Economics of SERM

Sports and Entertainment Marketing

What is Economics 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

Making Economic Choices

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

Scarcity Customers have limited

money and time to

spend on sports and

entertainment

Producers have limited

resources for making

their products

This lack of resources is

called scarcity

Question! Answer with your group

How are the sports and

entertainment industries

affected by scarcity?

How are the sports and

entertainment industries

affected by opportunity cost?

Economic FactorsControllable FactorsPriceValue

Uncontrollable Factors Income Population

Controllable Economic Factors 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

Controllable Economic FactorsValue – 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

Uncontrollable Economic Factors

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

Uncontrollable Economic Factors

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

Question! Answer with your group

How are the sports and

entertainment industries affected

by controllable economic factors?

(price, value)

What about uncontrollable

economic factors?

(income, population)

Unemployment Rate

How many people are

out of work

How do you think high

unemployment could

affect the sports and

entertainment

industries?

Competition: The MoviesDIRECT 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

Competition: Review

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

Question! Answer with your group

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?