Re: London 2012 Olympic Games
Paul Williamson and his team were responsible for developing the policies for pricing and distributing the tickets for the 2012 London Olympic Games. He along with team members Chris Townsend, the Commercial Director of the LOCOG and Joanna Manning-Cooper, Head of Public Relations and Media were actively engaged in the pricing strategy decision making. The tickets were set to go on sale starting in late 2010 which meant that Williamson had about 18 months to plan his pricing strategy. The Olympic Games are governed by the International Olympic Committee (IOC) which is responsible for electing the Olympic host cities, setting guidelines for the host cities, managing copyrights, and trademarks as well as managing broadcast rights and international sponsorships. The management of the Games is left to the host city’s Organizing Committee for the Olympic Games (OCOG) which is responsible for ticketing, domestic sponsorships, and domestic licensing. As Williamson was considering his strategy, he kept two thoughts in mind; one from his boss Chris Townsend who said “Missing either our revenue or our attendance target is simply unacceptable.” The other comment came from Joanna Manning-Cooper who reminded him that “We are billing these as ‘Everybody’s Games,’ which means the majority of tickets have to be at prices the public can afford.” Williamson was caught between the two choices- should he make the prices high in order to maximize revenue, or should he price them low enough or the general public to fill the seats. There was 7.9 million tickets up for sale and the LOCOG estimated about 500,000 people per day that attend the Games with up to 800,000 people on busy days. According to the LOCOG, “It is estimated that roughly 30% of all the tickets would be purchased by Londoners, 25% by United Kingdom residence who live outside of London, 20% by the rest of Europe, and 25% by people in the rest of the world. Problem
Williamson was faced with the difficult decision of how to price the London Olympic tickets. He needs to decide whether he should price tickets at a high price in order to maximize revenues or at an affordable price for Londoners and the average person. Another issue is managing attendance. Many times, the seats are sold but the purchasers do not actually show up. This was the case in the 2008 Beijing games. Williamson and his team need to ensure that the people who buy the tickets actually want to be at the game and avoid people such as VIPs and media people from not showing up. Williamson’s goal is to maximize the ticket sales and attendance in all of the 26 Olympic events, not only the popular sports such as swimming, athletics, and gymnastics but also table tennis and handball. Williamson is also wanted to focus on selling the tickets to the “knowledgeable fans” that will be not only attending the events but all so actively participating and cheering on the athletes. Finally, Williamson and the committee need to find a pricing strategy that not only is suitable for the high class society and the wealthy foreigners, but also for the average Londoners and those leaving nearby. Williamson has to choose between exceeding the ticket revenue target by $50 million with about 70% attendance or falling short of the $50 million goal and raising the attendance to 90%. The reoccurring issue remains the same; to raise the revenue or to raise the attendance to the 2012 London Olympics, “Everyone’s Games.” Analysis
Williamson needs to consider different pricing strategies. There are several advantages and disadvantages of variable or dynamic pricing. It would be wise for Williamson to consider variable pricing for the Olympic events by varying the price based on the popularity of each event. He can also consider using different prices for different seat locations, as described in the case as “tiers.” The issue for variable pricing based on type of event or sport...