Abstract
The concept of price is exceedingly complex, and the roles it can play are numerous. Two basic roles for price are allocation and information. The price of a product as an allocative mechanism determines who can buy the product, and how much can be purchased, or the total demand for the product. In an allocative role, prices can have a divisive impact in splitting a society into ‘haves’ and ‘have-nots’. Effective pricing by increasing the total size of the potential market enables more consumers to be able to reap the benefits of society’s organizational resources. Conversely, ineffective pricing may polarize the social classes and alienate the poor from the rest of society.1 At the same time, price provides signals, and in effect positions a product as to its quality and the acquired social status in owning the product. Price is often a clear indicator of what the consumer may desire or want to be recognized for in a purchasing or use situation. Price, therefore, along with deals and promotional levels, can be a potent marketing stimulus in eliciting the response of purchasing behaviour.
One popular misconception about the sports economy is that ticket-buyers are picking up the tab for skyrocketing costs — including the extravagant salaries of stars. The truth according to economist Gerald Scully is that ‘there is no relationship whatsoever between ticket prices and owners’ costs’. Prices are set on the basis of what the market will bear. Owners can’t pass along their costs until demand increases — that is until fans’ perceptions of the games rise.
(USA Today © 1993; reprinted by permission.)
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© 1995 Nessim Hanna and H. Robert Dodge
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Hanna, N., Dodge, H.R. (1995). Market Interpretations of Price. In: Pricing. Palgrave, London. https://doi.org/10.1007/978-1-349-14477-8_2
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DOI: https://doi.org/10.1007/978-1-349-14477-8_2
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