reaching new heights... offerings, distribution, and pricing chapter x integrating marketing in the...

Reaching New Heights . . .Reaching New Heights . . . Reaching New Heights . . .Reaching New Heights . . .

Offerings, Distribution, and PricingOfferings, Distribution, and PricingChapter XChapter X

Offerings, Distribution, and PricingOfferings, Distribution, and PricingChapter XChapter X

Integrating Marketing in the Leisure IndustryIntegrating Marketing in the Leisure Industry

Agency OfferingsAgency OfferingsAgency OfferingsAgency Offerings

Products - Physical goods that are presented to the consumer.

Services - Amenities that support the primary product offering.

Facilities - Physical structures available to consumers.Programs/ Events - Activities that complement products

offered to consumers.

Delivery - Impacts the experience received by consumers.Policy/ Procedures - Establishing boundaries for

participation. Physical Environment - Physical attributes of the agency

itself.

Categories of OfferingsCategories of OfferingsCategories of OfferingsCategories of Offerings

Intangible

Programs

Services

Delivery

Policies/procedures

Tangible

Product

Facility

Physical environment

Product Life CycleProduct Life CycleProduct Life CycleProduct Life CycleI N T R O D U C T I O N

G R O W T H

M A T U R I T Y

D E C L I N E

S A L E S

TIME/STAGES

Product Development

Modification

New Market

Product IntroductionProduct IntroductionProduct IntroductionProduct Introduction

• Product unknown.• Sales/participation is low/non existent and over time

begins to emerge and grow.

• Pricing may be high to capture top of market or recover costs or low to penetrate the market and spur

consumption. • Promotional statements are geared toward the needs

of the targeted markets.• Agencies utilize heavy advertising, promotion, and

public relations tools during this phase to introduce the offerings and induce trial and use.

Product Growth StageProduct Growth StageProduct Growth StageProduct Growth Stage

• Sales/participation is growing, as competitors are as well.

• The product is becoming well known and brand recognition is emerging.

• Pricing tends to be higher as demand increases as well.• Distribution systems are expanded.• Quality issues are emerging.• Agencies place continued emphasis on advertising,

promotion and public relations, but also begin to utilize other tools more moderately such as sponsorship, personal selling, stewardship and internal marketing to build brand loyalty.

Product MaturityProduct MaturityProduct MaturityProduct Maturity

• Sales/participation has flattened or is slightly falling.• Large number of competitors exist on the market.• Agencies focus their efforts in building brand loyalty.• Promotional statements tend to be reminder oriented,

positioning against competitor while expanding on competitive advantages.

• Less emphasis is placed on advertising and public relations while increased focus on personal selling, sponsorship, stewardship, community relations and internal marketing to build and maintain loyalty exists.

• Revenues are extremely low and competitors have reduced to only the strongest and most successful.

• Loyalty practices are the most successful tools to use as agencies prepare for reemergence into the introduction stage.

• Three main strategies exist for reemergence:Product modificationExpanding to new market segmentsDevelopment of new offerings

Product DeclineProduct DeclineProduct DeclineProduct Decline

DistributionDistributionDistributionDistribution

• Distribution is the way in which a leisure service agency connects to consumers to ultimately provide a leisure service experience.

Physical source

Physical location

Physical delivery

Physical SourcePhysical SourcePhysical SourcePhysical Source

Links product to user and user to product.

Hotel - consumer

Hotel - travel agent - consumer

Hotel - tour operator - travel agent – consumer

WHY?

Reach more consumers.

Provide alternative ways to reach.

Maximize agency resources.

Better meet consumer needs.

Physical LocationPhysical LocationPhysical LocationPhysical Location

• Provide golf clinics at a local agency during lunch hours.

• Provide aerobic classes at an off site location.

• Oakland County Mobile Recreation.

Physical DeliveryPhysical DeliveryPhysical DeliveryPhysical Delivery

• Train staff to work with seniors.• CPR and First Aid Certified.• Develop a service recovery system to gain feedback.

