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Nor‟easter‟s first season will be very telling of the team‟s future success in Springfield, Massachusetts. Costs for running the minor league program are expected to total 1.76M, meaning in order to break-even, Nor‟easter must employ an optimal ticket pricing strategy that maximizes revenue opportunity and does not “leave any money on the table” (Cespedes, Winig & Lovelock, 2009).
The main factors Nor‟easter should take into account in establishing a pricing policy are (1) pricing objective, (2) consumer demand, (3) estimated costs, (4) competitor‟s costs, prices and offers and (5) optimal pricing method.
Nor‟easter will employ a partial cost recovery pricing objective. In order to recover costs through concession revenue (an estimated 39% profit margin) (Cespedes, Winig & Lovelock, 2009) filling the maximum number of seats in the 3600 capacity stadium is imperative. Revenue from advertising and donations will also be a critical factor in cost recovery.
Determining the demand of Nor‟easter‟s services cannot be underestimated. Survey results show 89% of respondents are willing to pay an average of $10 per game for 5 ticket packages, 68% are willing to pay an average of $10 per game for packages of 20 games and only 35% of respondents would be willing to pay $10 per game for the full 38 game season package. We can expect 78% of people are willing to attend roughly 12 games at a cost of $10 per ticket. 64% of respondents would purchase the season packages if the price drops to $5 per game.
an appropriate sample size would be roughly 384 responses.50 for the whole season package. Overall. an average of $11 per game for 5 or 20 ticket packages. but families within .S. More notably.000 sent out.9k .8k and median household in general was $31k. meaning 6% of surveys were completed and the 10.It is important to note that the survey also showed only 7% of respondents would subscribe to a 20 or 38 game packages whereas 42% would attend a game or get 5 game packages. 2009). Families with children between 6 and 17 years of age are not only the most likely audience for the Nor‟easter games. we must disregard this data and instead target the appropriate audience. 625 responses to the survey were gathered from the 10. the average income of a household of 3 was $37. representative of . 40% of the survey respondents are between 36 and 55 years of age and 76% of respondents have annual household incomes between $22. (U. 60% of the families living in Springfield are traditional families with children under age 18. 48% would be willing to pay more for better seats. 61% responded they would not attend a game at all (Cespedes. Census. 95% (593) are accurate and roughly 5% (1 in 19) of the surveys will not provide accurate responses. we can conclude that 355 (60%) respondents do indeed assume they would not attend a game at all leaving only 270 respondents. Of the accurate responses. Given the small representative sample size we can assume would attend a game from the survey answers alone. and $5. in Springfield. we can assume of the 625 responses. (Cespedes.000) of Springfield. 2009).5k and $74.000 survey targets represented 6% of the total population (153. The survey results must be adjusted from the sample population to figures relative to Springfield‟s actual population.1% of the total population of Springfield would attend a game. Therefore. 2010). Winig & Lovelock. Assuming we accept a 5% margin of error for the survey with a 95% confidence level. Target market is very important. Winig & Lovelock.
However. The Nor‟easters can capitalize on competitive advantage here.384 tickets) concession costs are estimated at $515k for the 38 game season. family friendly entertainment alternative to other professional sporting events such as the Boston Red Sox major league baseball or Boston Celtics major league basketball. $870 annually per household. the majority of survey respondents are parents of children involved in youth sports. After all.96 million. minor baseball is not selling baseball. the excitement and attractiveness of the higher skill level necessary in minor league sports compared to college sports and the cost of travel when attending major league games will be three of the fundamental marketing basics of the tickets for the Nor‟easters. the money that is no longer needed for marketing and advertising will be .com). a cost shift happens. 66% of respondents have at least one child. Nor‟easter should target the family demographic. families with young children and busy schedules would be optimal targets for a closer. Marketing and advertising fixed costs will however eventually decrease as popularity of the team spreads and loyal customers are secured. Instead. Variable costs such as concession inventory and memorabilia are assumed to average $4 per person in attendance. (aareports. With an expected average of 94% attendance (3.those demographics. on average. major league events which average $12-$325 per ticket and other minor league games which average $6-$26 per ticket) . As more people become aware and attend games. it is important to note the ticket costs do not include the inevitable travel expenses associated with comparable alternatives. Support and pride for the “home team”. It is important to note that comparable alternatives (college games which average a cost of $5-6 per ticket. they are selling entertainment (Case Study). 28. With the closest professional sporting event a minimum of 90 miles away.7%. can be attended for an average cost of $8 per ticket. those savings cannot be assumed as revenue. However. Fixed costs for Nor‟easter‟s first season in operation are 1. spend the most amount of money on event concessions.
