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Premium member Presentation Transcript Chapter 18: Chapter 18 Pricing Decisions in Sports Marketing McGraw-Hill/Irwin ©2007 The McGraw-Hill Companies, All Rights ReservedPrice: Price What the Buyer Gives Up in the Exchange Process The Third Variable of the Traditional Marketing MixElasticity: Elasticity Elastic Demand – Market Exhibits Sensitivity to Changes in Price Characteristic of Most Products When Beef Prices Rise, Consumers Reduce Expenditures on Beef and Purchase More ChickenInelasticity: Inelasticity Inelastic Demand – Market Is Less Sensitive to Pricing; Purchase Product at Higher Prices Few (or no) Substitutes – Gasoline Buyer Not Willing to Forgo Purchase - Textbook Buyer Not Able to Forgo Purchase - MedicineFactors That Influence Price: Factors That Influence PriceSituational Influences: Situational Influences Unusual, Often Short Term Influences, that Impact Consumer Purchase Decisions Team Is Winning Move to a New Stadium Presence of a Visiting Star PlayerCosts: Costs In Spectator Sports, this Generally Relates to the Team’s Payroll or Appearance Fees Paid to Individual Athletes MLB’s New York Yankees Payroll in 2006 Was $194,663,079 Michelle Wie Reportedly Paid $1,500,000 to Play in the Casio World Open in Japan Competition – Cost of Alternatives for Consumer: Competition – Cost of Alternatives for Consumer Baseball versus Football (MLB v. NFL) Baseball versus a Motion Picture Gold’s Gym versus Curves Nike versus Converse Athletic ShoesSupply and Demand: Supply and Demand Surplus Drives Prices Down; Shortage Is a Catalyst for Higher Prices Teams that Sell Out – Red Sox, Packers, Lakers, Red Wings – Have Higher Ticket Prices Teams Struggling to Fill the Stands Often Resort to Promotional Pricing Marketing Objectives: Marketing Objectives Market Share Objectives Prestige and Image Seeking Higher Market Share, Top Flight Golf Balls Are Sold at Prices Much Lower than Those of the Premium Brands Such as Titleist and NikeLegal Considerations: Legal Considerations Taxes Added to Cost of Products Team “Scalping” MLB’s Chicago Cubs Taken to Court Over Team’s Resale of Desirable Tickets at Highly Inflated PricesConsumer Perceptions – “Perception Is Reality”: Consumer Perceptions – “Perception Is Reality” What Consumers Think about the Product Influences Their Perception of Value Influences How Much They Will Pay Influences Price that Can Be Charged Titleist Golf Balls Command Premium Marketing Mix Consistency: Marketing Mix Consistency Price Needs to Work in Harmony with the Other Elements of the Marketing Mix Price Also Needs to Be Consistent with the Target Market Many Marketers of Sports Products Offer Alternatives Featuring Different PricesGeneral Implementation Strategies: General Implementation Strategies Cost-Plus Markup Promotional Yield Management Target ReturnPricing Applications: Spectator Sports: Pricing Applications: Spectator Sports Most Commonly Criticized Component of the Strategies Employed by the Marketers of Spectator Sports Fan Cost Index – Average Ticket Price NFL $58.95 for Most Recent Season NBA $45.92 NHL $41.19 MLB $22.21Pricing Applications: Spectator Sports: Pricing Applications: Spectator Sports Season Ticket Partial Season Ticket Price Tiering Variable PricingPricing Applications: Spectator Sports: Pricing Applications: Spectator Sports Value Pricing Promotional Pricing Discount Pricing Bundling Cross-Promotion Discounting Pricing Applications: Spectator Sports: Pricing Applications: Spectator Sports Qualifying Payment PSL Donation to University Program BiddingPricing Applications: Participation Sports: Pricing Applications: Participation Sports Supply and Demand Based Pricing Level of Service Variable Pricing Individual ConsiderationsPricing Applications: SASS: Pricing Applications: SASS Traditional Retailing Principles Supply and Demand Value Added through Licensing Value Added through Celebrity EndorsementPricing Applications: SASS: Pricing Applications: SASS Markup Based on COGS Evident that Prices for SASS Are Influenced by the Set of Factors Discussed for Spectator Sports Closing Capsule: Closing Capsule Many Factors Influence PriceClosing Capsule: Closing Capsule Pricing Policies Are Commonly Criticized Tickets for New England Patriots NFL Game Greens Fees at Pebble Beach Nike Shoes Endorsed by LeBron James A Beer at a Sports Stadium Any Bargains in that List?Closing Capsule: Closing Capsule Marketers in Each Category of Sports Products Recognize the Presence of Different Market Segments Prices Vary Significantly Depending on Which Segment Is Being Targeted You do not have the permission to view this presentation. 