Sports and Entertainment Means Business 2 Sports and Entertainment Means Business Take 5minutes Read pgs. 32-35

Lesson 2.1 Sports and Entertainment Economics Learning Targets I can define profit and explain the profit motive. I can list and describe the FOUR types of economic utility. Chapter 2

Terms Profit Profit Motive Microeconomics Macroeconomics Economics Economic Utility Chapter 2

THE PROFIT MAKERS Revenue the money a business receives from the sales of goods and services. Money coming “in” to the business. Chapter 2

Profit the amount of money remaining from revenues after all expenses have been paid. Goal of any business is to earn (make) a Profit. Profit Motive making decisions to use resources in ways that result in the greatest profit. Chapter 2

Opportunities for Profits Worldwide distribution revenue is critical for profits. Example: Movies Avg. Box Office income increases 50% to 100% Avatar - highest ticket sales in last 100yrs with $2,788,007,625 Domestic (released just in USA) $760,507,625 vs. International (released in multiple countries) $2,027,500,000 (+70%) Chapter 2

Marketers must always understand the markets in which they target and sales occur. China’s market - over 1.3 Billion people Sounds like a good market for movie makers correct? Not so fast…… the government censors movies for content. pirated movies diminish theater sales. Chapter 2

Rentals (Redbox, Netflix, etc). Movie Merchandise In addition to U.S. ticket sales, name two other large sources of revenue for U.S. film studios. International Sales DVD Sales Rentals (Redbox, Netflix, etc). Movie Merchandise In addition to ticket sales, name two other large sources of revenue for the Cincinnati Bengals. Apparel and Merchandise Sales Broadcast (TV / Radio) Licensing Agreements Sponsorships Chapter 2

ECONOMICS Economics the study of how goods and services are; Produced Distributed Consumed Chapter 2

Macroeconomics Microeconomics the study of the economics of the entire society. Microeconomics the study of the relationships between individual consumers and producers. Macro (large scale) / Micro (small scale) NOTE - Sports and Entertainment marketers are focused on Microeconomics. Chapter 2

Economic Utility Ability of a product/service to satisfy one or more needs or wants of a consumer. the amount of satisfaction a person receives from the consumption of a particular product or service. NOTE – consumers (fans) are more likely to purchase products/services if it provides higher utility than their other choices/options. Chapter 2

Four Types of Marketing Utilities Form, Time, Place, and Possession make up the Utility Marketing Model. Utility Marketing – Benefits Helps businesses to make better choices by allowing them to gain a better understanding of consumer demands Utility Marketing – Drawbacks Consumers purchase products for reasons than the four types of utilities….emotion, necessity, boredom, etc. Chapter 2

Types of Utility Form Utility Time Utility when the physical characteristics of a product/service are improved thus increasing the attractiveness of the product/service to a group of consumers. Can result in changes to tangible parts of the product/service. Time Utility making the product or service available when the customer wants it. 24/7 Grocery Stores, Gas Stations, Wal-Mart, McDonalds Chapter 2

Types of Utility Place Utility Possession Utility the product is available where it is wanted. Note – making things convenient for consumers is a good business practice. Possession Utility the product or service is available at an affordable price. Offering options to consumers regarding payment options; 24months Same as Cash, Cash Back, Credit Cards, Rent-To-Own, Installment Loans, % off Coupons. Chapter 2

Example: __________ Utility Chapter 2

Example: ___________ Utility Then… Now… Appearances can be deceiving… Same great taste as always… Something’s never change… Chapter 2

Example: __________ Utility Chapter 2

Example: _________ Utility: Chapter 2

Textbook Assignment: Encore pg. 36 Answer questions: 1, 2, 3 Utilize Microsoft Word – type your answers. Chapter 2

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Economic Utility Ad Assignment: 25pts CHAPTER 19 Economic Utility Ad Assignment: 25pts 4/21/2017 List examples of FIVE products/services that have been updated (changed or modified) via one or more of the economic utilities - Form, Time, Place, Possession. Research Internet Newspaper Magazines you need to find Do not use any of the examples we have discussed in class (exit slip Examples from Wednesday) Utilize PowerPoint to demonstrate a “Compare / Contrast” of your findings. New vs. Old List which utilities you believe have been changed Describe how this was accomplished/why you feel this is so. You must have addressed each of the four economic utilities (Form, Time, Place, Possession). Chapter 2

