Case Study Excerpt
Updated: Oct 12, 2018
Arts Marketing Theory & Practice
Excerpt from an Arts Marketing Case Study Discussion written during my Master's study at Deakin University.
Pricing the arts
On the whole customers of arts products such as events and performances, face the challenge of taking a risk in committing to a somewhat blind purchase
Of the widely recognised marketing mix principles including product, distribution, promotion and price, price is arguably the most important for it is the only element that actually generates economic turnover for the organisation whereas the other elements conversely, generate costs. (Learn Marketing, 2015) A strategic variable; pricing must support the other elements of the marketing mix. In so doing, price will reflect the economic relationship between supply and demand. (Learn Marketing, 2015) Traditionally, price as it relates to marketing, centres significantly on the building of market share and market leadership with a focus on financial profitability. However these objectives bare little relevance to the arts sector that instead are occupied almost entirely with the marketing objective of building and developing new and loyal audiences. (Hill, O’Sullivan & O’Sullivan, 2011, p.161) Unlike other commercial businesses, arts organisations financial objectives are “often less to do with profitability and more to do with how much it will cost the organisation to do its desired work for its preferred customers.” (AMA, 2002, p.8) Managers often cite the mounting “(p)ressure to produce the work (as) often outweigh(ing) the need to produce marketing materials (and) devise strategies.” (Cinemedia, 1999) It stands to reason therefore why pricing the arts is considered to be a source of great tension within many arts organisations. As a somewhat seemingly uncomfortable topic, pricing may be of all the marketing mix elements, the most misguided and perhaps underutilised marketing tool within the arts sector.
It is widely accepted that the economic principle of pricing in theory, is to reflect the value of a product or service to the customer. Broadly speaking, it is determined “by the discovery of what customers perceive (as) the value of the item (for) sale.” (Business Case Studies, 2015) In theory, the product is normally something tangible and its value is perceived through its relevance according to the consumer’s unmet desire and “the amount they are willing to pay to fulfil it.” (Carnrite, 2015) However unlike the other marketing mix elements, price is regarded theoretically as “not primarily concerned with creating value. Rather, it could be said to be the marketing activity involved with capturing or ‘harvesting’…value”. (Schindler, 2012, p.5) Still in practice, price often supports or dissuades the customers’ notion to purchase based on the success of the other three marketing elements in creating perceived value in the mind of the customer. (Schindler, 2012, p.4) Arts customers mostly have no means of product comparison when considering an arts purchase. Unlike the products offered in other sectors where marketing efforts can be aimed towards highlighting competitive similarities such as ingredients or comparative quality, arts customers are usually purchasing “an ephemeral experience (of which) the intangible nature…constitutes a considerable risk.” (Hill, O’Sullivan & O’Sullivan, 2011, p.158) At most, some might have prior experience or knowledge of events upon which to reflect, but on the whole customers of arts products such as events and performances, face the challenge of taking a risk in committing to a somewhat blind purchase. It is not until they have in fact come to the end of their experience that they will be “in a position to judge the value they received in exchange for their money.” (Hill, O’Sullivan & O’Sullivan, 2011, p.158) In practice therefore, arts organisations are faced with the task of selling the intangible, the value of an experience. To do so effectively “the arts need… to comprehend, create and then communicate value more effectively (to audiences for) (i)f value is not communicated, (then it is perceived that) there is none.” (Wellington, 2008)