Comparable alternatives can be entered into at an average of $8/ticket. local families and individuals. Eventually. We will assume concession profit in line with the 39% industry average.62 is the average cost per gallon of gasoline fuel in Massachusetts. roughly $200. Channel pricing will be used to sell tickets to a variety of consumers. families activities. however travel expenses must be considered.76M in its first season. which means a 90 mile trip will add $16 in travel . $3.8k annually. The attractiveness of the Nor‟easter‟s games (as mentioned as competitive advantage) will be its perceived value. and roughly $190k of annual entertainment costs (moon bounces. Differentiated pricing will occur.13 per person in attendance assuming the average 94% rate of attendance. automobile gets 21mpg. a general admission strategy will encourage attendees to arrive early resulting in higher concession sales. an average of $12. This expected revenue leaves the Nor‟easters with 1.shifted into concession and memorabilia costs. Time pricing will be used to vary ticket prices by purchase date. Product-bundle pricing will be available for those who would prefer season ticket packages. games. The average U.S. A perceived value pricing approach will encompass the idea that the Nor‟easters deliver more value in their ticket price than alternatives. With $46k secured in revenue through local donations and advertising from local vendors plus the estimated concession costs. Product-mix pricing strategies will also be employed.).56M necessary in order to break even. a comfortable estimate of total costs of operations for the Nor‟easters is 1. $41k needs to be generated in ticket and concession sales every home game of the Nor‟easter‟s 38 game season. etc. vendors and ticket brokers. product-line pricing will delineate costs by the seating location but for the first year.
we will reduce travel costs per ticket to $8 bringing the estimated costs of attending alternatives $16 per ticket.) | $12 | $10 | $7 | ** Single tickets purchased at the door will be $14 ** 15% of tickets will be saved and sold only to vendors and brokers at a flat rate of $7 per game for the whole 38 game package With the above pricing and previously noted variables. we will assume 70% of attendees will be households and the remaining 24% will be purchasers of individual tickets and bundle packaging for vendors and or ticket brokers. average of 12 games) per person.com. we must assume that every person attending an alternative sporting event will not be driving themselves and instead will attend such events in groups. 2012). That is an average of $120 per transaction ($10/game. However. Nor‟easter Ticket Pricing: Timing | Single Game | 5 or 20 game packages | 38 game season ticket package | Pre-purchases (online. ticket brokers. we can expect roughly 78. With 94% average rate of attendance.expenses bringing the average ticket price up to roughly $24 (Road Trip America.5% of ticket sales to be pre-purchased for 5 or 20 game packages at $10 per ticket. . 2012) (Gas Buddy. etc. (70% of survey respondents are within the age average age range of parents). The target 12 game average plus concession sales previously estimated at $870 per household resulting in $1230 per household of 3 or more annually.
. Harvard University. and „day of‟ purchasers can be estimated to generate $162k annually. Retrieved from http://cb. that is roughly $18.harvard.Therefore. The estimated 790 households in attendance will generate $971k in ticket and concession sales annually plus the estimated amount generated from the remaining 24% of attendees results in an estimated $297k in ticket sales and an estimated 81% of the 24% of non-household ticket purchasers (812 attendees) will spend an average of $10.massachusettsgasprices.50 on concessions generating $324k annually. F.edu/cb/web/he/product_view. Unpublished raw data. C. (2012). The Springfield nor'easters: Maximizing revenue in the minor leagues.3k in concession revenue annually. & Lovelock.27M in ticket sales plus estimated concession sales results in roughly 1.hbsp.087 per game. References Cespedes.aspx . The remaining 24% (812) of attendees are broken down into the 15% of wholesale sales (vendors and brokers) and the remaining 9% of attendees will be assumed as „day of‟ purchasers at a ticket price of $14.seam?R=2510PDF. Broken down.com/Prices_Nationally. 1.59M in total sales. Retrieved from http://www. an estimated 2368 of attendees will be members of households (3 or more).56M needed to break even the first year. (2009). Vendor and broker ticket sales will generate $135k annually. Harvard Business Publishing.ENG&T=EDC&C=PURCHASED_MATERIALS& Gas Buddy.. Winig. $400k over the 1. so roughly 790 households can be expected at the games resulting in $687. Massachusetts gas prices. L.
P. Retrieved from http://www.roadtripamerica.Kotler. Fuel cost calculator. (2012).php . New Jersey: Pearson Prentice Hall. K. & Keller.. A framework for marketing management. (2009). Upper Saddle River. Road Trip America.com/fuel-cost-calculator.