1. SEM A - Pricing
PE - Develop a foundational knowledge of pricing to understand its role in marketing
PI - Identify factors affecting pricing of SEM products (lead time, market demand, market segmentation, smoothing, responding to competitors)
PI - Describe pricing issues associated with SEM products (cost, value, objectives)

2. Why do ticket prices vary?
Seat location
Market segmentation
Performance of the team
Top Athletes
Popularity of the team/entertainer
Value to the consumer
Expenses
Location of the venue
Production Costs
Time of the event
Uncertainty
Opponent
Unsold Tickets “Deadwood”
Scarcity of tickets
Paying for a new stadium
PSL’s
Ticket discounts

3. Factors affecting pricing of SEM products
Lead time
Market demand
Market segmentation (target market)
Smoothing/penetration/skimming price strategies
Responding to competitors

4. Lead Time
Lead Time: The time between customer order and delivery of final product.
Sports and Events will often charge less if tickets are purchased ahead of time.
Ex: “Purchase concert tickets now for $25 or at the door for $35.”

5. Market demand
Price Elasticity – is the degree to which demand for a product is affected by its price
How much of a product customers will buy at a certain price - Relationship between market demand and price
Inelastic demand - Price changes have little to no impact on quantity of sales
“Need” items - necessity, brand loyalty, urgency of purchase
Ex: Milk, Eggs, Super Bowl Tickets, Gasoline?
Skimming pricing strategy would work here – high then lower
Elastic demand - Small price changes (up or down) have big impact on quantity of sales
“Want” items – luxuries, availability of substitutes
Ex: I-pod, sports equipment, new clothes
Penetration pricing strategy would work here – low then normal

6. Effect of Elasticity Elastic Demand Inelastic Demand Price Demand

7. SEM Activity
Students work in pairs and create a PPT showing elastic and inelastic products
Students must show 2 sports goods & services & 2 entertainment/event goods & services (8 total)
On each PPT slide list if the product is elastic or inelastic and the factor affecting why it is
Ex: NFL football, elastic due to availability of substitute products
Must have 2 sports products that are elastic and 2 that are inelastic – same for event/entertainment

8. Market Segmentation Target Marketing – fans/brand loyalty, PSL’s
Discounts to certain age groups – kids free!
Coupons sent to specific geographic locations

9. Pricing strategy - Smoothing
Smoothing - dividing product into different segments:
Time: Pay more money for “Prime time”
Place: Pay more money for court-side seats and less for nosebleeds (higher seats)

11. Pricing strategy Penetration - Skimming
Responding to competitors – pricing can assist in gaining sales or market share based on how it relates to your competition
Non-price: Charge higher prices than competitors for unique product and services
Ex: The Panthers can charge what they wish – unique and no competition
Price: Encourage sales with lower prices than competitors
Penetration pricing
Setting prices lower than the competition
Used to introduce a new product
Encourage maximum participation (More people will purchase if price is lower)
Skimming
Setting prices higher than the competition (as high as the consumer/market will pay/bear)
When a product is new & unique, you can skim the cream and charge higher price
Promotes “high-class” image of product

12. Pricing issues: Cost and Value
COST (of the event)
Cost of production for good/service
Some events have higher production costs
VALUE (to the consumer)
What are the perceived benefits to consumers?
What is the overall value to the consumer
Overall value – consumers will look at costs of attending event, parking, concessions, merchandise, etc.
Unique experience to each person
Perceived benefits:
Tangible : Physical benefits (Buying a set of weights to get into shape)
Intangible (Buying a set of weights to look good at the beach)

13. Different pricing objectives
What are the goals of the good/service?
Do you want it to seem “high class” or affordable?
What type of attendees do you want?
How much profit do you want to make?
Company-Focused
Competitor-Focused
Customer-Focused
Pricing products to enhance the image
Covering costs
Creating profit
What the consumer will pay
Beating the competition
Offer lowest prices to gain share
Offering the most discounts
Offer “fair” price in the consumer’s mind

14. Ticket pricing strategies
Scaling the house/arena/stadium
Pricing tickets differently based on
Location of seat
Location of entire section
Time of purchase
Price is less if purchased further in advance
Yield-management pricing
Maximize revenue at venues with limited capacity
Venues with limited seating price tickets differently to have greater revenue potential
Charge more at smaller venues!