Chapter 9 - Humble ISD
Download
Report
Transcript Chapter 9 - Humble ISD
Chapter 9
The Economics of Supply
and Demand
9.1 Supply and Demand
9.2 Pricing Strategies
9.3 Market Conditions
Sports and Entertainment Marketing
© Thomson/South-Western
Winning Strategies
Cereal Stars
Wheaties cereal discovered by accident
first featured star was fictitious
Lou Gehrig was first actual star featured
many athletes make it a career goal to be
featured on the box
in 1999, women in sports were featured
Chapter 9
Slide 2
Sports and Entertainment Marketing
© Thomson/South-Western
Lesson 9.1
Supply and Demand
Goals
Explain the relationships between
supply, demand, and price.
Discuss the government’s influence on
pricing.
Chapter 9
Slide 3
Sports and Entertainment Marketing
© Thomson/South-Western
Terms
law of demand
law of supply
scarcity
equilibrium
price fixing
bait and switch
price discrimination
Chapter 9
Slide 4
Sports and Entertainment Marketing
© Thomson/South-Western
THE LAWS OF SUPPLY AND
DEMAND
demand
the relationship between the quantity of a
product that consumers are willing and
able to purchase and the price
Chapter 9
Slide 5
Sports and Entertainment Marketing
© Thomson/South-Western
producers
businesses that use resources to develop
products and services
supply
the relationship between the quantity of a
product that producers are willing and able
to provide and the price
Chapter 9
Slide 6
Sports and Entertainment Marketing
© Thomson/South-Western
Price-Demand Relationships
law of demand
an inverse relationship
when the price goes up, demand goes down
when the price goes down, demand goes up
Chapter 9
Slide 7
Sports and Entertainment Marketing
© Thomson/South-Western
Price-Supply Relationships
law of supply
when the price goes up the supply
produced goes up
when the price goes down the supply
produced goes down
Chapter 9
Slide 8
Sports and Entertainment Marketing
© Thomson/South-Western
Scarcity
scarcity
consumers have limited money to spend
producers have limited resources to use
for production
Consumers and producers must decide
how to use their limited resources to
meet unlimited wants and needs.
Chapter 9
Slide 9
Sports and Entertainment Marketing
© Thomson/South-Western
Equilibrium
equilibrium
the point where the supply and demand
curves intersect
indicates the best quantity and price for
goods and services
Chapter 9
Slide 10
Sports and Entertainment Marketing
© Thomson/South-Western
Chapter 9
Slide 11
Sports and Entertainment Marketing
© Thomson/South-Western
Concerts in the Spotlight
Concert prices can be set high.
limited supply
high demand
If demand is high enough, supply can
be increased by adding a second show.
Chapter 9
Slide 12
Sports and Entertainment Marketing
© Thomson/South-Western
How does price affect demand?
Chapter 9
Slide 13
Sports and Entertainment Marketing
© Thomson/South-Western
GOVERNMENT INFLUENCE ON
PRICING
private-enterprise system
based upon independent decisions made
by consumers and businesses
Chapter 9
Slide 14
Sports and Entertainment Marketing
© Thomson/South-Western
The U.S. government has an influence
on prices charged for merchandise
directly and indirectly through antitrust
laws, taxation, and various consumer
protection laws.
Chapter 9
Slide 15
Sports and Entertainment Marketing
© Thomson/South-Western
Benefits of Competition
monopoly
where one business controls the entire
market
Antitrust laws encourage competition
and help avoid monopolies.
Chapter 9
Slide 16
Sports and Entertainment Marketing
© Thomson/South-Western
Taxation
Taxation can be used by the
government to encourage or discourage
sales.
Chapter 9
Slide 17
Sports and Entertainment Marketing
© Thomson/South-Western
Illegal Pricing
price fixing
when related businesses conspire to
charge high prices
illegal in U.S.
Chapter 9
Slide 18
Sports and Entertainment Marketing
© Thomson/South-Western
bait and switch
when a product that is advertised at a great
price is “out of stock”
salesperson tries to sell customer a higherpriced alternative
advertised prices cannot be misleading
price discrimination
occurs when one individual, group, or
business is charged a higher price than
others purchasing the same product or
service
Chapter 9
Slide 19
Sports and Entertainment Marketing
© Thomson/South-Western
List three ways the government
influences pricing.
