The focal article I chose is Dynamic Pricing: The Future of Ticket Pricing in Sports by Patrick Rishe published on January 6th, 2012 through Forbes. Pricing is an important component of the marketing mix because it is the element where managers have expectations of customers paying their money to the organization (Kopalle, 2009). Compared with other elements of the marketing mix, pricing has the advantage because there is a high level of flexibility. The flexibility is because prices change continually (Smith, 2008). The opportunity of quick price changes also has disadvantages. For much of the 20th century, the vast majority of sport managers employed one of two pricing strategies: the one-size-fits-all approach, where every ticket price …show more content…
The organization created the Yankee Ticket Exchange which is capable of tracking who resells their seats, who they are sold to, and also has the ability to not allow tickets to be sold for lower than face value.
In 2009, the San Francisco Giants were the first team to utilize dynamic pricing. Variable and dynamic ticket pricing is determined in real-time and based on a set of demand criteria. Most every other MLB franchise currently employs some form of this pricing system. Dynamic pricing is an approach to setting the cost for a product or service that is highly flexible. The goal of dynamic pricing is to allow a company that sells goods or services over the Internet to adjust prices by a simple click in response to market demands.
Why choose to infiltrate dynamic pricing? Having one price for everyone plainly stated isn’t the logical thing to do. A business isn’t maximizing its profits on each individual sale by charging one price. Baseball presents the best opportunity for dynamic pricing (Kahn). Compared to the NBA or NHL, MLB plays twice as many games and its venues hold twice the amount of people. There’s always the skeptic asking has dynamic pricing actually
Spendthrift, the perfect connotation of Major League Baseball’s (MLB) economy and how any one team can dominate free agency and the player market. As long as they are financially superior to the rest of the league, they will remain on the upper edge of talent. Unlike the other three major sports leagues (NFL, NHL, NBA,) the MLB presents one key underlying feature…the lack of a salary cap. A salary cap, or lack of salary cap in any sport, can do one of two important things: create parity, or create Darwinism amongst small market teams. If a salary cap is to exist in baseball, a sense of parity may arise leaving all teams with equal chances of landing big name free agents.
Johnson, Dennis A., and John Acquaviva. "Point/counterpoint: Paying College Athletes."The Sport Journal 15.1 (2012). Questia School. Web. 3 Feb. 2014.
Noll, Roger, and Zimbalist, Andrew. Sports, Jobs, and Taxes: The Economic Impact of Sports Teams and Stadiums. Brooking institutions press, Summer 1997. Vol. 15 No. 3.
Disney institutes different pricing ranges during different times of the year. The reason why Disney does this is to make “an effort to better even out demand amid growing attendance” (Fritz). At certain times of the year; holidays, summer, and etc., Disney has a high demand for tickets, so they make their prices higher. Disney has changed their pricing by the time of year, “three sets of prices: value, regular and peak. Those categories will typically correlate to weekdays (value); weekends and summer weekdays (regular); and holiday periods and summer weekends (peak)” (Fritz). Disney does this type of pricing to eventually help smooth out the demand during the seasons
Of the reading the most interesting topic to me was issues involving ticket sales. I have always been interested in ticket sales but never realized all the things involved. Everyone needs a ticket to attend any athletic event, but getting one can be challenging. The guidelines and decisions making in deciding who should get tickets and the quantity they should receive really got me thinking. The question of should a season ticket holder sit next to someone who only attends one or two games a year? Or vice versa is an ethical issue in ticket sales. I think that season ticket holders should have first pick on which seats they would like for all the games. The fans that are not season ticket holders should be able to purchase any remaining tickets, if it’s a seat next to a season ticket holder. I think Eve...
Information Technology has quickly became an everyday part of life. It is used in almost every aspect of our lives. It used at home to check e-mail, send text messages, and surf the web. It is used at work for networking and even many modern telephone systems. In many cases IT is simply a part of our day. Major League Baseball is no different. The league has also become very active in the IT world. It is used in almost every single aspect of the game, as well as the business. If you look back at baseball through the ages, it is easy to see just how much it has changed. The trick for Major League Baseball was they knew they had to advance to keep up in today’s world. However, at the same time, they knew that fans loved the game of baseball because of its history. Baseball has a legendary past that is appealing to fans. They want the modern technologies without losing the vintage appeal. Major League Baseball has done just that. They have become one of the most technologically advanced sports in America. Everything from how tickets are purchased all the way to just how the games are broadcast, it has all changed dramatically.
