3.00 Explain economic foundations relevant to the sports andentertainment marketing industry.
3.02 Explain the concept of competition.
Sports and Entertainment Marketing ISummer 200344
A. Explain the role of competition.1. Competition is a rivalry between two or more businesses to gain as much of thetotal market sales or customer acceptance as possible.2. Competition helps to maintain reasonable prices, and to provide consumers withnew and improved products.3. Competition results in a wide selection of products from which to choose.4. Competition forces businesses to operate efficiently.B. Identify the differences between direct and indirect competition, price and non-pricecompetition, and monopolies.1. Direct competition involves two or more companies that utilize the same type ofbusiness format. For example, JaRule versus JayZ and Coke versus Pepsi.2. Indirect competition is between two or more retailers that employ different typesof business formats to sell the same type of goods. For example, playing Putt-Putt versus an 18 hole golf course.3. Price competition focuses on the selling price of a product. Consumers prefer tobuy the products that are lowest in price. For example, buying athletic shoes atFoot Locker versus purchasing from Eastbay catalog.4. Non-price competition is based on factors that are not related to price. Non-pricecompetition includes the quality of products, customer services, businesslocation, business reputation, and the qualifications of the salespeople. Forexample, the price of tickets for the Super Bowl versus purchasing tickets for alosing team.5. Monopolies exist when one company has exclusive control over a product or themeans of producing it. Monopolies are prohibited under the free enterprisesystem, the United States Government allows an exception if it is wasteful tohave more than one company. For example, there is only one NFL team perarea.C. Discuss profit and loss as they relate to the sports and entertainment marketingindustry.1. Profit is the money earned from conducting business after all costs and expenseshave been paid.a. Profit for many businesses is 1-5% of sales.b. Ninety-five to ninety-nine percent of the selling price goes to pay costs,expenses and business taxes.2. Loss is a decrease in a potential profit.a. Risk is the potential for loss or failure.b. Risk management discusses how to effectively manage losses due to risk.