1. Pricing in Sports & Entertainment How am I influenced? How can I satisfy customers?

2. Price Is defined as the value placed on the goods or services being exchanged Price is important in a business Because it helps determine a company’s profit or loss

3. Four P’s of the marketing mix

4. Many consumers believe that The higher the price, the better the quality of an item What do you think? A very good quality product at a low price a. May sell better than at a higher price b. May sell less than at a higher price

5. Prestige pricing Is pricing based on consumer perception Examples of prestige pricing BMW 2011 535i $50, 475

15. Odd-even pricing Pricing foods with either an odd number or an even number to match image Odd pricing example 25.99 suggest a bargain Even pricing example $100 reflect a quality item

16. Target pricing Pricing goods according to what the customer is willing to pay

17. Think, Pair, Share What price are most people willing to pay for an Iphone app?

19. Think, Pair, Share If a product is in high demand And there is a limited supply, its price will be Low High Ex. Popular sporting events with a limited number of seats

20. Think, Pair, Share Whenever, there is a large supply of an item and demand is not great, dealers may: Raise prices to increase demand for the item lower prices to increase demand for the item Ex. Retailers may do this at the end of a season when there is still a supply of merchandise that did not sell at a regular price (clearance)

21. Why can Nike charge high prices and keep demand high? Brand loyal customers feel there is no substitute for Nike products

22. Since a business needs to make a profit, The price of an item must be higher than the cost a business paid for it Markup Is the difference between retail or wholesale price and the cost of an item Ex. $49.99 retail price - $25 cost = $24.99 markup

23. Cost-plus pricing Pricing products by calculating all costs & expenses & adding a desired profit Ex. New Tennis Shoes: Costs & Expenses: Materials - $20 Research & Design - $30 Marketing - $30 Shipping/Storage - $20 Desired Profit - $100 Recommended Retail Price - $200 Nike SB Eric Koston Zoom One

24. When introducing a new product, Marketers may decide to price the item very high to recover the costs of development – or they may price it low to create immediate demand for the product Pricing a new item high is called Skimming pricing Pricing a new item low is called Penetration pricing

25. Skimming or Penetration?

26. Skimming or Penetration?

27. Non-price competition Competition between businesses based on quality, service and relationships Market share The percentage of the total sales of all companies that sell the same type of product Ex. Gatorade may have an 80% market share for sports drinks

29. Price lining Selling goods in a product line at specific price points Ex. Warm up suits - $39.99, $59.99, $79.99

30. Bundle pricing Selling several items as a package for a set price

31. Loss-leader pricing Pricing an item at cost or below cost to draw customers into the store

32. Yield-management pricing Pricing items at different prices to maximize revenue when limited capacity is involved Concerts, events, hotel rooms, airplanes *Better to sell for $1 than to get no money at all

33. Think, Pair, Share When the New York Mets have tickets to home games against more competitive opponents that might draw more attendance they should charge More for the tickets Less for the tickets

35. Pricing Regulations Price fixing An illegal practice whereby competitors conspire to set the same prices Predatory pricing Is setting a very low price in order to drive competition out of business

37. Revenue is The total income brought in through the sales of goods and services

38. Product placement The appearance of a product as a prop in a film or TV show in exchange for a fee paid by the product’s advertiser Ex. BMW paid 15million to MGM to have its cars in the James Bond movies Ashton Martin DBS

39. Product Placement

40. Product Placement

41. Did you know that: Most CD’s released by record companies Do not recover the cost of production and distribution One successful album May have to pay for 20 unsuccessful albums and make a profit A local ad broadcasted on a small town tv station at 2 am Could cost as little as $50 for 30 seconds

42. Advertising Terms Reach The number of people exposed to an advertisement Frequency and the number of times they are exposed to it On average it takes 3 exposures to have a successful ad

43. FrequencyExample:How many times have you seen these commercials?

44. TV Profits For producing TV shows, the general rule is That if a series can stay on for 3 years and or complete production of 60 episodes it is a financial success The real profits are generated in Reruns because most production costs have already been paid

45. Top 10 Most Profitable TV shows

47. Think, Share How much do you think that $6 box of popcorn might cost the theater ?

48. Event Pricing Terms Draw – size of the audience Gate – number of tickets sold

49. Think, share Which movie had the biggest draw ever?

51. Who had the largest concert draw ever?