PRICING IN SPORTS ENTERTAINMENT MARKETING WINNING STRATEGIES What

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? 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 q. Encouraged q. Why competition with antitrust laws is competition encouraged? TAXATION q. To encourage or discourage q. What do we know about cigarette and alcohol taxes? q. 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 2. Price Lines Target Zimbrick 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