How would you describe the
current pricing strategies used by the GWS Giants?
The current pricing strategies used by the GWS Giants reflect the
relationship between supply and demand for their product. The GWS Giants are
the newest team to enter into the AFL. In addition, the club has been
established in the traditionally rugby-dominated state of New South Wales. As a
result, the high substitutability of their sport product for other products
from Rugby League and Rugby Union teams means that the GWS Giants are
experiencing more supply than there is demand for their memberships. Therefore,
the pricing reflects this need to stimulate demand for their product. In order
to create more demand, the marketing department at GWS Giants have three tiers
of memberships on offer: Ultimate, Giant and Reserve. Within each category,
subgroups of memberships are on offer such as Adult, Concession, Junior (under
13 years), Family (2 Adults + 2 Juniors), and Pet Membership. Overall, it is
evident that the GWS Giants have taken into account demand/supply issues,
pricing strategies of competitors and marketing mix constraints arising from
product mix and place dependence.
Consider the GWS Giants’ new
stadium. What pricing objectives could you develop for the team to reflect its
‘new place’?
It is necessary that GWS Giants look to maximise shareholder value
to capitalise on the unique viewer experiences that Skoda Stadium offers. The
stadium has undergone an upgrade and refurbishment in recent years. As a
result, stadium attendees have access to members’ bars, fan zones, facilities
and features such as the largest video screen in the Southern Hemisphere. Thus,
GWS should look to maximise sales growth as a long term pricing objective by
having lower membership pricing options. In doing so, they can sell their sport
product to as many customers as possible who will then experience the features
and experiences that Skoda Stadium has to offer. Ultimately, this experience
will encourage consumers to repurchase tickets in the future.
How would you make sure the
price set is not too high or too low?
To ensure the price of GWS Giants tickets are not too high or too
low, the marketing team will need to implement a strategic pricing process.
After setting some organisational goals, they will first need to determine
market sensitivity to price by looking at supply and demand, as well as factors
that determine price elasticity (such as substitutability of the product and
the proportion of income spent on the product). Moreover, the GWS Giants
marketing team must conduct research into the pricing strategies of major
competitors in both rugby codes and soccer. After doing so, it is necessary to
determine possible constraints by researching the product mix and place
dependence.
How can the new objectives
support other elements of the GWS Giants’ marketing mix?
In particular, the new objectives can support the promotion component
of the GWS Giants’ marketing mix. By combining strategies such as sales
promotions, advertising and personal selling, the club can communicate to
consumers how their sport product can satisfy consumer needs. If the
promotional strategies are implemented correctly, it can influence whether the consumer
choses to purchase a GWS Giants membership over another substitutable product
on offer from rugby codes or soccer.
Develop a pricing strategy
for a range of membership (individual and corporate) packages for the GWS
Giants, including a timeline for launching memberships for the new season.
Determine pricing goals: Firstly,
the GWS Giants must set clear goals for their organisation. It is recommended
that the club take a long-term view of maximising the profits from their sport
product, rather than focussing on current financial performance. By
concentrating on increasing the potential for sales growth, the GWS Giants can
aim to sell as much of their product possible. This would mean that the price
must reflect affordability and a lower price than the competition in the
market.
Determine market sensitivity to price: The GWS Giants must ascertain the size of the market and each
segment to gain a clearer understanding on price elasticity as well as the
supply/demand relationship. The club already has options available for adults,
children, pets and families. However, GWS Giants can diversify their product
range by developing products for more segments such as interstate supporters,
occasional attendees (less than five games) and perhaps online packages for
potential overseas supporters. Further, the marketing department must conduct
research into how their target market segments spend their income.
Estimate the break-even price: In
order to determine a break-even price point, the GWS Giants marketing team need
to look at the following factors: selling prices, volume of sales, unit
variable cost, total fixed cost and sales mix. Once this is ascertained, the
club can charge as little or as much above the break-even price.
Determine pricing strategies of major competitors: The GWS Giants are located in the rugby-dominated state of New
Sales Wales. Therefore, the marketing team must look at the price points both
rugby codes use to make their AFL product an attractive alternative.
Determine constraints on pricing behaviour: For public policy or strategic reasons, the AFL can implement a
threshold that ticket prices must adhere to. As a result, the GWS Giants will
need to ensure they follow such guidelines set out by the AFL when setting
their prices.
Determine constraints of other marketing mix variables: As previously discussed, the GWS Giants have entered into a new
market for the AFL. New South Wales is not traditionally an AFL state. Instead
it has a long history with rugby league and rugby union. Therefore, this product
mix means that the club should set lower prices in comparison to bring
consumers to the game. Visually, this will fill up seats. In turn, the games
will look more attractive on television, having the potential of maximising
sponsorship opportunities for the club. Moreover, if a low pricing strategy is
adopted, the promotions must be both proactive and intensive to sell as many as
possible to yield the greatest return.
Determine time dependence: The GWS
Giants should implement their pricing strategies throughout the season, with
extensive promotional work in the off-season. For example, the club could pre-sell
memberships in the pre-season at a reduced price to reward early adopters. In
addition, the peak period of demand would be in the first half of the season.
As a result, the membership prices should be at the highest point during this
time. Lastly, reduced ticket packages should be on offer during the second half
of the season. The purchaser cannot consume games that have already been played.
Yet, if the team is performing well or if consumers want to attend games on a
casual basis, the pricing strategy should accommodate these factors.
Determine final price: Once
the aforementioned steps are completed, the GWS Giants can formulate
appropriate and effective prices.
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