Pricing

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

http://www.howstuffworks.com/movie-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

DemandConsumer TastesConsumer 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