Creating Pricing Strategy
Autor: 2003076 • February 18, 2015 • Essay • 348 Words (2 Pages) • 1,167 Views
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- Mr. Buckingham has problem about creating pricing strategy. There are 4 types of ticket packages for single game, 5-game, 20-game and 38-game. He did not know how the people react with the ticket and concession price as he did not familiar with the Minor League Baseball Market.
- The revenue mainly comes from tickets and concession. The tradeoffs are the ticket price and the population. When the ticket price is high, there will be less people willing to watch and there will be less revenue from concession. When the ticket price is low, more people may buy the tickets but the ticket revenue may not be high, then the revenue mainly come from concession. There may also be another problem. If the ticket price is too low, the no-show rate will increase as skipping a game is cheap. No-show rate increase will decrease the concession revenue as people are not here to consume.
- The survey shows the percentage of the people who are interested to buy specific ticket package and their willingness to pay for the ticket package and the concession. These can be used for estimating the revenue with different pricing strategy.
- From the excel file, I used different pricing strategy for the ticket packages. The ticket packages should have different price for segmentation. I simply segment the packages with $2 price difference. Assume the survey shows the case in reality and take 55338 as Springfield total population, the price per ticket for single game, 5-game, 20-game, 38-game should be $10, $8, $6 and $4 respectively. The total revenue will be $765258.
- From the survey, it shows the percentage of people willing to spend different amount on the concession. After calculation, the expected amount spent on concession per seat per game is $8.61. And the profit margin for the concession is 39% no less. Then we can calculate the concession revenue. After all, I conclude that the team will breakeven and even has a profit of $150412. If Mr. Buckingham want to segment the bleacher seat and the grandstand seat, the profit will be even higher.
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