Financial aspects and profitability of college athletic programs is one of the most important arguments involved in this controversy. A group of people expresses that college athletic programs are over emphasized. The point they show on the first hand, is that athletic programs are too expensive for community colleges and small universities. Besides, statistics prove that financial aspects of college athletic programs are extremely questionable. It is true that maintenance, and facility costs for athletic programs are significantly high in comparison to academic programs. Therefore, Denhart, Villwock, and Vedder argue that athletic programs drag money away from important academics programs and degrade their quality. According to them, median expenditures per athlete in Football Bowl Subdivision were $65,800 in 2006. And it has shown a 15.6 percent median expenditure increase fro...
It is determined by the cost of production, the segment aimed, the capability of the market to recompense, supply and demand, and all other direct and indirect factors. There are more than a few kinds of pricing strategies, each corresponded with the total business plan (Yoo, Donthu et al. 2000). Pricing could also be used to discriminate different brands of product, and to enhance the appearance of a particular company (Kotler and Levy 1969). In this case, Amazon is quite competitive in term of its prices, and has strategic approaches of staying up front of its market competitors (Chevalier and Goolsbee 2003). For instance, when a person is considering to purchase a particular book, Amazon has options whether that individual would prefer a new copy or a used one, and it also presents the prices for these books together with their conditions. A further proposal is to pay to create a premium account, where the items purchased would be delivered quicker. Amazon’s competitive prices also results from the minimum number yet well skilled employees, thus the customers are actually benefitting from the reduced cost of overheads, hence, the low prices of Amazon
Second, market growth, which is measured by attendance at NBA games, has leveled recently, so increasing competition among teams for a fixed number of fans.
Poplawski, Wade, and Michael O'hara. 2014. The Feasibility of Potential NHL Markets under the New Collective Bargaining Agreement. Journal of Sports Economics. (1): 64-77.
Lower prices draw a larger audience. When tickets are inexpensive and in high-demand, audiences are drawn to that event, thus creating a
Pricing is an important aspect of every business. Chief Financial Officer’s (CFO) use pricing to create financial projections, establish a break-even point, and calculate profit and loss margins (Power Point, 2005). It is the only element in the marketing mix that produces revenue. Price is also one of the most flexible elements of the marketing mix as it can be changed very quickly. This is usually done to beat competitor prices in an attempt to fix the product’s market value position very low (Anderson & Bailey, 1998). After all, high prices make it difficult to become the market share leader. The leading US retailer, Wal-Mart, is an expert at low product pricing as evident in 2004 with $250 billion dollars in sales to their 138 million weekly shoppers. However, they are also responsible for reducing prices so low that it drives specialty stores out of business. This is the effect Wal-mart has had on many toy stores and has almost closed the doors of the famous toy store Toys “R” Us Inc.
This technique of raising or lowering prices based on the demand of the guest is something that airlines have been using for some time now. The first two airlines to use Revenue Management in 1985 were United and American Airlines. They used a series of algorithms to determine the best price to sell their seats (Desiraju & Shugan, 2000). The reason Revenue Management came about in the airline industry had to do with the airplanes only having a select amount of seats. Trying to sell all of the seats at the same price is very difficult to do especially when the airlines needed to at least be able to cover fixed operating expenses. A lot of times the planes would be left with empty seats, which, doesn’t help the airlines make any money. So by a...
Price discrimination is a pricing strategy that charges customers different prices for the same product or service. In pure price discrimination, the business charges a customer the maximum price that they are willing to pay . This practice is becoming more and more important for customers because of the discrete ways that businesses are finding to make it easier to implement them in many different ways. These are categorized into three forms; First-degree price discrimination, second-degree price discrimination and third-degree price discrimination. First degree price discrimination is where consumers pay the exact price that they are prepared to pay and where the producer charges different prices depending on how much the consumer is looking
Sports are one of the most profitable industries in the world. Everyone wants to get their hands on a piece of the action. Those individuals and industries that spend hundreds of millions of dollars on these sports teams are hoping to make a profit, but it may be an indirect profit. It could be a profit for the sports club, or it could be a promotion for another organization (i.e. Rupert Murdoch, FOX). The economics involved with sports have drastically changed over the last ten years.