Price Ticketing and Placement in Marketing Communication

Topic 9 Price ticketing and placement Marketing Communication 2 Universidad Europea All rights reserved Contents Presentation 3 Objectives 3 1 Basic definitions Concept of elasticity 4 2 Pricing as a Marketing Tool Pricing Elements 5 3 Determining Factors in Pricing 6 4 Pricing methods 7 5 Pricing strategies 8 6 Ticketing Different sales channels for sports events tickets 10 7 Placement or distribution of related products either directly or indirectly 11 8 Intermediaries 12 Summary 13 Bibliography 14 Marketing Communication Price ticketing and placement Universidad Europea All rights reserved 3 Presentation Objectives The objectives for this presentation are the following Identify the basic concepts related to pricing policies costs and cost allocation criteria as well as basic price determination methods Distinguish the external factors which must be taken into consideration when defining a pricing policy Describe pricing strategies in sports marketing Classify the distinguishing characteristics of the different types of distribution channels determining the characteristics of commercial and physical distribution Marketing Communication Price ticketing and placement Universidad Europea All rights reserved 4 1 Basic definitions Concept of elasticity Historical cost is the monetary sacrifice made to meet a previously reached objective This cost serves as an information source for reference in future pricing Expected cost is calculated in advance It is the cost that must be incurred in order to meet a proposed objective also often known as replacement cost Price elasticity is usually negative meaning an increase in price generally results in a decrease in demand and conversely a decrease in price leads to an increase in demand In some cases for example luxury goods elasticity can be positive Elastic demand When the percentage variation in the quantity demanded is greater than the percentage variation in price Demand is very reactive to price changes Inelastic demand When the percentage increase in demand does not exceed the percentage decrease in price Demand is not very reactive to price changes Here is an example of elasticity The price elasticity of a product A is 130 In the last period the company managed to sell 245 units of the product at 28 Euro If the company launches a new pricing strategy that implies a price per unit of 30 Euro what will the expected demand be Here we calculate the percentage of the price increase 228𝑥100 71 Expected effects on the demand 71𝑥13 923 Expected demand would be 222 units 245 minus 923 Important Cost can be defined as a monetary measure of all the necessary resources that must be sacrificed in order to meet a given objective Important Elasticity is defined as the relative variation in the quantity demanded of a product when its price is modified Marketing Communication Price ticketing and placement Universidad Europea All rights reserved 5 2 Pricing as a Marketing Tool Pricing Elements Pricing is a shortterm marketing tool given that it can work quickly and flexibly usually having an immediate effect on sales and profits Competitive tool Pricing is a powerful competitive tool seeing as it is the only tool that provides revenue Other tools help ensure demand for the product Psychological repercussions The price must be in accordance with the value perceived by the consumer Price sensitivity is not always constant In times of recession the consumer becomes more sensitive to the price Although price is usually defined per unit kg package etc it is actually made up of several elements Determining elements Payment term payment method packaging higher quality means pricier product discounts andor promotions promotions sales rebates and technical warrantyassistance since customers also value the existence of warranty on the product they purchase and the manufacturer can pass it on to the price Marketing Communication Price ticketing and placement Universidad Europea All rights reserved 6 3 Determining Factors in Pricing Legal framework It can set limits on the price of products offered by a company although in most cases they are free to set prices as they wish Market and Competition Pricing decisions are largely determined by how the competition behaves The company will have more or less room to modify its prices depending on the competitive conditions of the market monopoly oligopoly monopolistic competition or perfect competition Pricing will also be determined by the habits and customs of the market Company objectives The pricing strategy may vary from higher to lower Multiple stakeholders Changes in price may affect the expectations of the following groups Competitors Intermediaries Shareholders Employees Etc 1 2 3 4 Marketing Communication Price ticketing and placement Universidad Europea All rights reserved 7 4 Pricing methods Three methods are used in determining the price of a product depending on The costs Costs determine how low a product can be priced This method consists of adding a profit margin to the total unit cost of the product The total unit cost is calculated by adding the total fixed and variable costs then dividing by the number of units produced The concurrence The competitive conditions of the industry whether there are any price leaders price wars etc can have a strong impact on pricing and can alter the costs by profit margin procedure The company will determine whether to set its prices higher lower or the same as its competitors Important The value of the product as perceived by the consumer determines how high the product can be priced The perception of the value of the product by the consumer sets the highest level at which the price can be set Marketing Communication