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Virtual Business

Virtual Business . Lessons 1-3, Franchise Location, Ticket Pricing, Promotions. Franchise Location. The franchise location is an IMPORTANT decision for any sports team.

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Virtual Business

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  1. Virtual Business Lessons 1-3, Franchise Location, Ticket Pricing, Promotions

  2. Franchise Location • The franchise location is an IMPORTANT decision for any sports team. • Franchise – the permission contracted to a group or single entity to sell a company’s goods or services within a certain region. (The VBS is the right of association within a professional football league) • The factors in the decision can be divided into two key ways: • Demographics • Infrastructure – The physical resources required for the operation of an event or activity. (The right sized stadium (seating capacity), enough offsite parking, and available transportation.

  3. Franchise Location • Franchises can move if the choice of location proves wrong. However, it is a difficult task the will require rebuilding awareness and loyalty in the new location. • Fan Loyalty – devotion to the team. The fan loyalty determines how much fans are willing to pay for sporting event tickets and how many games they are likely to attend. A losing record will decrease attendance but LOYAL fans will continue to attend (Opposite of bandwagon, front runners, etc..)

  4. Ticket Pricing • The main “product” of a sports franchise is seats (or tickets to customers). • Pricing tickets is difficult because seating prices are fixed. There is no marginal costs to selling additional seats. • Price – The amount of money you charge customers for one unit. • A team would rather sell a seat for $1.00 than leave it empty and get no money. However, if all seats are sold for $1.00 the team will never make money or revenue. • Revenue- the money you collect for things you sell. Revenue is equal to the Unit Sales (# of tickets) x Price of each Unit (price of each ticket). • Ticket Sales • Concessions • Licensing and Sponsorships

  5. Ticket Pricing • Yield Management Pricing tries to address this by setting different prices for seats of different value • Higher prices for the 50 yard line – these tickets are priced high to yield the most total revenue (number of tickets times average price price per ticket) • Yield Management Pricing is used whenever the quantity of the product is fixed, and there is no marginal cost to providing an additional unit. • What other products might use yield management pricing?

  6. Promotions • Sports franchises employ many different types of promotions to attract fans. One of the most popular is to give away items to the first X number of fans who attend. • Promotional Items sometimes a business will use special items in combination with its promotional campaign to help attract customers. (Bobble heads, foam fingers, rally towels, dollar dogs, etc…) • The goal of this type of promotion is to attract people to attend the event who otherwise would not.

  7. Promotions • The disadvantage to promotional items is that they will be given away to fans who would attend the game anyway. • Forecasting-involves the prediction of upcoming results based on the evaluation of accessible, relevant data. • SO… promotional items/giveaways are planned for events that are not expected to be sold out, attendance is low. • Promotional planners are constantly searching for items that will be of high appeal to fans yet cost the franchise relatively little to provide.

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