PricingPricingPricingPricing

Steps taken in any pricing decision:

• Identifying the pricing objective• Assessing the pricing variables• Determining the price• Evaluating the pricing decision

Identifying the Pricing ObjectiveIdentifying the Pricing ObjectiveIdentifying the Pricing ObjectiveIdentifying the Pricing Objective

• We want to make money.• We want to break even.• We want to have as much participation as possible.• We want to turn off certain market segments or

demarket.

Assessing the Pricing Assessing the Pricing VariablesVariables

Assessing the Pricing Assessing the Pricing VariablesVariables

• History• Demand• Competition• Willingness to pay• Cost• Margin Issues

• Consumer tastes• Consumer income• Mob effect• Price range• Cost of info search• Perception of value• Availability of substitute products

Determining the PriceDetermining the PriceDetermining the PriceDetermining the Price• Variable/Differential• Market Skimming/ Exclusivity• Market Penetration/ Discount• Breakdown• Pay One Price/Pay As You Go• Bundling/Unbundling• Captive• Psychological• Hidden Costs• Fixed to Variable/ Creative Variable• Price Performance• Differing Segments• Product Line

Pricing StrategiesPricing StrategiesPricing StrategiesPricing Strategies

1. Differential Pricing– Selling the same

product/service to different buyers at different prices

– Can be illegal…– Legal if…– Second Market

Discounting • Different prices

charged to different segments of consumers

Pricing StrategiesPricing StrategiesPricing StrategiesPricing Strategies

2. New product pricing strategy (org sets price levels for products being introduced)

• Examples– Penetration Pricing-product introduced at a low

initial price relative to the competition– Price Skimming-org sets high prices and charges

more than the competition

Pricing StrategiesPricing StrategiesPricing StrategiesPricing Strategies

3. Psychological Pricing -consumer’s emotion and image rather than economics

• Examples– Prestige Pricing– Reference Pricing– Odd-even pricing

Pricing StrategiesPricing StrategiesPricing StrategiesPricing Strategies

4. Product-Mix Pricing -profitability of entire product line rather than setting prices for individual products independently.

Examples-sporting events, baseball cards, cruises– Examples

• Bundle pricing• Captive product pricing

Pricing StrategiesPricing StrategiesPricing StrategiesPricing Strategies

5. Cost-Based Pricing-the org examines all of the costs associated with producing the service before pricing.

• Cost Plus-price =computing the total cost (fixed + variable costs) of producing the product and then adding an additional cost to achieve the desired profits.

• Target Profit-approx. prices are set based on the target profit marketers have determined when setting price objectives

• Break-even-determine the number of units it will have to sell at a given price to break even

Break Even FormulaBreak Even FormulaBreak Even FormulaBreak Even Formula

• Break Even Point =

Fixed cost

Price – approx. costs per person

Example:

$3,000

$15-$7

Break even Point=375 (race entries)

Pricing StrategiesPricing StrategiesPricing StrategiesPricing Strategies

6. Price Adjustments-caused by competition, adjustments made to create demand

• Examples– Price reductions-enhance

sales

– Price increases-keep up with cost inflation or there is an excess demand

– Price Discounts• Quantity• Seasonal

Evaluating the Pricing DecisionEvaluating the Pricing DecisionEvaluating the Pricing DecisionEvaluating the Pricing Decision

• Monitoring participation and/or revenue or profit data. • Analyze cause/effect relationships to prices. • Understand the price sensitivity.

Yield ManagementYield ManagementYield ManagementYield Management• A term concerned with understanding the balance

between the amount an agency sells of its offering at the best price possible.

• An agency determines its yield by comparing potential inventory to actual inventory.

• Yield management allows an agency to strategically organize the agency’s inventory of offerings in a way to be sold as effectively as possible to achieve agency objectives.

• Yield management attempts to maximize the opportunities for agencies, it combines the elements of pricing and distribution to maximize opportunities for agencies.