All alternative solutions take into consideration (1) the concessions and the right balance between the price of the tickets and the price of concessions and (2) the way the pricing strategy will encourage the participation of people to the games of the local team. Following this, the alternative solutions seem to include:
- offering a low ticket price and keeping the concessions price reasonably high to complete the company's revenues;
- offering a medium to high individual ticket, corroborated with a lower 5-game and full and half-season packages, in order to encourage people to purchase these forms of tickets;
- keeping all ticket prices reasonably high, assuming that the alternatives to the local minor league baseball team are not that numerous.
As always, the best solution seems to be a combination of the alternative solutions presented previously and the recommendations below will reflect this in the final conclusions.
3. Recommendations
The key to make the right decision likes in comparing the baseball team with a new product being launched on the local market. From that point-of-view, this analysis proposes a penetration price strategy during the first year of operation, continued with a gradual increase in the ticket prices over the subsequent period of time.
This type of strategy is likely to address all the issues previously presented. First of all, the low price will have an impact on consumers, making them more loyal to the team's games. If a consumer attends regularly the team's games during the first year, he will be more likely to accept a gradual increase in the ticket price, as he a more ardent fan. This type of approach will eliminate all other alternatives, such as occasionally driving to Boston to see a game: that will become impossible because the consumer turned-fan will prefer to stay in Springfield to see his favorite team's game.
At the same...
Some of these products can even be offered for free so as to stimulate people to purchase season-tickets (for example, for each season ticket, you get a baseball cap with the team logo). All these will need to be corroborated with marketing actions throughout the town aimed towards the same objective: ensuring that the brand develops and that people become more aware of the fact that there is a baseball team in their town and that they are more loyal to its brand.
The only potential problem with such a strategy is that it might affect the objective of breaking even during the first year. One can negotiate with the owner spreading this objective over a period of 3 years, with the condition that the profitability in years 2 and 3 will be sufficiently high to cover the loss in the first year of operation.
Following the first year and the price penetration strategy, management can gradually increase the prices for all categories of tickets, including for season tickets. Management can both count on the inhabitants of Springfield being loyal to the team brand now and can also use a marketing technique to show that most of that money is actually going toward supporting the local team and making it more competitive in the minor league.
This dualistic approach is likely to tackle all the problems that have been identified, as well as the threats from other games and other leisure activities. At the same time, it will also ensure the financial viability of the enterprise over a medium and long period of time, which is vital for the success of the project. The main obstacle that needs to be considered is the activity in the first year. For the right approach, sponsors could be attracted to support the team during that period of time and a short-term bank loan would be able to cover some of the potential losses during the first year.
