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2011

Setting prices for sports & entertainment. ”We sell entertainment.”. 2011. Price Discrimination. Profit Maximization. Selling Experiences. Selling Experiences (not tickets). What are you selling? 4 or 5 F s. Fantasies. Family. Feelings. Fun. Friends.

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2011

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  1. Setting prices for sports & entertainment ”We sell entertainment.” 2011 Price Discrimination Profit Maximization Selling Experiences

  2. Selling Experiences (not tickets) What are you selling? 4 or 5 Fs Fantasies Family Feelings Fun Friends

  3. Selling the entertainment experience... Describe a recent experience using all 16 Es.

  4. 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.

  5. 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?

  6. 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 • amenities • service • participants • Participants: • opponent teams • tournament or race entrants • Timing • pre-season, season, post-season • weekday vs. weekend; day vs. night

  7. Price discounts • Why should you not offer discounts? • What do we learn from Pebble Beach? • What are you saying when you discount? • Discounts generate a negative • connotation for your brand. • You run the risk of alienating • your customers who are paying • full price. • The discounts may become • permanent (in the minds • of consumers).

  8. 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)

  9. Profit Maximization • Profit Maximizing • Adjust the quantity of seats available, or • Adjust the prices of seats • To maximize the gap between revenues & costs. • Practical application Next Season’s Prices Per capita income Population & Rivalry Price signaling Players Winning Stadium

  10. How do these promotions influence price perceptions?

  11. Price Discrimination Settting price deals must be strategic to not confuse customers. How does dynamic pricing overcome the problems of discounting? Segment large enough? Economically profitable? Confuse customers?

  12. If you are forced, at gunpoint, to offer discounts.... • Do not undercut prices paid by season ticket holders for the same seats. • Do not mass promote to the public. • Do target price-sensitive segments 1-to-1 via your database with an “exclusive” offer. • Do have a sponsor cover the cost. • Do make price sensitive fans take action to receive discount. • Do learn from your mistakes and read this chapter again before next season.

  13. The End

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