipod, Sports Equipment, new clothes

6. 3. Market Segmentation • Target Marketing • Discounts to certain age groups • Coupons sent to specific geographic locations

7. 4. Smoothing • Dividing product into different segments: • Time: Pay more money for “Prime time” • Place: Pay more money for Court-side seats and less for nosebleeds (higher seats)

9. 5. RESPONDING TO COMPETITORS • Non-price: Charge higher prices than competitors for unique product and services • Price: Encourage sales with lower prices than competitors • 2 Types of Pricing Strategies: • PENETRATION PRICING • Setting prices lower than the competition • Used to introduce a new product • Encourage maximum participation (More people will be involved if price is lower) • SKIMMING • Setting prices higher than the competition • Used to keep new competitors out of market • Promote “high-class” image of product

10. PRICING ISSUES: Cost and Value • COST (of the event) • Cost of production for good/service • Some events have higher production costs • VALUE (to the consumer) • What are the PERCIEVED BENEFITS to consumers? • Unique experience to each person • PERCEIVED BENEFITS: • TANGIBLE: Physical benefits (Buying a surfboard with an ankle-band) • INTANGIBLE (Buying a surfboard to spend time with friends at the beach)

11. DIFFERENT PRICING OBJECTIVES • 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? • How much profit do you want to make?

12. TICKET PRICING STRATEGIES • SCALING THE HOUSE • Pricing tickets differently based on • Location of seat • Location of entire section • Time of purchase • Price is less if purchased further in advance • YIELD-MANAGEMENT PRICING • Maximize revenue at venues with limited capacity • Venues with limited seating price tickets differently to have greater revenue potential • Charge more at smaller venues!