Setting prices for sports & entertainment
2011
Profit
Maximization
”We sell
entertainment.”
Selling Experiences (not tickets)
What are you selling?
4 or 5 Fs
Fantasies
Family
Feelings
Fun
Friends
Selling the entertainment experience...
Experience
Escapism
Emotions
Enjoyment
Entertainment
Esthetics
Excitement
Ecstasy
Exhibitionism
Enthuse
Express
Expose
Evangelizing
Educate
Evince
Endorse
Describe a recent experience using all 16 Es.
Price Sensitivity
Examples
•Take beverages for example.
•Describe a setting and occasion
for each quandrant.
•Explain how price sensitive you
are for beverages in each
setting/occasion.
Psychological Triggers
Triggers
•On what side of the brain do
we process price discounts?
•On what side of the brain
processes the 4Fs and 4Es of
entertainment experiences?
Price Lining
Price Lines...
•set different prices for distinctly
different levels of product quality.
•How would your price sensitivity
differ across these quality levels?
Give examples.
Seats:
•view
•comfort
participants
•amenities
•service
Participants:
•opponent teams
•tournament or race entrants
Timing
•pre-season, season, post-season
•weekday vs. weekend; day vs. night
Price discounts
Why should you not
offer discounts?
•What do we learn from Pebble
Beach?
•What are you saying when you
discount?
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.
Profit Maximization
Profit Maximizing
•Adjust the quantity of
seats available, or
•Adjust the prices of
seats
•To maximize the gap
between revenues &
costs.
•We can use equations to
estimate prices
Profit maximization in the NFL
(Brunkhorst and Fenn ,2010)
Profit Maximization
Profit Maximizing
Next Season’s
Prices
Stadium
•Adjust the quantity of
seats available, or
•Adjust the prices of
seats
•To maximize the gap
between revenues &
costs.
•Practical application
How do these promotions influence price perceptions?
Settting price deals
must be strategic to
not confuse
customers.
How does dynamic
pricing overcome the
problems of
discounting?
S
L
Identifiable
are identifiable so that they can be priced
differently.
are not confused by the different prices.
Confusion
Economics
Separation
are economically profitable segments.
are separate enough so that those who pay one
price can’t exchange the product (or ticket)
with those who paid higher prices.
Confuse
customers?
Price Discrimination
Table 7.1 Conditions for Effective Price Discrimination
Issue
Price discrimination works when segments:
have different levels of price sensitivity that
ensitivity
motivates some fans to search for lower prices.
are large enough to warrant different prices.
arge
If you are forced, at
gunpoint, to offer
discounts....
1. Do not undercut prices paid by season
ticket holders for the same seats.
2. Do not mass promote to the public.
3. Do target price-sensitive segments 1-to-1
via your database with an “exclusive” offer.
4. Do have a sponsor cover the cost.
5. Do make price sensitive fans take action to
receive discount.
6. Do learn from your mistakes and read this
chapter again before next season.