How much are you willing to pay?
Price is defined as the value placed on the goods or services being exchanged PRICE:
The cost of providing the product or service The profit that companies hope to make Demand for the product Supply of the product What is the Competition charging? Factors Affecting Pricing
CD Costs and Profit
Movie Theatre distribution2.htm
Popcorn Saves Theatres Profit 85% Cost 15%
Limited Supply High Demand
Supply and Demand
In Line with Competition
A pricing strategy is defined as: A plan which determines the best (at the time of making) pricing decision. Pricing Strategy
Importance of: Know the market Elasticity Keeping an eye on rivals Pricing Strategy
Estimating Consumer Demand Consumer Tastes Consumer Income Knowing the Market
Is the measure of the responsiveness of demand and supply of a good or service to an increase or decrease in its price. Elasticity
Competitors The availability of substitute sports or entertainment product How easily can we be replaced ? Accessibility to the consumer
Three main pricing strategies: 1.Market skimming 2.Penetration pricing 3.Competitive pricing Pricing Strategies
Think! Pair! Share! In pairs, brainstorm what you think each pricing strategy means. Come up with examples of sports or entertainment products or companies that use these strategies Join another pair, and discuss your answers As a class each group of 4 will present their findings Pricing Strategies
Setting a very high price for a new product when demand is greater than supply Skimming
Setting a low price for a new product to attract many customers to try the product and to obtain a large share of the market in a short time Example: Nintendo consciously chose a penetration strategy when it introduced its GameCube video game console. GameCube was priced at substantially less than Microsoft’s Xbox and Sony’s PlayStation 2 consoles. Penetration
Products in particular category match or follow the price of their competitors very closely Competitive Pricing