Sports and Entertainment Marketing © Thomson/South-Western ChapterChapter Sports and Entertainment Means Business 2

Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 2 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.

Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 3 Terms Profit Profit Motive Microeconomics Macroeconomics Economics Economic Utility

Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 4 THE PROFIT MAKERS Revenue the money a business receives from the sales of goods and services

Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 5 Profit the amount of money remaining from revenues after all expenses are. 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.

Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 6 Opportunities for Profits Worldwide distribution revenue is critical for profits. Example: Movies Avg. Box Office income increases 50% to 100% Titanic - highest ticket sales in last 100yrs. Domestic (released just in USA) $600,800,000 vs. International (released in multiple countries) $1,234,600,000

Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 7 China’s market - over 1.3 Billion people Sounds like a good market for movie makers correct? the government censors movies for content pirated movies diminish theater sales Marketers must always understand the markets in which they target and sales occur.

Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 8 In addition to U.S. ticket sales, name two other large sources of revenue for U.S. film studios. International Sales DVD Sales DVD Rentals Movie Merchandise

Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 9 ECONOMICS Economics the study of how goods and services are; Produced Distributed Consumed

Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 10 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. Macroeconomics

Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 11 Economic Utility 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.

Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 12 Types of Utility Form Utility when the physical characteristics of a product or service are improved. 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

Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 13 Types of Utility Place 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.

Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 14 Economic Utility Ad Assignment: 20pts Utilizing the Internet, Newspaper or Magazines, you need to find FIVE products/services that businesses/companies have changed one or more of the economic utility (Form, Time, Place, Possession) in regards to their product/service. Can’t use any of the examples we have discussed in class. Do a compare/contrast (New vs. Old) and be sure to list which utilities you believe have been changed and 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).

Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 15 Example: ___________ Utility Then… Now… Appearances can be deceiving… Same great taste as always… Something’s never change…

Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 16 Example: __________ Utility

Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 17 Example: _________ Utility:

Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 18 Example: __________ Utility

Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 19

Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 20 Lesson 2.2 Risk Management Learning Targets I can define risk and describe the categories and classifications of risk. I can name and describe four strategies for risk management.

Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 21 Terms Risk Risk Management Liable

Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 22 RISKING IT ALL Risk the possibility of financial gain or loss or personal injury.

Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 23 Categories of Risk Natural Risk occurs from unavoidable weather conditions. Human Risk dishonest customers and employees. inadequately trained employees. Economic Risk occurs due to changes in the economy.

Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 24 Additional Classification of Risk Speculative Risk either a gain or loss could result. Pure Risk a chance of an event occurring that could only result in a loss.

Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 25 loss can be prevented or the likelihood of its occurrence can be reduced. Uncontrollable Risk nothing can be done to prevent the risk. No control. Controllable Risk

Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 26 (pure risk) loss is predictable and the amount of the loss can be estimated. Uninsurable Risk dollar loss could occur…loss cannot be estimated. Insurable Risk

Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 27 Movie Theater Risk Type – Tornado Uncontrollable Risk Type – FireControllable Golf Resort Risk Type – FloodPure Risk Type – Heat WaveUninsurable Risk Type – Golf Cart in lakeInsurable

Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 28 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

Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 29 Risk Avoidance Sports and entertainment marketers need to plan to avoid risky situations. Liable the business/team is legally responsible for damages/injuries that occur.

Sports and Entertainment Marketing © Thomson/South-Western Chapter 2 Slide 30 Risk Insurance pays for predictable losses. Premium amount (cost) paid for insurance Deductible amount (payment) due to receive insurance benefits.

Sports and Entertainment Marketing © Thomson/South-Western Textbook Assignment: Encore pg. 41 On paper answer questions: 1, 2, 3 Due before you leave class today! Chapter 2 Slide 31