Campbell’s Soup Change in Form Utility – changed physical appearance to a smaller more colorful “microwavable” container. Chapter 2

Textbook Assignment pg. 36 1.) B – the study of the economics of the entire society. 2.) D – making decisions to use resources in ways that result in the greatest profit. 3.) Think of a sports or entertainment event you have attended. How could the form utility have been improved? Chapter 2

Lesson 2.2 Risk Management Learning Targets I can define risk and list the categories and classifications of risk. I can name and describe two of the four strategies for risk management. Chapter 2

Terms Risk Risk Management Liable Chapter 2

RISKING IT ALL Risk the possibility of financial gain or loss or personal injury. There are 3 Main Categories of Risk Natural Risk Human Risk Economic Risk Chapter 2

Categories of Risk Natural Risk occurs from unavoidable weather conditions. Chapter 2

Categories of Risk Human Risk dishonest customers and employees. inadequately trained employees. Chapter 2

Categories of Risk Economic Risk occurs due to changes in the economy. Note - No guarantee that consumer demand will remain consistent. Chapter 2

Classifications of Risk 1. Gain/Loss 2. Controllable/Uncontrollable 3 Classifications of Risk 1. Gain/Loss 2. Controllable/Uncontrollable 3. Insurable/Uninsurable Speculative Risk (Gain) Three possible outcomes exist in speculative risk: something good (gain) something bad (loss) nothing (staying even) Investing in the stock market and Gambling on sports are two examples of Speculative Risk(s). Each offers a chance to make money, lose money or walk away even. Chapter 2

Pure Risk (Loss) There are only two possibilities; something bad happening nothing happening. It is unlikely that any measurable benefit will arise from a pure risk. Example – a flood closes a golf resort for 2 months, the loss of business is a Pure Risk since there is no possibility of gain from the event. Chapter 2

Controllable Risk loss can be prevented or the likelihood of its occurrence can be reduced. Example – if your home has Smoke Detectors and a Fire Extinguisher your family has taken steps to control the risk of loss due to fire. Example – our school? - Extreme Weather and Fire Drills - Lock Down Drills Chapter 2

Uncontrollable Risk nothing can be done to prevent the risk. No control. Example – nothing you could do to prevent the loss if a sinkhole swallows your car. Chapter 2

Insurable Risk Uninsurable Risk (pure risk) loss is predictable and the amount of the loss can be estimated. Example – car accident….loss can be calculated using statistics based on similar losses in the past. Uninsurable Risk dollar loss could occur…loss cannot be estimated. Example – REDS 2014 season is a bust. REDS have losing season, don’t make the playoffs causing ticket sales to drop, the loss of revenue is an uninsurable risk. Chapter 2

Movie Theater Golf Resort Risk Classifications Risk Type – Tornado Risk Type – Fire Golf Resort Risk Type – Heat Wave Risk Type – Golf Cart in the lake Risk Classifications Uncontrollable Risk Controllable Risk Uninsurable Risk Insurable Risk Chapter 2

MANAGING RISK Risk Management preventing, reducing, or lessening the negative impacts of risk by using the strategies of risk; Risk Avoidance Risk Insurance Risk Transfer Risk Retention Chapter 2

Risk Avoidance Jury: Dodgers negligent in Giants fan's beating (must) need to plan to avoid risky situations. Liable the business/team is legally responsible for damages/injuries that occur. Jury: Dodgers negligent in Giants fan's beating The jury found damages of about $18 million but said the Dodgers were responsible for only a quarter of the sum. The rest of the responsibility was split between the two men who beat fan Bryan Stow Chapter 2

Risk Insurance Risk Insurance Premium Deductible pays for predictable losses. Premium amount (cost) paid for insurance. Typically paid monthly, Quarterly, Semi-Annually, or Annually Deductible amount (payment) due to receive insurance benefits. Chapter 2

Textbook Assignment: Encore pg. 41 Answer Questions: #1, #2, and #3 Email your responses to the questions. Michael.florimonte@campbell.kyschools.us Chapter 2

Textbook Assignment: Encore pg. 41 B – Thunderstorm A – Gain or Loss Risks Insurable Risks Controllable Risks Make the facility is well-lit, has adequate fire exits, staffed with security personnel, employees have been trained for emergency situations. Chapter 2