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18-1 Chapter 18 Chapter 18 Pricing Decisions Pricing Decisions in Sports Marketing in Sports Marketing McGraw-Hill/Irwin ©2007 The McGraw-Hill Companies, All Rights Reserved

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Page 1: 18-1 Chapter 18 Pricing Decisions in Sports Marketing McGraw-Hill/Irwin©2007 The McGraw-Hill Companies, All Rights Reserved

18-1

Chapter 18Chapter 18

Pricing Decisions Pricing Decisions

in Sports Marketingin Sports Marketing

McGraw-Hill/Irwin ©2007 The McGraw-Hill Companies, All Rights Reserved

Page 2: 18-1 Chapter 18 Pricing Decisions in Sports Marketing McGraw-Hill/Irwin©2007 The McGraw-Hill Companies, All Rights Reserved

18-2

PricePrice

• What the Buyer Gives Up in the Exchange Process

• The Third Variable of the Traditional Marketing Mix

Page 3: 18-1 Chapter 18 Pricing Decisions in Sports Marketing McGraw-Hill/Irwin©2007 The McGraw-Hill Companies, All Rights Reserved

18-3

ElasticityElasticity

• 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 Chicken

Page 4: 18-1 Chapter 18 Pricing Decisions in Sports Marketing McGraw-Hill/Irwin©2007 The McGraw-Hill Companies, All Rights Reserved

18-4

InelasticityInelasticity

• 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 - Medicine

Page 5: 18-1 Chapter 18 Pricing Decisions in Sports Marketing McGraw-Hill/Irwin©2007 The McGraw-Hill Companies, All Rights Reserved

18-5

Factors That Influence PriceFactors That Influence Price

Page 6: 18-1 Chapter 18 Pricing Decisions in Sports Marketing McGraw-Hill/Irwin©2007 The McGraw-Hill Companies, All Rights Reserved

18-6

Situational InfluencesSituational Influences

• Unusual, Often Short Term Influences, that Impact Consumer Purchase Decisions

• Team Is Winning

• Move to a New Stadium

• Presence of a Visiting Star Player

Page 7: 18-1 Chapter 18 Pricing Decisions in Sports Marketing McGraw-Hill/Irwin©2007 The McGraw-Hill Companies, All Rights Reserved

18-7

CostsCosts

• 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

Page 8: 18-1 Chapter 18 Pricing Decisions in Sports Marketing McGraw-Hill/Irwin©2007 The McGraw-Hill Companies, All Rights Reserved

18-8

Competition – Competition – Cost of Alternatives for ConsumerCost of Alternatives for Consumer

• Baseball versus Football (MLB v. NFL)

• Baseball versus a Motion Picture

• Gold’s Gym versus Curves

• Nike versus Converse Athletic Shoes

Page 9: 18-1 Chapter 18 Pricing Decisions in Sports Marketing McGraw-Hill/Irwin©2007 The McGraw-Hill Companies, All Rights Reserved

18-9

Supply and DemandSupply 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

Page 10: 18-1 Chapter 18 Pricing Decisions in Sports Marketing McGraw-Hill/Irwin©2007 The McGraw-Hill Companies, All Rights Reserved

18-10

Marketing ObjectivesMarketing 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 Nike

Page 11: 18-1 Chapter 18 Pricing Decisions in Sports Marketing McGraw-Hill/Irwin©2007 The McGraw-Hill Companies, All Rights Reserved

18-11

Legal ConsiderationsLegal 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 Prices

Page 12: 18-1 Chapter 18 Pricing Decisions in Sports Marketing McGraw-Hill/Irwin©2007 The McGraw-Hill Companies, All Rights Reserved

18-12

Consumer Perceptions –Consumer Perceptions –“Perception Is Reality”“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

Page 13: 18-1 Chapter 18 Pricing Decisions in Sports Marketing McGraw-Hill/Irwin©2007 The McGraw-Hill Companies, All Rights Reserved

18-13

Marketing Mix ConsistencyMarketing 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 Prices

Page 14: 18-1 Chapter 18 Pricing Decisions in Sports Marketing McGraw-Hill/Irwin©2007 The McGraw-Hill Companies, All Rights Reserved

18-14

General Implementation General Implementation StrategiesStrategies

• Cost-Plus

• Markup

• Promotional

• Yield Management

• Target Return

Page 15: 18-1 Chapter 18 Pricing Decisions in Sports Marketing McGraw-Hill/Irwin©2007 The McGraw-Hill Companies, All Rights Reserved

18-15

Pricing Applications:Pricing Applications:Spectator SportsSpectator 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 $22.21

Page 16: 18-1 Chapter 18 Pricing Decisions in Sports Marketing McGraw-Hill/Irwin©2007 The McGraw-Hill Companies, All Rights Reserved

18-16

Pricing Applications:Pricing Applications:Spectator SportsSpectator Sports

• Season Ticket

• Partial Season Ticket

• Price Tiering

• Variable Pricing

Page 17: 18-1 Chapter 18 Pricing Decisions in Sports Marketing McGraw-Hill/Irwin©2007 The McGraw-Hill Companies, All Rights Reserved

