The World Cup and How to Set Prices

Segmenting prices, packaging the product and making the most of when the value is greater than any competitor, are examples of good practices in setting prices during occasions such as the World Cup.

Tuesday, May 20, 2014

Three World Cup lessons on prices

The World Cup in Brazil provides valuable lessons for price management for companies. Here are three key lessons for those who aspire to make their company the Lionel Messi of prices.

By Ariel Baños
President and founder of FIJACIONDEPRECIOS.COM

1.-The Brazuca and price segmentation:

The world cup is here, and also making an appearance are low-priced products, mainly imitations and counterfeits that try to steal market share from the brand names featuring in the official event. Beyond the logical legal offensive to combat piracy, there are also intelligent answers from the point of view of price management.

Adidas has been the official supplier of the footballs used in the world cup continuously since Mexico 1970. In Brazil 2014, the ball , baptized Brazuca, is being offered in a format in addition to the classic "professional" version that Messi will caress with his feet, in an economy version called "replica". Taking as reference the prices at the online store Amazon, the professional version is being sold at about $120, and the replica $30. While there are differences in the quality of products, its hard to fathom why the professional version costs four times as much as the replica. Moreover, even in the hypothetical situation where both products have similar production costs, it would make perfect sense to offer both versions at very different prices. The main reason is price segmentation.

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