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Chapter 18 Techy_Guy Download Post to : URL : Related Presentations : Share Add to Flag Embed Email Send to Blogs and Networks Add to Channel Uploaded from authorPOINTLite Insert YouTube videos in PowerPont slides with aS Desktop Copy embed code: (To copy code, click on the text box) Embed: URL: Thumbnail: WordPress Embed Customize Embed The presentation is successfully added In Your Favorites. Views: 642 Category: News & Reports.. License: All Rights Reserved Like it (0) Dislike it (0) Added: April 18, 2008 This Presentation is Public Favorites: 0 Presentation Description No description available. Comments Posting comment... Premium member Presentation Transcript Chapter 18: Chapter 18 Pricing Decisions in Sports Marketing McGraw-Hill/Irwin ©2007 The McGraw-Hill Companies, All Rights ReservedPrice: Price What the Buyer Gives Up in the Exchange Process The Third Variable of the Traditional Marketing MixElasticity: Elasticity Elastic Demand – Market Exhibits Sensitivity to Changes in Price Characteristic of Most Products When Beef Prices Rise, Consumers Reduce Expenditures on Beef and Purchase More ChickenInelasticity: Inelasticity Inelastic Demand – Market Is Less Sensitive to Pricing; Purchase Product at Higher Prices Few (or no) Substitutes – Gasoline Buyer Not Willing to Forgo Purchase - Textbook Buyer Not Able to Forgo Purchase - MedicineFactors That Influence Price: Factors That Influence PriceSituational Influences: Situational Influences Unusual, Often Short Term Influences, that Impact Consumer Purchase Decisions Team Is Winning Move to a New Stadium Presence of a Visiting Star PlayerCosts: Costs In Spectator Sports, this Generally Relates to the Team’s Payroll or Appearance Fees Paid to Individual Athletes MLB’s New York Yankees Payroll in 2006 Was $194,663,079 Michelle Wie Reportedly Paid $1,500,000 to Play in the Casio World Open in Japan Competition – Cost of Alternatives for Consumer: Competition – Cost of Alternatives for Consumer Baseball versus Football (MLB v. NFL) Baseball versus a Motion Picture Gold’s Gym versus Curves Nike versus Converse Athletic ShoesSupply and Demand: Supply and Demand Surplus Drives Prices Down; Shortage Is a Catalyst for Higher Prices Teams that Sell Out – Red Sox, Packers, Lakers, Red Wings – Have Higher Ticket Prices Teams Struggling to Fill the Stands Often Resort to Promotional Pricing Marketing Objectives: Marketing Objectives Market Share Objectives Prestige and Image Seeking Higher Market Share, Top Flight Golf Balls Are Sold at Prices Much Lower than Those of the Premium Brands Such as Titleist and NikeLegal Considerations: Legal Considerations Taxes Added to Cost of Products Team “Scalping” MLB’s Chicago Cubs Taken to Court Over Team’s Resale of Desirable Tickets at Highly Inflated PricesConsumer Perceptions – “Perception Is Reality”: Consumer Perceptions – “Perception Is Reality” What Consumers Think about the Product Influences Their Perception of Value Influences How Much They Will Pay Influences Price that Can Be Charged Titleist Golf Balls Command Premium Marketing Mix Consistency: Marketing Mix Consistency Price Needs to Work in Harmony with the Other Elements of the Marketing Mix Price Also Needs to Be Consistent with the Target Market Many Marketers of Sports Products Offer Alternatives Featuring Different PricesGeneral Implementation Strategies: General Implementation Strategies Cost-Plus Markup Promotional Yield Management Target ReturnPricing Applications: Spectator Sports: Pricing Applications: Spectator Sports Most Commonly Criticized Component of the Strategies Employed by the Marketers of Spectator Sports Fan Cost Index – Average Ticket Price NFL $58.95 for Most Recent Season NBA $45.92 NHL $41.19 MLB $22.21Pricing Applications: Spectator Sports: Pricing Applications: Spectator Sports Season Ticket Partial Season Ticket Price Tiering Variable PricingPricing Applications: Spectator Sports: Pricing Applications: Spectator Sports Value Pricing Promotional Pricing Discount Pricing Bundling Cross-Promotion Discounting Pricing Applications: Spectator Sports: Pricing Applications: Spectator Sports Qualifying Payment PSL Donation to University Program BiddingPricing Applications: Participation Sports: Pricing Applications: Participation Sports Supply and Demand Based Pricing Level of Service Variable Pricing Individual ConsiderationsPricing Applications: SASS: Pricing Applications: SASS Traditional Retailing Principles Supply and Demand Value Added through Licensing Value Added through Celebrity EndorsementPricing Applications: SASS: Pricing Applications: SASS Markup Based on COGS Evident that Prices for SASS Are Influenced by the Set of Factors Discussed for Spectator Sports Closing Capsule: Closing Capsule Many Factors Influence PriceClosing Capsule: Closing Capsule Pricing Policies Are Commonly Criticized Tickets for New England Patriots NFL Game Greens Fees at Pebble Beach Nike Shoes Endorsed by LeBron James A Beer at a Sports Stadium Any Bargains in that List?Closing Capsule: Closing Capsule Marketers in Each Category of Sports Products Recognize the Presence of Different Market Segments Prices Vary Significantly Depending on Which Segment Is Being Targeted