18-17

Pricing Applications:Pricing Applications:Spectator SportsSpectator Sports

• Value Pricing

• Promotional Pricing– Discount Pricing– Bundling– Cross-Promotion Discounting

Page 18: 18-1 Chapter 18 Pricing Decisions in Sports Marketing McGraw-Hill/Irwin©2007 The McGraw-Hill Companies, All Rights Reserved

18-18

Pricing Applications:Pricing Applications:Spectator SportsSpectator Sports

• Qualifying Payment– PSL– Donation to University Program

• Bidding

Page 19: 18-1 Chapter 18 Pricing Decisions in Sports Marketing McGraw-Hill/Irwin©2007 The McGraw-Hill Companies, All Rights Reserved

18-19

Pricing Applications:Pricing Applications:Participation SportsParticipation Sports

• Supply and Demand Based Pricing

• Level of Service

• Variable Pricing

• Individual Considerations

Page 20: 18-1 Chapter 18 Pricing Decisions in Sports Marketing McGraw-Hill/Irwin©2007 The McGraw-Hill Companies, All Rights Reserved

18-20

Pricing Applications: SASSPricing Applications: SASS

• Traditional Retailing Principles

• Supply and Demand

• Value Added through Licensing

• Value Added through Celebrity Endorsement

Page 21: 18-1 Chapter 18 Pricing Decisions in Sports Marketing McGraw-Hill/Irwin©2007 The McGraw-Hill Companies, All Rights Reserved

18-21

Pricing Applications: SASSPricing Applications: SASS

• Markup– Based on COGS

• Evident that Prices for SASS Are Influenced by the Set of Factors Discussed for Spectator Sports

Page 22: 18-1 Chapter 18 Pricing Decisions in Sports Marketing McGraw-Hill/Irwin©2007 The McGraw-Hill Companies, All Rights Reserved

18-22

Closing CapsuleClosing Capsule

• Many Factors Influence Price

Page 23: 18-1 Chapter 18 Pricing Decisions in Sports Marketing McGraw-Hill/Irwin©2007 The McGraw-Hill Companies, All Rights Reserved

18-23

Closing CapsuleClosing 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?

Page 24: 18-1 Chapter 18 Pricing Decisions in Sports Marketing McGraw-Hill/Irwin©2007 The McGraw-Hill Companies, All Rights Reserved

18-24

Closing CapsuleClosing 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


© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 18-1

McGraw-Hill The McGraw-Hill Companies, Inc., 2004

Liability and Liquidity Management Chapter 18 © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. McGraw-Hill/Irwin

Retailing Management 8e© The McGraw-Hill Companies, All rights reserved. 18 - 1 CHAPTER 2CHAPTER 1CHAPTER 18 Customer Service CHAPTER 18 McGraw-Hill/Irwin

Personal Selling 18 McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved

Pricing for International Markets Chapter 18 McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved

18–1. 18–2 Chapter Eighteen Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin

McGraw-Hill/Irwin ©2005 The McGraw-Hill Companies, All rights reserved McGraw-Hill/Irwin

18. Antitrust Policy and Regulation McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 18-6 THE COMMUNICATION PROCESS Promotional Mix Integrated Marketing Communications (IMC)Integrated

Chapter 18: Theory versus Reality Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 13e

Theory versus Reality Chapter 18 Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin

18-1 Short-Term Finance and Planning Chapter 18 Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin

© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin INTEGRATED MARKETING COMMUNICATIONS AND DIRECT MARKETING 18 C HAPTER

Chapter 18 Retirement Planning McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved

Chapter 18 Pricing Policies McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies, Inc. All Rights Reserved

International Trade Chapter 18 McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved

© 2000 The McGraw-Hill Companies, Inc. Irwin/McGraw-Hill 1 Session 18 Strategy Implementation

Chapter 10 · Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 2001 $ Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc.,

18-1. 18-2 Personal Selling and Sales Management Chapter 18 McGraw-Hill/Irwin Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved

18-1. Chapter Creating and Managing Change 18 McGraw-Hill/Irwin Management, 7/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved

18-1. 18-2 Chapter 18 Inventory and Overhead McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved

Assessment Chapter 18 McGraw-Hill/Irwin © 2012 McGraw-Hill Companies. All Rights Reserved

Chapter 18 ATM Design Goal ATM Topology ATM Architecture WCB/McGraw-Hill The McGraw-Hill Companies, Inc., 1998

18-1. 18-2 18 Organized Crime, Counterterrorism, and Anti- money Laundering McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All

1 18-1 McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved

© 2004 The McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Chapter 18 Employee Benefit Plans

McGraw-Hill©The McGraw-Hill Companies, Inc., 2000 Chapter 18 Domain Name System (DNS)

© 2013 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill Chapter 18 Special Types of Speeches

Chapter 18 The Tax Compliance Process McGraw-Hill Education Copyright © 2015 by McGraw-Hill Education. All rights reserved

© The McGraw-Hill Companies, Inc., 2005 McGraw-Hill/Irwin 18-1 PROCESS COSTING Chapter 18

18-0 McGraw-Hill Ryerson © 2003 McGraw–Hill Ryerson Limited Corporate Finance Ross Westerfield Jaffe Sixth Edition 18 Chapter Eighteen Dividend Policy:

Antitrust Policy and Regulation Chapter 18 McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved