Nor'easters Case Analysis

Goals:

• Achieve profitability through a mix of ticket sales and concessions and souvenirs.

• Goal: maximize profit per customer by segmenting based on willingness to pay.

• Encourage purchases of tickets in bundles packages; fill the seats!

Maximize Number of Tickets Sold:

The Nor'easters should first focus on filling the stadium; virtually all costs associated with the price of a ticket are fixed costs. Thus profits are directly correlated with revenues. If the Nor'easters sell 4 tickets at $10 each, this is the same revenues and profits as selling 10 tickets at $4 each. However, 10 fans who each spend $8 on concessions and souvenirs, brings in $80 revenue and $31 in profits while the 4 fans who spent $10 each on tickets are still only going to spend $8 on hotdogs and ball caps, which nets the Nor'easters only $12.50 in profits. Once games start selling out, the ball club can easily rationalize a price increase for tickets, but until then, tickets should be inexpensive. The trick will be in communicating a high value at a low price.

Maintain Perception of Value:

In order to prevent erosion of the perceived value of tickets, discounts will be given when premiums are sacrificed. The best seats should be sold on a first-come-first-served basis. Fans can opt for bleacher seating and a price reduction. In this way, the value for tickets is anchored at $12 per ticket with discounted prices available for open seating ($2 discount) or bundled ticket sales ($2/4/8 discount, depending on package). So prices for tickets could range anywhere from $12 for one seat in the covered section down to $2 per game for a full season in the open seating.

Conjoint Analysis:

It would be extremely helpful to go back to the raw data from the survey to rerun the numbers in a conjoint analysis. In particular, the key insights missing here are in terms of correlations among groups for willingness to pay. Traditionally, season ticket holders enjoy special rates. But it is possible that the data from the survey, run through a conjoint analysis, could yield new information about those most interested in season tickets. It is possible that comfort, convenience, and premium quality food might be a higher priority than cost savings for season ticket holders. Given that there is only a small discrepancy in percentage of the population that is willing to pay $10 per ticket for one game vs. pay the same $10 per game for a package of five games (between 70-75% in each case), there is little evidence to support that cost savings is going to be the primary motivator for fans to buy multi-game packages. If a discount would get the same pants in the same seats game after