SEM I 4.07

1. SEM I 4.07 IDENTIFY FACTORS AFFECTING PRICING OF SPORT/EVENT PRODUCTS DESCRIBE PRICING ISSUES ASSOCIATED WITH SPORT/EVENT PRODUCTS

2. YIELD MANAGEMENT PRICING • Yield-management pricing helps sport/event organizations with limited capacity (e.g., stadiums, arenas) to maximize revenue. For example, a person who purchases a ticket for a prime location seat at a later date than a person who buys a ticket for a similar location at an earlier date might pay more for the ticket. • If a facility charged the same amount for each ticket, the facility limits its revenue potential. Because facilities have limited seating, tickets are priced differently based on time of purchase, place of purchase, and seating location.

3. YIELD MANAGEMENT PRICING NOT yield management pricing: A resourceis any item that is used to produce goods or services. Stock refers to shares or units of ownership in a corporation. Sport/Event organizations are not always legally established as corporations. Intermediaries are channel members operating between the producer and the consumer or industrial user to help in the movement of goods and services. The use of intermediaries does not always affect product pricing issues.

4. WHAT MARKET WILL BEAR • In sports and entertainment marketing, the concept of price centers on what the organization believes the customer is willing to pay for the good or service. • Costs of any renovations would certainly need to be considered though this element would be long term. Customers do look at the total cost of the experience when making decisions about participating in these activities. Demand for skiing would be elastic, as it is not considered a necessity; therefore, pricing would not be based on this concept.

5. TOTAL COST • Price is the amount of money paid for a good, service, or resource. However, in the entertainment industry, price is often more complicated and includes the costs of additional goods and services. The cost of a ticket is the main price for attending a concert, but customers usually consider the total cost when evaluating price. • In some cases, the price of a ticket may be only a small part of the overall cost which may include the price of parking, food, drinks, programs, and souvenirs.

6. TOTAL COST • Concerts set the price of tickets but also consider these other factors because they have an effect on whether customers will attend. If customers think that the overall price is too high, they might not buy tickets. • A benefit is an advantage that a good or service can provide the customer. A goal is an objective. Value is the amount of satisfaction a good or service will provide a customer.

7. VALUE OF OVERALL EXPERIENCE • In sports and entertainment marketing, the cost of a ticket often is only a small part of the price of attending an event. Frequently, there are many other costs associated with an event such as parking, food, drinks, programs, and souvenirs. • When considering price, it is important to consider all the costs to determine if customers will think that the value of the overall experience is worth the total price. If customers link the total price with value, they will be willing to pay for the event. • For example, if customers see value in attending a major-league baseball game, they will buy tickets and pay for the additional goods and services. The location of the facility is a factor in distribution or place. The quality of the media advertising is a promotional factor.

8. TANGIBLE BENEFIT • A tangible benefit of purchasing a surfboard is it has a wrist strap to keep it connected to you in the water. It is a tangible benefit because it can be measured by the five senses. • Owning a popular board, spending time with friends at the beach, and joining a surfing club are all intangible benefits because they are measured by the way one feels.

9. PRICING – ENHANCING IMAGE • Pricing products in a way that will enhance their image is a company-focused pricing objective because it is concerned only with what the company is trying to achieve for itself. • Other company-focused pricing objectives include covering costs and creating profits. Offering the lowest prices is a competition-focused pricing objective. Offering the most discounts and achieving prices that customers consider "fair" are customer-focused pricing objectives.

10. PRICING BELOW NORMAL RATE • A sport/event organization might price entry fees for a marathon below the normal rate to encourage maximum participation in the race. • Lower fees would not meet competitors' prices since the fees would be less expensive than for other marathons. Also, lower fees would not establish the event as "luxury" or create profits. Only higher fees would do that.

11. PRICE ELASTICITY • Price elasticity is a measure of how sensitive customers are to changes in price. It gauges the relationship between market demand and price. • "Total cost" is a concept that customers' perception of overall value is linked to all the expenses involved in attending an event, including expenses that are not under marketers' control. • Market segmentation is the process of dividing the market into groups of people who share common characteristics.

