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The Springfield Nor’easters

Case Analysis

[Street Address]
[City, ST ZIP Code] Section - A
1. Critically evaluate the research survey undertaken by Larry?

Larry had access to a three-year old survey which gave him a bird’s eye view of the
industry. But to prepare a pricing plan for the club, he had to resort to a much more
targeted survey containing questions which would be helpful in the decision-making
process. It was decided that 10,000 postcards would be sent inviting responses which
would be accepted through an online survey or a telephonic conversation on the number
provided in the postcard. As an incentive to participate in the survey, all respondents got
the chance to win a $500 voucher redeemable at a restaurant. The company received 510
internet responses and 75 telephonic responses. Hence, a total of 625 responses were
studied.

The questionnaire was designed in such a way that each of the eighteen questions helped
the management in understanding the whole scenario in Springfield. All the questions
were of objective type, and the respondent had to select the best option according to
their preferences.

Questions in the form pertained to demographics, respondents’ inclination towards


sports in general and baseball in specific, the price they were willing to pay, and the
amount of money they were willing to spend while they were in the stadium. The main
objective of the survey was to study the price sensitivity and the attendance patterns in
the region.

The first two questions were specific to baseball, in that it tried to assess if the respondent
is a baseball enthusiast and tried to find out if they were enthusiastic enough to drive all
the way to another city to attend a professional baseball game. If they were this
enthusiastic, they would obviously welcome a team in their home town.

The next four questions pertained to their inclination towards visiting sporting events in
general. However, these questions would not contribute to the decision making in a very
constructive way as it cannot be said with certainty that a particular respondent attending
another sporting event, let’s say basketball would attend a baseball game.

The seventh tries to assess the behavior of the respondents given that a minor league
baseball team came to Springfield. This would help the management in deciding on the
target market.

The next five questions ask the respondents about their willingness to pay for a single
ticket, multi-game packages and full-season tickets. One of the questions also tries to
assess their willingness to pay a premium for a grandstand seat. These questions would
form the heart of the whole analysis and would be pivotal in deciding the price of the
tickets.
The next question tries to capture their spending behavior at the stadium, which would
help the management in assessing the expected revenue from concession sales, which
contribute hugely to the revenue model of the club.

The last five questions try to assess the demographic profile of the population. Questions
on age, gender, income, educational qualification and the current life stage of the
respondents would help the management in building a profile of the ideal club follower
and would help them in gathering insights about the population.

1. Studying the results of the survey, please find out the key takeaways/findings that you
can extract from them.

Larry designed a survey to gather insights about the willingness of the respondents to pay
for different packages. The survey was sent to 10,000 prospective respondents, of which
625 responded.

It was found in the survey that 38% of the respondents were baseball fans. 28% of the
respondents had attended a professional baseball game in the past year. It is useful to
note that Springfield did not have a professional baseball team. Hence, it can be deduced
that if they can travel all the way to another city, they would obviously welcome the new
team in their home town.

Questions 3, 4 and 5 can be helpful in determining the percentage of population not


interested in any kind of sporting activity. Around 75%-80% of the respondents had not
attended any kind of sporting activity at any level in the past two-three years.

It was found in the survey that 23% of the respondents had purchased a season ticket for
a sporting event in the past. However, the question does not specify the sport in question.
Hence, we cannot deduce that they would end up buying a season ticket for baseball as
well.

The seventh question can prove to be instrumental in calculating the expected revenues
from each of the ticket types, given it provides us a percentage break-up of the audience
preferring each type. As an example, 21% of the population would attend just one game,
hence they would buy a single ticket.

Questions 8-11 can help in devising the pricing for each of the packages. A cumulative
willingness to pay table can be created as shown below –
Following this, an expected revenue can be calculated by multiplying the percentages
with the respective prices. The following matrix will be formed –

From the above matrix, the price for each package can be easily determined. The optimal
prices for single ticket, 5-game package, 20-game package, and 38-game package are $10,
$8, $7, and $6 per ticket respectively. The total revenue from tickets can be calculated as
follows –

The thirteenth question can help us in calculating the revenue from concessions per seat.
This can be calculated by multiplying the respective amounts by the percentage of people
willing to spend that amount. Average of the amounts can be taken in case of intervals.
After calculations, $8.56 can be the expected revenue per seat. The total revenue from
concessions can be calculated as follows –

Since the contribution margin from concessions is 39%, the net income from concessions
comes out to be $335726.70.

The remaining questions can help the company in analyzing the demographic profile of
the population. It has been found that the population consists of 56% females and 30%
of the population is between ages 26-35. Also, 72% of the respondents live with zero or
one child aged 5-16.