Economics of SERM Sports and Entertainment Marketing

 The study of how goods and services are produced, distributed, and consumed  People have limited amounts of time and money and must decide on the best way to spend it  A business wants to find a way to get customers to spend those resources (time and money) on their products or services

opportunity cost  Each economic decision a customer makes involves an opportunity cost  Opportunity cost - the value of the next best alternative that you give up when making a choice Examples:  new video game vs. a new pair of shoes  Tickets to a sporting event vs. tickets to a movie

 Customers have limited money and time to spend on sports and entertainment  Producers have limited resources for making their products scarcity  This lack of resources is called scarcity

 How are the sports and entertainment industries affected by scarcity?  How are the sports and entertainment industries affected by opportunity cost?

Controllable Factors  Price  Value Uncontrollable Factors  Income  Population

Price  Price – the value in money (or its equivalent) placed on a goods or services  Usually in dollars ($40 for a sweater)  Can be an exchange of goods that is perceived to be equal  Ex: Exchanging products for advertising space  Companies can control how much they charge for products based on competition and cost of production

 Value  Value – a matter of anticipated satisfaction  Great deal of satisfaction = more value  More value = higher price  Companies can create value in their products in several ways  Limited edition  Short supply  Status

Income  Income – how much people make and how much money they have to spend  How does the economy affect income?  SER industries cannot control consumer income or discretionary income

 Population  Population – the number of people in a given area  Available consumers to purchase a product  SER industries cannot control the population of a given area  Population may effect where a product is sold or what product is sold

 How are the sports and entertainment industries affected by controllable economic factors? (price, value)  What about uncontrollable economic factors? (income, population)

 How many people are out of work  How do you think high unemployment could affect the sports and entertainment industries?

DIRECT  Sell same product in same geographic area  Regal Fox Theatre Brambleton  Cobb Theater Leesburg  Alamo Draft house One Loudoun INDIRECT  Sell similar but not identical products to the same customers  Red Box  Netflix  Movie rental stores

Price  When a business uses the price of their product to compete in the marketplace Non-Price  When a business uses other product features (such as quality, image or service) to compete in the marketplace

 List direct and indirect competition for the following:  KFC (fried chicken dinner)  Lifetime fitness gym membership  Why is competition good for SER customers?  Why is it important for businesses to always be watching the competition?