1) What are the trade-offs Williamson faces? Explain. Trade Off that Williamson Faces: Pricing Sale of 7.9 million tickets for the games while maximizing attendance was primary concern But entire U.K has a lot of potential customers with very high purchasing power. This will automatically generate higher revenues from tickets. Attendance But being at a higher price the customer segment should be selective otherwise lesser attendance during the respective sports in the view of many venues were sold out, still effected with half filled stadiums. So selling the tickets at a higher price to selective customers under targeted segments because it was mentioned as Everybody’s Games.
Keeping in the per view of all fans inclusive of average income candidates should enjoy it is a bit stressful situation for William to control the attendance So it is better by having a pricing strategy 1. Keeping in mind THE POPULAR SPORTS technique pricing them higher would lead to covering lossin revenue from unpopular sports but in other aspect of low pricing there is a mere chance of getting short on estimated revenue of 650 million. For average pricing for tickets: There are 7,961,000 tickets available: 650M/ 7,961,000= 81.65 USD Total revenues from top sports is 650M * 40%= 260M Tickets available: 1,246,000 So that we get, Pricing = 260M/ 1,264,000= 208 USD/ ticket 2. Best seats at the Start and Finish lines, and around the cycling track.
Price range from 65-110 USD Q2) How might LOCOG’s Pricing Strategy vary by sports? If we look at the challenge before LOCOG, it had to price over 8 million tickets for 26 sporting events along with ensuring that everyone can purchase the ticket, from elite to common man. Bundling of tickets doesn’t work since people ignore the secondary sport if it is not popular, this leads to empty seats and diseconomies of scale happens. The pricing strategy does vary with sports. Popularity of sport is directly related to revenue earned. For instance, since football is the most common sports in UK, LOCOG hoped to generate 10% ticket revenue from football.
Thus, the demand will be inelastic for hardcore loyal fans even if ticket price for football is raised. But it should not be raised much, otherwise fans will prefer staying at home and watching on TV. Demand exceeds supply for swimming, gymnastics and athletics, so these sports sell out at lower prices and they together contribute to 40% of the revenue. If we look at exhibit 9, it shows the various pricing tiers for various sports.
These tiers will allow Paul Williamson to set the optimum price for most popular and least popular sports. He should study the marketing mix of various sports during Olympics and then decide which sport to promote more. Popular sports sell by themselves while less popular need marketing. This would allow more sales, more revenue, more seats filled. There should be no missed opportunity to make tickets as affordable as possible. 3) What are the characteristics of good pricing plan with respect to the case? Pricing is something that has the highest and the quickest impact in maximising the profits.
The London Olympic Game ticket sales team used various pricing strategies for selling the tickets for their 300 sports events. Following are few strategies which were used by the sales team: • The committee decided upon to increase the number of pricing tiers for different sports which would keep some of the ticket prices low but achieve the same revenue targets. • The London 2012 Olympics became the first games where the tickets were booked via internet. This helped it enter the unchartered territories.
• They considered it as “Everybody’s Games”, thus made it available to the majority of the crowd at an affordable price. • The committee came up with a new plan of providing “First Public Transport”, that is, the price of every ticket in the Olympic would include the use of London’s public transport network on the day of the event. • The committee also mentioned that higher prices of the tickets will provide the spectators with a better view for the game. • Ticket price plan included public transport which would reduce traffic congestion in and around the venues and increase participation.
This would not only benefit the spectators but also the games. 4) What would you recommend LOCOG do? By the end of the planning, London Organizing Committee of the Olympic Games (LOCOG) were left with 2 options – exceeding the ticket revenue targets by $50 million with 70% attendance coming up short by $70 million with 90% attendance. As per what we recommend, the LOCOG should go ahead with the option of the option of having the 90% attendance and coming back short by $50 million. As a justification of my support, out of the total 2.8 billion revenues in the 2000 Sydney games, ticketing accounted for 551 million which is only 20% of the total revenue. Referring exhibit 5, 1.7 billion (65%) came from broadcasters and sponsors.
The impact of attendance is very high on the compensations offered by the sponsors and broadcasters. Hence, the shortfall in the amount by choosing this method is covered up by the compensations offered by the sponsors and broadcasters. Further in, it is a matter of national pride if the stadiums are full of spectators during the event. Also, higher attendance means more revenue to the national economy by the people travelling from foreign countries.
Hence, this option is a more viable and profitable option in the long run in our view.