advanced theory and practice in sport marketing - Marshalls University

point where profit is ultimately increased by the resulting increase in sales volume.
This can only work if total retail costs do not significantly rise as a result
of the increased volume. With a market skimming pricing strategy, a sport retail
firm sets premium prices and attracts sport consumers whom are less concerned
with price. These individuals are influenced by service, assortment, and prestige.
This strategy is appropriate when new competitors are unlikely to enter
the market, and added sales will greatly increase retail cost.
Once the objectives have been set, a pricing policy must be implemented.
This policy serves as the framework for applying the pricing objective within
the sport retail organization. In general, sport retail firms employ a broad pricing
policy so that short- and long-term objectives can be met. In addition, the
sport retail firm must coordinate the pricing policy with the sport retail firm’s
image, the composition of the target market, and the elements of the sport retail
mix discussed earlier in this chapter. Examples of pricing policies include: (a)
discount pricing vs. market pricing vs. luxury pricing; (b) pricing leader in the
market segment or price follower; and (c) consistent pricing or changing pricing
based on costs.
The creation of a pricing strategy comes as a result of the pricing policies, as
well as from the understanding that the sport industry is demand oriented. As
a result, the sport retailer starts developing their strategy by attempting to
determine the maximum price the sport consumer will pay for a given sport
product. The pricing is then adjusted based on the quantities purchased and
feedback from sport consumers. This adjustment is referred to as markup pricing
(which includes markdowns). However, a major external factor may create
an additional alteration to pricing. Competitor-oriented pricing is set in equivalence
to that of a competitor to maintain an average market price, and allow
the sport retailer to concentrate on other factors to differentiate their organization,
including service, image, and convenience.
After the strategy is set, a plan for implementation must be instituted. The
most common ways to implement a pricing strategy are via customary pricing
or variable pricing. Customary pricing is when the sport retailer sets prices for
goods and services and seeks to maintain them for an extended period. The
most common practice of customary pricing is “everyday low prices.” Variable
pricing is when a sport retailer changes their prices as a result of changes in
costs or demand. This is especially true in the sport and recreational travel
industry, where changes in costs and demand change based on environmental
trends (seasons, weather, politics, societal issues).
There are a number of other implementations of pricing policies and strategies.
A one-price policy is where all products are the same price ($1 store). A
flexible pricing policy is where consumers bargain over prices of products
(eBay, Boston Whaler Boats). An odd-pricing strategy is a psychological pricing
strategy where all products are priced slightly below the even dollar. For example,
a person will spend $44.99 for sneakers at one store more likely than
$45.00 at another. A multiple-unit pricing strategy is where a sport consumer
will receive a discount for purchasing in bulk. An example would be a camp
director could buy one basketball off the shelf for $24.99, but will only pay
$22.49 for buying 100 basketballs (10% discount saves almost $250).
SPORT RETAIL MANAGEMENT 301