Chapter 9
Slide 20
Sports and Entertainment Marketing
© Thomson/South-Western
Lesson 9.2
Pricing Strategies
Goals
Discuss pricing strategies used by
businesses to increase sales.
List five steps for determining price.
Chapter 9
Slide 21
Sports and Entertainment Marketing
© Thomson/South-Western
Terms
operating expenses
markup
price lines
loss-leader pricing
Chapter 9
Slide 22
Sports and Entertainment Marketing
© Thomson/South-Western
PRICING CONSIDERATIONS
price
the amount that customers pay for
products and services
Chapter 9
Slide 23
Sports and Entertainment Marketing
© Thomson/South-Western
pricing
the process of establishing and
communicating the value of goods and
services to customers
operating expenses
all the costs associated with running your
business
markup
the amount that is added to the cost of an
item to cover operating expenses and allow
for a profit
Chapter 9
Slide 24
Sports and Entertainment Marketing
© Thomson/South-Western
pure competition
many companies offering the same product
customers do not recognize major differences in the
brands
the market will drive the prices low as businesses
compete for consumers’ business
market price
determined by laws of supply and demand
if not sufficient to cover costs and allow for a profit,
the business will cease production of the product
Chapter 9
Slide 25
Sports and Entertainment Marketing
© Thomson/South-Western
Pricing Policies
one-price policy
all customers pay the same price for a
product
flexible pricing policy
allows customers to negotiate a price
within a range
Chapter 9
Slide 26
Sports and Entertainment Marketing
© Thomson/South-Western
price lines
distinct categories of merchandise based
upon price, quality, and features
geographic pricing
allows pricing variations based upon
geographic location
Chapter 9
Slide 27
Sports and Entertainment Marketing
© Thomson/South-Western
A Variety of Pricing Strategies
Psychological Pricing
creating an illusion for customers
Prestige Pricing
higher-than-average pricing
targets customers seeking status and
quality
Chapter 9
Slide 28
Sports and Entertainment Marketing
© Thomson/South-Western
Volume Pricing
when a supplier provides a lower price to a
customer who buys a high volume of
product
Promotional Pricing
offering customers an incentive to get them
in the store
two-hour/ 50% off sale
Chapter 9
Slide 29
Sports and Entertainment Marketing
© Thomson/South-Western
Loss-Leader Pricing
the willingness to take a loss on the reduced
prices of selected items in order to create
more customer traffic
special event promotion
associates a special sale with a major event
Chapter 9
Slide 30
Sports and Entertainment Marketing
© Thomson/South-Western
rebates
coupons on products that customers can mail in for
a refund
depends upon further action by the customer
multiple-unit pricing
a volume based discount
trade-in allowance
giving a store your old product when purchasing a
new product
usually results in a discount on the new product
purchase
Chapter 9
Slide 31
Sports and Entertainment Marketing
© Thomson/South-Western
List and describe five pricing strategies
to increase sales.
Chapter 9
Slide 32
Sports and Entertainment Marketing
© Thomson/South-Western
DETERMINING THE PRICE
There are five steps to determining the
price to charge for a product or service.
Chapter 9
Slide 33
Sports and Entertainment Marketing
© Thomson/South-Western
1. Establish the price objectives.
2. Determine the cost of the product or
service.
3. Estimate consumer demand for your
product or service.
4. Study the competition.
5. Decide on a pricing strategy.
Chapter 9
Slide 34
Sports and Entertainment Marketing
© Thomson/South-Western
List the five steps for determining price.
Chapter 9
Slide 35
Sports and Entertainment Marketing
© Thomson/South-Western
Lesson 9.3
Market Conditions
Goals
Define the business cycle and describe
its impact on sports and entertainment.
Discuss the importance of monitoring
consumer trends.
