Based on these 6 factors in setting a price: selecting the pricing objective, determining demand, estimating costs, analyzing competitors costs, prices and offers, selecting a pricing method and selecting the final price, Singapore GP Pte Ltd employed 2 different pricing strategies. They are 1. Price discounts and allowances 2. Differentiated Pricing
Promotional pricing was not used in the sale of the FORMULA 1™ SingTel Singapore Grand Prix tickets as none of the techniques: lost-leader pricing, special-event pricing, cash rebates, low-interest financing, longer payment terms, warranties and service contracts and psychological discounting were used to stimulate early purchases were used. This is probably because the annual international event is highly exclusive and a world’s first and therefore consumers would most likely be rushing to buy the tickets, thus not needing any promotional pricing to encourage early sales.
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Price Discounts and Allowances Price discount is the act of giving discounts for early payment, volume purchases and off-season buying. For the FORMULA 1™ SingTel Singapore Grand Prix, a quantity discount was given to buyers who purchased a 3 day walkabout pass instead of a daily pass. The savings of about $36 was given to encourage attendance for all three days of the match. A 10% discount was also given to youths aged 7-15 and seniors above the age of 60. This was done to target a wider range of audience.
Promotional allowance is shown when SingTel subscribers are offered the option to purchase single-day walkabout tickets before the tickets were released to the public. This is the reward for consumers who are SingtTel subscribers who choose to participate in this advertising program. Differentiated Pricing Differentiated pricing occurs to accommodate the variance of consumers, products, locations etc. In differentiated pricing, there is price discrimination as a product or service is sold at 2 or more prices that do not reflect a proportional difference in cost (textbook pg 85).
There are 3 degrees in price discrimination. In the first-degree, the seller charges a different price to each customer based on the intensity of his demand. In the second degree, the seller charges a lower price to buyers who buy a larger volume. In the third degree, the seller charges different prices to different classes of buyers. It is clearly shown in the FORMULA 1™ SingTel Singapore Grand Prix that this pricing strategy was used to sell the tickets. Firstly, Singapore GP Pte Ltd charges a lower price to customers who buy a three day walkabout ticket instead of a one day ticket.
This is the second degree in price discrimination. The third degree of discrimination is evident in pricing of the FORMULA 1™ SingTel Singapore Grand Prix tickets. Third degree price discrimination methods include customer-segment pricing, product-form pricing, image pricing, channel pricing, location pricing and time pricing. Singapore GP Pte Ltd has priced their tickets according to customer-segment pricing, product-form pricing, image pricing and location pricing. Customer-segment pricing Customer-segment pricing is the charging of different prices for the same product or service to different customer groups.
Singapore GP Pte Ltd gave a 10% discount to youths aged 7-15 and seniors above the age of 60 exhibiting this type of pricing. Product-form pricing and location pricing Product-form pricing is the pricing of different versions of the product but not proportionately to their respective costs. Location pricing is the difference in pricing based on the difference in locations even though the cost of each location is the same. Product-form and location pricing is evident given the variety of grandstand seats tickets offered to the consumers. The ticket price ranging from $248 to $1,388 is for the different locations and level of services.
The cost of offering the tickets at different grandstand locations is the same but are priced differently according to consumer location preferences. In this case, the location of the finishing line on the race track would be very popular and therefore the ticket prices are higher. The range of service also warrants a higher price of the race tickets. In this case, the Esplanade Steps Premier Grandstand Seats were priced at $2,588 as it offered a bevy of services ranging from exclusive gifts to premium meal services and a complimentary open bar.
Although there is extra cost for providing these services, the ticket price reflected is not proportionate to these costs. As such product-form pricing is clearly highlighted. Image Pricing Image pricing is the pricing of the same product at 2 different levels based on the image differences. Singapore GP Pte Ltd sold suite tickets which are relatively more expensive as there is an air of prestige surrounding suite tickets when compared to the other tickets.
Consumers must pay the $6,955 price tag in order to be holders of suite class tickets. Even though it might seem cheaper that the Esplanade Steps Premier Grandstand Seat tickets because it is a three day pass, consumers have no option in getting a one day pass and therefore is actually forced to pay more. The services provided for suite ticket holders are even lesser than the Esplanade Steps Premier Grandstand Seat ticket holders lacking the complimentary open bar and exclusive gift.
However, suites are considered the “best seats” in almost all sporting events not because of its location but because of its price tag and reputation. Therefore using this reputation, Singapore GP Pte Ltd sold the suite tickets for a higher price, engaging in image pricing. In conclusion, based on the above explanations, it is clear that the pricing strategies used in selling of the FORMULA 1™ SingTel Singapore Grand Prix included price discounts and allowances and differentiated pricing.