12. PENETRATION PRICING • Penetration pricing refers to setting prices lower than those of the competition. Sport/Event marketers mainly use it to introduce a new product or to gain a greater share of the market. • Price skimming refers to setting prices higher than those of the competition. Smoothing refers to grouping a sport/event product into different segments for customers.

13. REVIEW

14. 4 (2). Yield management is a way that sport/event marketers address product pricing issues when they want to maximize revenue but have: • A. Below market stock value • B. Unallocated resources • C. Limited capacity • D. Few distribution intermediaries.

15. 4. Yield management is a way that sport/event marketers address product pricing issues when they want to maximize revenue but have: • A. Below market stock value • B. Unallocated resources • C. Limited capacity • D. Few distribution intermediaries.

16. 5 (2). Wintergreen Ski Area knows that the area will be most successful if it bases its pricing structure on: • A. Costs associated with renovations • B. What the market will bear • C. Total cost of the experience • D. Inelastic demand for skiing

17. 5 (2). Wintergreen Ski Area knows that the area will be most successful if it bases its pricing structure on: • A. Costs associated with renovations • B. What the market will bear • C. Total cost of the experience • D. Inelastic demand for skiing

18. 6 (2). The additional cost of paying for parking & buying refreshments & programs is part of the overall __________ of attending a concert: • A. Benefit • B. Price • C. Goal • D. Value

19. 6 (2). The additional cost of paying for parking & buying refreshments & programs is part of the overall __________ of attending a concert: • A. Benefit • B. Price • C. Goal • D. Value

20. 7 (2). In sports & event marketing, the concept of price includes not only the cost of a ticket to an event but also the: • A. Value of the overall experience • B. Quality of the media advertising • C. Elements of the marketing plan • D. Location of the facility

21. 7 (2). In sports & event marketing, the concept of price includes not only the cost of a ticket to an event but also the: • A. Value of the overall experience • B. Quality of the media advertising • C. Elements of the marketing plan • D. Location of the facility

22. 8 (2). Which of the following is a tangible benefit of purchasing a surfboard: • A. It is the most popular brand on the market • B. It gives you the opp. to join a surfing club • C. It allows you to spend time with friends at the beach • D. It has a wrist strap to keep it connected to you in the water

23. 8 (2). Which of the following is a tangible benefit of purchasing a surfboard: • A. It is the most popular brand on the market • B. It gives you the opp. to join a surfing club • C. It allows you to spend time with friends at the beach • D. It has a wrist strap to keep it connected to you in the water

24. 9 (2). Which of the following is a company-focused pricing objective for sport/event products: • A. Offering the most discounts to customers • B. Offering the lowest prices • C. Enhancing image • D. Achieving a price customers feel is fair

25. 9 (2). Which of the following is a company-focused pricing objective for sport/event products: • A. Offering the most discounts to customers • B. Offering the lowest prices • C. Enhancing image • D. Achieving a price customers feel is fair

26. 10 (2). Why might a sport/event organization price entry fees for a marathon below the normal rate: • A. To establish their event as “luxury” • B. To encourage maximum participation • C. To create profits • D. To meet competitors prices

27. 10 (2). Why might a sport/event organization price entry fees for a marathon below the normal rate: • A. To establish their event as “luxury” • B. To encourage maximum participation • C. To create profits • D. To meet competitors prices

28. 11 (2). When prices go up or down, the change can affect how much of the sport/event product customers want to purchase. This is the general principle of: • A. Elasticity • B. Market segmentation • C. Smoothing • D. “total cost”

29. 11 (2). When prices go up or down, the change can affect how much of the sport/event product customers want to purchase. This is the general principle of: • A. Elasticity • B. Market segmentation • C. Smoothing • D. “total cost”

30. 12 (2). Which pricing strategy sets prices lower than those of the competition: • A. Smoothing • B. Stretching • C. Penetration • D. Skimming

31. 12 (2). Which pricing strategy sets prices lower than those of the competition: • A. Smoothing • B. Stretching • C. Penetration • D. Skimming