Sport Marketing Chapter 7

pricing in sports is dependant on
an attractive place and product
when selling experiences we must emphasize four Fs
fantasies, feelings, fun, friends
we should think of experiential marketing in terms of four Es
experience, entertainment, exhibitionsm, and evangelizing
experience
you want to emphasize the escape, the emotion, and the enjoyment of the event.
entertainment
that uniquely occurs only that way on that particular three hours that will never be repeated in exactly the same way. The suspense and uncertainty of esthetic performances (e.g., Will the pitcher throw a shut-out?) breeds excitement and ecstasy.
exhibitionism
We’re talking about the opportunity for fans to exhibit their love for the players and the team, to express their passions, and expose their support of the team to others.
evangelize
others into being fans, as they educate, evince, and endorse the experience. If you are a passionate fan, you educate others as you talk about the game experience. You evince, or validate the experience to others with your first-hand knowledge of being there. Clearly, you will endorse the experience to others as a great way to spend time out for entertainment.
price sensitivity
refers to how fans react to price variations of tickets, concessions, merchandise, or any other aspect of the entertainment experience.
what price sensitivity is dependent upon
whether the consumption experience setting is private (alone) or social (with others) and whether the occasion is functional (for necessities) or hedonic (for fun). We are most price sensitive when the consumption experience has no social interaction and the occasion is functional
the basis of price
focuses on the economic exchange
left vs right side of brain
Once you begin down the path of price deals and discounts, a psychological trigger occurs in the minds of fans to process price information in functional (left brain) terms of dollars and cents—rather than the emotional value received from the experience. We would rather keep fans focused on the 4 Fs and 4 Es of the experience, which are processed primarily on the right side of the brain. The right side of the brain is where we have fun, as the accompanying scientific drawing of brain hemispheric lateralization illustrates.
price lining approach
to set different prices for distinctly different levels of product quality. In particular, fans with more income are generally less price sensitive than those with less income.
venues levels of quality
seats- view, comfort, amenities, service (remains constant)
participants- opponent teams, tournament or race entrants (changes from event to event)
timing- pre-season, season, post- season, weekday vs weekend, day vs night (changes based on availability)
price lines are consistent with
market conditions, market demand, product quality, venue quality and promotional positioning.
fixed costs
most costs of sports are fixed meaning no matter how many fans the production costs for the game itself is relatively constant
perishable
seat inventory, meaning that once the game is played, that inventory is lost. Unused seats also affect the volume of other venue sales (viz., parking, food, beverages, and souvenirs).
why you should never offer price discounts
You run the risk of alienating your customers who are paying full price.
The discounts may become permanent (in the minds of consumers).
Discounts generate a negative connotation for your brand.
the goal of profit maximization
is to adjust either the quantity of seats available or the prices of the seats in order to maximize the gap between revenues and costs.4) Consequently, the strategic goal in setting ticket prices each season is to determine the appropriate quantity of seats at each price line that will maximize revenue.
strategic discount packages
1) Are programmed and consistent (i.e., different discount or offer on different days of the week) and

2) They all are in some form of partnership with one or more of our sponsors who support each program promotionally and otherwise.

price discrimination
when different customer segments are willing to pay different prices for the same experience. if a team sells the same ticket (e.g., reserved balcony seats) at different prices, then the team is using price discrimination. can be planned and practiced when organizations are able to forecast that event capacity will not be maximized.
conditions for effective price discrimination
SLICES: Sensitivity, large, identifiable, confusion, economics, separtation
price sensitivity
refers to how people respond to changes in price. Lower-income consumers are often more price-sensitive than others.
large enough
the segment must be large enough to warrant the different prices. Management must be careful to not overestimate the size of the price-sensitive segment for tickets.
identify
The best option is effective database management. Individuals who fit price-sensitive profiles (low income, purchase lower priced tickets, attend infrequently, otherwise loyal/identified with team) may be selected to receive pertinent ticket information. The problem with a good deal of marketing promotions targeting price-sensitive segments is that they are communicated through mass media communications (TV, radio, newspaper, etc.)
confuse
In particular, offering discounts for some games/events and not others for the same ticket (e.g., reserved seating) may lead fans to become disillusioned as to the real value of the ticket. The more frequently discount or complimentary tickets are offered, the more fans’ perceptions will shift toward the lower price.
economically profitable
In the short term, offering lower ticket prices to price-sensitive segments is likely to be profitable in the sense that each additional ticket sold at the lower price brings in additional revenue with little incremental cost.
separated
If the cheaper ticket can be bought and transferred to others at a higher price, then the profits are simply shifted from the property to middlemen known as scalpers or brokers. Clearly, the Denver Broncos practice of selling 2000 tickets at half price (to satisfy local government requirements to make tickets available to underprivileged segments) gives an excellent opportunity for individuals to purchase and resell the tickets. Another example of ineffective price discrimination due to the lack of separation also occurred in Denver. Fans attending a Denver Nuggets game received a free ski lift ticket to local ski areas. Within the week, attendees were selling these lift tickets on eBay at prices approaching the regular daily lift ticket prices.
ticket exchange
allows ticket holders to place unused tickets they own available to other buyers to purchase through the organization’s online exchange program. These tickets can be resold at auction or set prices determined by the seller. The advantage of this approach is the organization maintains control of the process and can analyze the data to determine appropriate prices for the coming season.
dynamic pricing
allow prices for individual tickets to change according to demand and other situational factors. Dynamic pricing models are frequently used by airlines, hotels, theaters, and more recently, sports and entertainment entities. The San Francisco Giants were the first team to go to a 100% completely dynamic pricing model that uses a mathematical algorithm to determine the demand for a specific game, taking into account the situational quality factors. Season ticket holders are protected so that no one can obtain the same quality level of seat for a lower price than the season ticket holder paid