Chapter 9
Slide 36
Sports and Entertainment Marketing
© Thomson/South-Western
Terms
business cycle
inflation
shoulder periods
Chapter 9
Slide 37
Sports and Entertainment Marketing
© Thomson/South-Western
IMPACT OF THE BUSINESS
CYCLE
business cycle (economic cycle)
the ups and downs of the economy
-
Chapter 9
Slide 38
Sports and Entertainment Marketing
© Thomson/South-Western
Chapter 9
Slide 39
Sports and Entertainment Marketing
© Thomson/South-Western
Expansion
expansion
the upside of a business cycle
peak
highest point of growth in the economy
Chapter 9
Slide 40
Sports and Entertainment Marketing
© Thomson/South-Western
Contraction
contraction
the downside of a business cycle
recession or depression
inflation
when prices for goods and services rise
faster than consumer income
Chapter 9
Slide 41
Sports and Entertainment Marketing
© Thomson/South-Western
Business Reaction
trough
lowest point of contraction
recovery
economy shows signs of improving
prosperity
the period of business expansion following
recovery
Chapter 9
Slide 42
Sports and Entertainment Marketing
© Thomson/South-Western
Seasonal Cycles
For some businesses, demand
fluctuates with the seasons.
high season
the season with the highest demand
low season
the season with the lowest demand
Chapter 9
Slide 43
Sports and Entertainment Marketing
© Thomson/South-Western
shoulder periods
periods of moderate demand
Sports and entertainment marketing
strategies must be developed to help
even out the fluctuations created by
changing seasonal demands.
Chapter 9
Slide 44
Sports and Entertainment Marketing
© Thomson/South-Western
What is inflation and how does it
contribute to recession?
Chapter 9
Slide 45
Sports and Entertainment Marketing
© Thomson/South-Western
IMPACT OF CONSUMER
TRENDS
Trends are dictated by
television revenue
sponsors
consumer demand
-
Chapter 9
Slide 46
Sports and Entertainment Marketing
© Thomson/South-Western
Retro Television
Retro show fans like to relive the good
old days and recall positive memories
of growing up watching the stars in the
sitcoms.
Popular show reruns are inexpensive to
show on television.
Chapter 9
Slide 47
Sports and Entertainment Marketing
© Thomson/South-Western
Game Shows
There are game show channels that
rerun old favorites.
New game shows are being produced
to meet demand.
Chapter 9
Slide 48
Sports and Entertainment Marketing
© Thomson/South-Western
Audience Ratings Speak
Television networks cannot afford the
risk of having viewers switch channels
to watch a more exciting show on a
competing network.
Some series do not last more than six
airings due to flat ratings.
Chapter 9
Slide 49
Sports and Entertainment Marketing
© Thomson/South-Western
Socio-Culture Issues
Socio-culture issues include trends in
customer attitudes
lifestyles
opinions
demographics
Assessing consumers’ ever-changing needs
and wants is the bottom line for the success
or failure of a product or service.
Chapter 9
Slide 50
Sports and Entertainment Marketing
© Thomson/South-Western
Why must sports and entertainment
marketers pay careful attention to
consumer trends?
Chapter 9
Slide 51
Sports and Entertainment Marketing
© Thomson/South-Western
PERFORMANCE INDICATORS
EVALUATED
Demonstrate an understanding of the
economic challenges facing television
network programming.
Demonstrate critical thinking and problemsolving skills.
Chapter 9
Slide 52
Sports and Entertainment Marketing
© Thomson/South-Western
Describe promotions appropriate for the
target market that will result in increased
ratings for the bowl game.
Describe advertisements that will attract the
attention of your target market.
Develop a strategy to encourage viewers of
the Price Is Right to watch the bowl game.
Chapter 9
Slide 53
Sports and Entertainment Marketing
© Thomson/South-Western
THINK CRITICALLY
1. How have the number of bowl games
affected the television ratings for the
games?
2. Why are the scheduled date and time of
the game important factors for ratings
and promotions?
Chapter 9
Slide 54
Sports and Entertainment Marketing
© Thomson/South-Western
3. Why should television networks pay
attention to the programming scheduled
around the game and on competing
networks when making decisions?
4. How can an association be made
between the game show and the bowl
game?
Chapter 9
Slide 55
Sports and Entertainment Marketing
© Thomson/South-Western