London Olympics Pricing

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The London 2012 Olympic Games|
The LOCOG’s Ticket Pricing Strategy|
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Contents
1. Introduction2
2. Setting the price2
2.1. Selecting Pricing Objectives2
2.2. Determining Demand3
2.3. Estimating Cost3
2.4. Analysis of competitor’s costs/prices/offers3
2.5. Selecting a pricing method4
2.6. Selecting a final price5
3. Pricing and Distribution Strategy5
4. Analysis5
4.1. Limitations5
4.2. SWOT5
4.3 Marketing Mix5
5. Summary/Conclusion5

1. Introduction
In 2004 London won the rights to host the 2012 Summer Olympics and it became the London Organizing Committee of the Olympic Games’ (LOCOG’s) contractual responsibility to plan and manage the 17 days of Olympic events in the city. 12,500 athletes from 205 countries are expected to participate in the London Olympics, competing in 26 sports and 300 events. With a projected 7.9 million tickets to be sold the 2012 Olympics will be the biggest ever. It is the LOCOG’s responsibility to manage the pricing, sale and distribution of the tickets. This report describes and justifies the LOCOG’s proposed pricing strategy for the upcoming 2012 Olympic Games 2. Proposed Pricing Plan

Proposed Prices
Table 1 – Proposed prices for London 2012 Olympic Games Tickets Events| Seat Prices ($)| Available Tickets| Total Revenue ($)| | Tier 1| Tier 2| Tier 3| | |
Non Sporting Events|  |  |  |  |  |
Ceremonies| 1500| 1000| 100| 120,000 | 103,896,000 |  |  |  |  |  |  |
Other Events| 60| 40| 20| 365,000 | 12,397,590 |
 |  |  |  |  |  |
Sports|  |  |  |  |  |
Category 1|  |  |  |  |  |
Preliminary| 80| 50| 30| 944,000 | 42,751,872 |
Finals| 300| 200| 80| 944,000 | 154,975,536 |
 |  |  |  |  |  |
Category 2|  |  |  |  |  |
Preliminary| 70| 45| 25| 2,301,000 | 91,181,727 | Finals| 175| 100| 50| 2,301,000 | 211,671,866 |
 |  |  |  |  |  |
Category 3|  |  |  |  |  |
Preliminary| 45| 30| 20| 498,000 | 13,391,096 |
Finals| 80| 50| 25| 498,000 | 21,848,630 |
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Total| | | | 7,971,000 | 652,114,316 |
Table 1 shows the proposed ticket prices. Th

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Each sporting event is also divided by perceived value into one of 3 categories (1 having the highest and 3 having the lowest perceived value). Popularity and categorization of each sport is summarized in Appendix 1. For the purpose of this exercise, each category’s ticket prices are calculated by means of weighted average price block encompassing pricing for all sports falling within a tier.

2. Pricing Strategy
Although ticket sales will not necessarily form a large part of the Olympic revenues, it is vital that the LOCOG get the ticket pricing policy and distribution right. To do so we will use a 6-step price setting procedure described in Kotler et al (2012). The procedure can be seen below in figure 1, each of the steps will be considered in the rest of this section. Figure 1 – 6 Step Pricing Setting Procedure

Figure [ 1 ] – 6 Step Pricing Setting Procedure

2.1. Pricing Objectives
The LOCOG has 4 main objectives that we will consider when setting ticket prices. The first objective is to maximise revenues, much media attention has been given to the escalating cost of these Olympics which provides increased motivation to hit or even exceed the £650 million mark that has been predicted by the budget. The second objective is to maximise attendance. Previous organizing committees have come under some scrutiny for the less than optimum attendance. Maximising attendance will give something back to the UK, improve the atmosphere, improve the presentation for the broadcasters, create memorable images and provide an audience for the sponsors. However, most importantly maximising attendance will boost the focus on the sports and athletes themselves. As well as...
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