With the recent launch of the AFL season, pricing of food and beverage at venues throughout the country have made headlines. It has been a constant frustration of consumers that not only do they pay good money to go and support their team, but they are also slugged excessively to feed the family. Each venue is governed by its own food and beverage standards so it is nearly impossible to compare like for like, but what we do know is all prices are above what you would generally pay for the item.
Now let’s discuss this in context of what we know about marketing. Of the 4Ps of marketing, three are focused on delivering value to the customer by making a good product, making it assessable and communicating the products benefit. Pricing however, provides the company a mechanism for obtaining value back from its customers (Iacobucci, 2013). The simplistic way to think about pricing is that a business can use one of three pricing strategies for its brand or product; being low, medium or high. Clearly, food and beverage outlets at sporting events have chosen the technique of charging customers the most they are willing to pay, the highest price.
Iacobucci also tells us that the Cs of marketing techniques directly affect pricing. Companies could argue that inherent costs to cater at such venues and events are higher than normal, and without further facts, it would be difficult to argue otherwise. However, on the face of it, it is hard to see why a bottle of water would cost triple of what you would pay at the supermarket.
Perhaps the most relevant C of marketing is competition. After all, pricing is all about supply and demand. Supply is generally limited due to Catering rights to venues are given to one provider. Therefore, once a consumer is enclosed in a venue there is no competition to the food and beverage providers. Is this reason enough to employ the high price technique?
Below are the average prices for staples at Sporting Venues around the country. As you can see they are well over what you would expect to pay at your local supermarket or your corner deli.
Most of the key venues in each state do allow patrons to bring in unopened water and snacks, so do we as consumers really have a right to complain when there is an alternate option? Are we too lazy or time poor as consumers to be prepared and pack a lunch and refreshments? Is the convenience really worth it?
What Iacobucci also tells us is pricing is the easiest of the 4P’s to change. However, how can a stadium announce nearly a 40% reduction across the board in food and beverage prices, and still make a profit? More to the point, what would motivate such a decision?
Are there any consequences? Remember, others are watching! Competitors will act quickly to respond to this price cut tactic. It is proven when Etihad Stadium adjusted its food and beverage pricing soon after MCG announced its price changes. Just like what normally Woolworths does after learning Coles price cut and vice versa. But unlike Coles vs Woolworths, these sporting venues are not fighting with each other for customers. Once a consumer is stuck in the venue, the only decision to make is to buy or not to buy. If that is the case, is it as simple as reduce your price to increase your sales?
These companies clearly understand the complexity of 4Cs of marketing, and realise in situations like these they have an opportunity to maximise their profit’s as a result of the favourable marketing conditions.
What are your experiences at sporting or other such events and does it have an impact on the ultimate brand be promoted?
Iacobucci, D. (2013) Marketing Management (MM), 4th Edition, South-Western, Cenage Learning, Mason