Comparison of Alternatives
Firms in the ticketing industry have different combinations possible when it comes to pricing strategies. Unless it is for few very specific events, most tickets sold nowadays are subject to tier pricing as well as variable pricing. The decision the firm must make is whether to adopt fixed or dynamic pricing. Tier Pricing
The basis of this strategy is that each seat will bring a different value to the customer. For large event, there is a wide range of willingness to pay (WTP) for tickets, each associated with different demographics. This strategy will allow more people to purchase at their WTP. If all seats were charged at the same price, everyone would rush for the best ones. However, if a tier pricing strategy
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The ticket price will not vary with demand for the event and will prevent taking advantage of the consumer’s WTP. Consumers are attracted to fixed ticket pricing because they understand the price: unlike dynamic pricing (the following pricing strategy), fixed pricing will show the same price whether they are browsing when it is released, or the day before the event. The downside with this strategy for companies using it is that they might underprice, or overprice tickets. Underpricing will result in a loss of potential revenue, the size of the consumer surplus. Whereas overpricing it will result in a low sales level that also translates into a loss in potential …show more content…
Of all the combinations of pricing strategies available to the firm, we believe that the current one (dynamic pricing) is optimal. As of today, the company holds 80% of the market share in the primary market, and see no reason why the constant increase in market share should stop in the future. Our primary recommendation for the primary market is to keep this optimal strategy in place. Ticketmaster’s market share will keep growing in the future as it gains control over more artists and venues through Live Nation. By changing their pricing strategy, they would risk losing revenues they are certain to make with the current strategy and existing contracts (since consumers have quasi-inexistent
For the 2019 major league baseball season, the New York Yankees should employ the dynamic ticket pricing strategy in order to essentially maximize on the overall excitement generated by both the fanbase and sports media outlets due to the influx of premier talent that has worked to transform a rebuilding franchise into a legitimate championship contender within the league as well as the favorable perception of the organization throughout their history of success. The dynamic ticket pricing strategy is a unique approach that ultimately work to increase the organization’s potential revenue streams due to the fluctuations in price based on the supply and demand for the product. Through this specific strategy, the organization would be able to
Orlando is known for its tourist attractions and theme parks. Surprisingly, we found out that business and leisure travelers’ amounts were almost the same for weekends. Hence, we also keep the prices high for the weekdays as it is an elastic demand market. If we increase the price, the total revenue will increase proportionally. On the other hands, we set the weekend’s price as close as to the weekday’s price in order to improve our profits. We tend to target on business travelers for these 3 cities as market research showed that they are the majority customers.
rates by only ten dollars it can have a lasting effect. When the ticket falls
The customers, venue organizers and artists saw that Ticketmaster’s management was willing to listen what they have to say and were open to make changes in order to make it better for everyone and increase profits as well as ticket sales. One of the biggest change that Ticketmaster did is to provide an interactive seating chart which allowed customers to pick their own seats instead of the best available seats picked by Ticketmaster. Another change that the company made was that the customers were allowed to pay for the tickets and print at the same time without any fees. In addition to that, Ticketmaster started not charging promoters and venue owners any fees when they were trying to promote the concert, games or theatrical venues. This was a risky move on Ticketmaster’s part; however, it paid off at the end based on an increased sales of tickets, and more artists started doing business with them. Moreover, Ticketmaster started alerting Facebook friends of the customers who are going to what show, which encouraged more people to purchase their tickets and go see whatever show their friends were going to
In April 1992, American Airlines launched "Value Pricing" -- a radical simplification of the complex pricing structure that had evolved over more than a decade following deregulation of the U.S. domestic airline industry. American expected that the new pricing structure would benefit consumers and restore profitability to both American and the industry as a whole. The critical issue raised is: Would American's bold initiative work?
After a company decides on its product(s), it has to think how it will price said product(s). Disney goes about pricing for all of its products in different ways. For instance, Disney’s amusement park tickets are cheaper during times of the year that it is the least busy and the tickets prices rise during sessions that the parks are busiest ("Your Ticket"). However, Disney’s biggest competitor, Universal Studios, goes about things in a very different way. Universal Studios tickets cost the same no matter
This is just one example of the manipulative business manner in which Ticketmaster operates. Ticketmaster...
Star power is the driving force in the secondary market, increasing demand and fan attendance. Team success and popularity also play a role in secondary market prices. The Los Angeles Lakers, though mediocre, are consistently in the top half of the NBA for average attendance. The face value of a single game Laker’s ticket in the upper sideline section 301 is $50. For the Laker’s last eight home games of the 2016-2017 season the average price on the secondary ticket seller Ticketmaster.com is $53. The average price when bought directly from the team is $65. The price variation on the secondary market averaged about $6, with lows and highs of $46 and $66 respectively. This price variation is derived primarily from the demand to see the Laker’s competition. The $66 game is against the Los Angeles Clippers, the Laker’s in city rival. The Laker’s have one of the best sport markets in the country, along with a historic franchise and large fan base, the team never fails to sell season tickets. With a high demand to see Laker basketball, when tickets make their way to the secondary market, prices stay closer to face value to ensure a profit for the
The truth is the company needs to make changes soon to avoid a hostile takeover or cash-crunch- driven bankruptcy. Hence, as Alex suggested we can divide the lines for consumers of both divisions to avoid unhealthy experiences and limit the amount of tickets given in a
- The pricing strategy is a way to recoup initial investments, competition with other companies, and the factor that volume will bring down production costs. A company may also look at the benefits to earn profits on their goods when looking at their pricing. A good example of this is my teacher Dr. Fishbeck and his IT consulting business. He offers very low rates due to his competition having better benefits with their size and customer
In order for revenue management to be successful, four fundamental conditions must be met. The first requires a permanent amount of supply available for sale. Meaning, a fixed amount of seats per aircraft should be available per route. Second, resources sold must be perishable. Seats are a perishable items, if not sold they terminate without value. Third, the most vital portion of r...
... ticket packaging, (c) money-back guarantees, and (d) web-based ticketing. There are benefits to using each tactic, but it depends on the professional sport organizations needs. In addition, professional sports ticket prices are price inelastic, which means the price for the ticket changes based on demand for that event. As stated previously, there were several different factors that can affect ticket prices in professional sports teams in America. Since there are many factors that can affect ticket prices, it would be beneficial to focus on the core factor that affects ticket prices and analyze it. Take pricing strategies for example. With two main types of pricing strategies, it would be valuable to identify which strategy would work best for each professional sports league. This study would help every sports league improve ticket prices and maximize revenue.
These circumstances include time of year, time of the week, time of day, and the departing and arriving destinations. It is of no surprise that ticket costs go up around holidays. Also, choosing to fly on weekends tend to raise ticket prices as well. Airports play a huge factor in the price as well. Typically, larger airports offer lower price, but the small regional airports cost more. A lot goes into determining the cost of airline tickets and that is why it is always in a constant flux. Airports require upkeep while the different airlines are trying to make a profit. The most common cause for the changing in ticket prices that is not listed above is the cost of fuel and
Economics is an extremely important aspect of the today’s society, especially, since it aids in the allocation of limited resources. Supply and demand are aspects and fundamental concepts of economics, which is considered the foundation of a market economy. In fact, the association between demand and supply underlie the forces responsible for the allocation of resources. Therefore, given the importance of supply and demand and its impact on the market economy, one will elaborate on the law of supply and demand. In addition, one will discuss how these fundamental concepts of economics apply and impact the prices of Airline tickets.
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