Price ticketing and placement Universidad Europea All rights reserved 8 5 Pricing strategies Fixed or variable pricing strategies Fixed pricing means selling the same product at the same price with the same conditions of sale Variable pricing means greater flexibility in the price and conditions of sale Price is subject to negotiation Bulk discounts A reduction in the unit price offered to the buyer of a product if they purchase a larger quantity than usual Early payment discounts A discounted price given to buyers paying in cash at the time of sale Payment plans An increase in the price of a product when paid for in several payments Promotions and sales o Promotions Lowering prices at a given time or place buyer does not know when the promotion will take place o Sales There used to be specific dates designated for sales but companies are now free to have as many sales as they like Prices for professionals Special prices for some collectives or members of a club for example Ethical prices Products which have lower prices for their characteristics given consumer need for them If the company offers higher quality products than the rest of the competition or provides additional services it may set higher prices and apply a premium pricing strategy This added value must be appreciated by the customers Selling at a loss Selling a product for less than its manufacturing or purchase cost For example to liquidate outdated stock to improve brand recognition or to gain market share Psychological pricing How the market perceives the amount of prices and the association consumers make about them Odd pricing 199 instead of 20 The price is associated with a lower price Remember A reduced or discount pricing strategy may imply a lower quality product or that additional services are more limited Marketing Communication Price ticketing and placement Universidad Europea All rights reserved 9 Loss leader It means having one or two products in the product line with low prices which do not make a profit or may even lead to losses If these products attract new buyers and encourage the sale of other products at a higher price so it will generate profits Captive product pricing A low price on a core product in order to encourage its purchase and therefore ensure demand for its accessories Package pricing Unit price is lower than standard price Marketing Communication Price ticketing and placement Universidad Europea All rights reserved 10 6 Ticketing Different sales channels for sports events tickets Ticketing systems Sales Channels Resale Channels Tourism Agencies Brokers Regardless of the acquisition channel they must maintain access control Marketing Communication Price ticketing and placement Universidad Europea All rights reserved 11 7 Placement or distribution of related products either directly or indirectly Direct sales Location and stores The location of stores is essential For example the Real Madrid store is strategically located near the Santiago Bernabéu Stadium Marketing Communication Price ticketing and placement Universidad Europea All rights reserved 12 8 Intermediaries Intermediaries are those who work between the manufacturer and the consumer facilitating the distribution of a product Lets have a look at their roles Reduce the number of transactions Adapt the supply to the demand they are the first to know what is in demand and are therefore able to quickly provide this information Carry out a number of marketing activities for said product Intermediaries sell or transfer possession or the rights to use the product The supplier must choose its financing methods wisely prepayment credit etc This includes the companys financial engineering Provide aftersales service which is of great importance and on which the longterm success of the product depends this includes delivery installation if required repair advising Take risks Risks of the market itself that the product does not sell that it must be sold below cost etc Marketing Communication Price ticketing and placement Universidad Europea All rights reserved 13 Summary Throughout this resource we have seen how cost is the monetary measure of all the resources that must be sacrificed as well as the importance of the difference between historical and expected cost Remember that the concept of elasticity is defined as the relative variation in the quantity demanded of a product when its price is modified differentiating between elastic demand and inelastic demand In addition pricing is defined as a marketing tool and aspect of the price which is affected by determining factors such as the legal framework the market and the competition as well as the company objectives and stakeholders Lastly we have studied how pricing strategies fixed or variable volume discounts cash discounts payment plans promotions and sales prices for professionals and ethical prices ticketing and the role of intermediaries are key factors Marketing Communication Price ticketing and placement Universidad Europea All rights reserved 14 Bibliography 1 Kotler P 1999 Introducción al Marketing Madrid PrenticeHall 2 Kotler P et al 2006 Dirección de marketing 12th Edition Madrid PrenticeHall 3 Santesmases Mestre M 1999 Marketing conceptos y estrategia Madrid Esic Pirámide All intellectual property rights of this work are owned exclusively by the Universidad Europea de Madrid SLU Reproduction availability to the general public or any other form of exploitation of any and all parts is strictly prohibited Unauthorized use of this work as well as any damage caused to the intellectual and industrial property rights of the Universidad Europea de Madrid SLU will lead the pursuit of corresponding legal actions and if applicable to the responsibilities arising from this activity