8.3 Example | MarketingNOW!

Chapter 8: Pricing Concepts and Strategies

One of the most prominent examples of dynamic ticket pricing is employed by airlines, but for this illustration, let's look into a different sector: Major League Baseball (MLB), specifically the San Francisco Giants.

The San Francisco Giants and Dynamic Pricing:

In 2009, the San Francisco Giants became one of the first professional sports teams to adopt dynamic pricing for ticket sales. This pricing strategy allows the team to adjust ticket prices in real-time based on several conditions and factors.

Conditions Influencing the Price:

Team Performance: If the Giants are on a winning streak or are performing well during the season, there's naturally more demand to watch them play. Higher demand can lead to higher ticket prices.

Opponent's Popularity: Games against high-profile teams or traditional rivals typically attract more fans. For example, when they play against teams like the Los Angeles Dodgers (a historic rivalry), there's a spike in demand and hence a potential price increase.

Time and Date: Weekend games or games during popular vacation times, like summer breaks, tend to attract more spectators. Evening games might also be more popular than day games, especially on weekdays.

Promotional Events: Special events, like a commemorative giveaway, can boost attendance. For instance, if the Giants were to give away a bobblehead of a popular player to the first 10,000 attendees, this could drive demand and ticket prices up.

Player Milestones: If a player is about to achieve a significant milestone, such as a pitcher nearing a 300th career strikeout, more fans will be interested in witnessing that moment live.

Seasonal Factors: Weather can play a role, especially if it's an open stadium. A sunny, pleasant day might see higher prices than a forecasted rainy day.

Seat Location: Even within the dynamic pricing model, different sections of the stadium have varied pricing structures. A seat right behind the home plate will be priced differently than one in the upper decks.

The Giants use software that analyzes these factors, among others, and adjusts ticket prices accordingly, sometimes even daily. By doing so, they aim to optimize revenue, ensure more consistent attendance throughout the season, and offer ticket prices that reflect the real-time value of the game experience.

It's worth noting that while dynamic pricing can lead to higher ticket prices during peak times or popular matches, it can also result in more affordable prices during less popular games, benefiting budget-conscious fans.

Dynamic pricing, also known as surge pricing, demand pricing, or time-based pricing, is used in various industries to adjust prices in response to real-time supply and demand. Here is a list of industries that commonly use dynamic pricing:

Airlines: Prices for airline tickets fluctuate based on factors such as demand, time to departure, competition, and seat availability.

Hospitality: Hotels and resorts adjust room rates based on occupancy levels, season, day of the week, and local events.

Ride-sharing: Companies like Uber and Lyft increase prices during peak demand times, such as rush hours or bad weather conditions.

Sports and Entertainment: Event organizers, including concert venues and sports teams, adjust ticket prices based on demand, opponent quality, and seat location.

E-Commerce: Online retailers like Amazon change product prices based on competitors' pricing, demand, and inventory levels.

Retail: Brick-and-mortar stores, especially during sales events or holidays, may adjust prices dynamically to maximize sales and profits.

Utilities: Electricity and water providers use dynamic pricing to encourage usage during off-peak times and reduce strain on the grid during peak hours.

Public Transportation: Some transit systems adjust fares based on peak and off-peak hours to manage congestion and demand.

Toll Roads: Toll rates on highways and bridges can change based on traffic conditions and time of day to manage congestion.

Real Estate: Rental prices for apartments and commercial spaces can fluctuate based on market conditions, location, and demand.

Telecommunications: Internet and mobile service providers might offer dynamic pricing plans based on usage, time of day, and network congestion.

Car Rentals: Rental car companies adjust prices based on demand, season, location, and vehicle availability.

Cruise Lines: Cruise prices can vary depending on cabin availability, booking window, and demand for specific itineraries.

Fitness and Wellness: Gyms and fitness centers may offer dynamic pricing for memberships and classes based on time slots and demand.

Parking: Parking facilities, especially in urban areas, adjust rates based on time of day, location, and demand.

Restaurants: Some restaurants use dynamic pricing for reservations during peak times or special events.

Software and Digital Services: Companies offering SaaS (Software as a Service) or streaming services may adjust prices based on subscription levels, features, and usage.

These industries use dynamic pricing to optimize revenue, manage demand, and offer more competitive pricing to customers.