This array of buy prices and consumer volume enables the company to find the combination of volume, price, and margin that would produce the best opportunity for profits. The consumer price curve provides additional consumer insights that can be used to build a product-line price strategy that captures higher overall margins than a single product-price position.

We would like to extend a special thank you to Rich Stead , founder of AthletesInsight , for his feedback in writing this Sports Product Management research paper. Roger Best is a professor emeritus in marketing at the University of Oregon and author of Market-Based Management.

He is a cofounder of the University of Oregon Sports Product Management program and director of sports product management research. Roger has a BS in electrical engineering, an MBA, and a PhD in marketing. He started his career at General Electric in engineering and product management and then went on to be a Fortune marketing consultant and UO marketing professor.

Chris Sataua is a product-market manager at Revant Optics in Portland, Oregon, and a graduate of the University of Oregon Sports Product Management program.

He holds a BA in comprehensive design from the University of California at Davis and has 10 years of experience in design and marketing.

Jordan Pope is a a recent Master of Science graduate in the University of Oregon Sports Product Management program.

He holds a BS degree in economics and a bachelor of business administration in finance from Eastern Washington University.

In the summer of , Jordan was the product intern at Revant Optics in Portland, Oregon. The University of Oregon Sports Product Management program's mission is to be the worldwide leader in sports product management education and research.

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Overview: Sports product pricing involves many considerations with regard to target consumer needs, competition, brand features, cost, desired margin, and sales. The purpose of this research paper is to demonstrate consumer-based pricing and how it impacts price, strategy, and profits.

A consumer-based pricing app is included for experimenting with our sample data or creating your own consumer-based price data. Consumer-based pricing, like consumer insight, is built around consumers who have a strong interest in a product category.

Specifically, pricing is set with regard to how much these consumers would be willing to pay for a particular product. Far too often sports product companies do not include the consumer in their pricing. Instead, many companies use cost-based pricing and desired margins to set their prices.

But these prices have nothing to do with what consumers would pay for the product. To demonstrate consumer-based pricing, this paper uses the Performance model of sunglasses marketed by AthletesInsight 1 and the brand story that the authors created in Exhibit I.

The authors presented this brand story to 50 category consumers who had a strong interest in sports sunglasses.

These consisted of 21 competitive runners, 7 competitive cyclists, 13 extreme outdoor enthusiasts hikers, skiers, and wind surfers , and 9 former collegiate athletes. After reviewing the AthletesInsight brand story, these 50 consumers where asked one simple question:.

So what is the best price to charge for these sports performance sunglasses? One approach is cost-based pricing, which is commonly used in the sports product industry. This pricing approach, as shown in Exhibit III, starts with the product cost.

While cost-based pricing provides the desired margin and a large share of the sample consumers, the price that the company sets has nothing to do with the amount consumers would pay. As a result, the product could be underpriced , which would mean lower margins, or overpriced , which would translate to a lower volume sold.

An alternative approach is consumer-based pricing. Exhibit VI presents the price-volume-margin scenario for each of the ten price points in Exhibit II. Hence, the combination of a higher margin and slightly lower volume produced higher sales and higher profits.

For purposes of an example, the authors created a product-line pricing strategy using the price points in Exhibit II and the comments that the authors obtained from their consumer insight research of the 50 sample consumers.

The example pricing strategy that follows shows how the company can obtain still greater sales and gross profits with products positioned at three price points as performance, polarized, and value.

Performance: These sunglasses are designed for competitive runners, cyclists, and other athletes where aerodynamics is a desired benefit. The product also would come with polarized lenses. Polarized: Many consumers in our sample stated they would pay more for polarized lenses.

The product-line pricing strategy presented in Exhibit VII allows the company to capture higher margins along three price points on the consumer price curve. Of course, both these consumer-based price strategies produce a high margin and gross profit than the cost-based strategy. Cost-based pricing sets a floor price for desired margins.

Consumer-based pricing checks to see if consumers would value the product at a higher price, which would yield a higher margin and higher brand gross profit. Using consumer input on the amounts that consumers would be willing to pay, a company can create a consumer price curve.

This array of buy prices and consumer volume enables the company to find the combination of volume, price, and margin that would produce the best opportunity for profits. The consumer price curve provides additional consumer insights that can be used to build a product-line price strategy that captures higher overall margins than a single product-price position.

We would like to extend a special thank you to Rich Stead , founder of AthletesInsight , for his feedback in writing this Sports Product Management research paper. Roger Best is a professor emeritus in marketing at the University of Oregon and author of Market-Based Management.

He is a cofounder of the University of Oregon Sports Product Management program and director of sports product management research. Roger has a BS in electrical engineering, an MBA, and a PhD in marketing. He started his career at General Electric in engineering and product management and then went on to be a Fortune marketing consultant and UO marketing professor.

Chris Sataua is a product-market manager at Revant Optics in Portland, Oregon, and a graduate of the University of Oregon Sports Product Management program. He holds a BA in comprehensive design from the University of California at Davis and has 10 years of experience in design and marketing.

Jordan Pope is a a recent Master of Science graduate in the University of Oregon Sports Product Management program.

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