From: Marketing Consultant
To: President, General Manager Bob Cortez and Board Directors
A new Class A minor league baseball team called the Nor’easters is coming to Springfield, MA. News around town was that another professional sports team, the Falcons, was having trouble drawing revenue. Since the Nor’easters are a new team it’ll be challenging for them to draw fans. Springfield is located 90 miles away from Boston and is the third largest city in Massachusetts. Springfield had lost many high wage residents resulting in 3.6% drop in average wages since 1990. Median income of a family of three was $37,800 and median household income was $31,046. Springfield Nor’easters would need to bring die-hard sports fans that are tired of driving to Boston at a fraction of the price. With a declining economy reasonable ticket prices would be ideal for the community. The task of Larry Buckingham, marketing director for Nor’easters, is to sell Nor’easters residents on the baseball experience. Buckingham’s strength is that he has experience in entertainment, marketing and specifically pricing tickets. People wanted to attend games to have fun and revenue wasn’t correlated toward the teams’ win/lost results but more of the baseball experience. The audience trends toward a more family and student friendly environment to support a small community team in the neighborhood. Buckingham’s weakness was that his theatre background wasn’t ideal toward marketing to sports fans. To counteract his lack of experience in the sports industry, Buckingham sought out help by communicating with other minor league teams to better understand the local industry. Buckingham conducted a survey of Springfield residents to try to gauge how much he can price tickets. The survey he created needed to help price tickets to where they would draw a loyal crowd away from competing venues such as: college football, movies, bowling, and minor league hockey. Local colleges set their ticket prices between $5-6 for adult and $3 for children. Nor’easters needed to entice people from going to a Boston Red Sox game that was 90 miles away with an expensive price tag of $12-325/game. The goal is to keep prices as competitive as possible while keeping attendance up. If you price tickets at a competing rate, you can increase revenue exponentially. Buckingham didn’t want to give the tickets away but also didn’t want to overprice causing unsuspecting fans to not attend games. Without people attending the game, you wouldn’t have the opportunity to cross-sell and have fans also purchase items at the concession and merchandise booths. In order to remain profitable management set a goal to break-even in the first season. With only 38 home games to sell to consumers, this proved to be a challenging task. Buckingham used marketing research to learn this unfamiliar market and find out what consumer’s behaviors were toward certain prices. A survey was conducted using 10,000 requests from a diverse range of people with income levels above the poverty rate and a mailing list of sports fanatics. These results would better inform Buckingham of potential customers who would be willing to attend games. However, the problem with the survey was that the results were biased toward a certain group of individuals and didn’t represent the majority of residents in Springfield. Out of the results, only 625 people answered the survey while 4% were returned as undeliverable. 6.5% of the people surveyed responded to the results giving us a good indicator of a customer base to start with but a small fraction of the population to represent all of the 55,338 people in Springfield. The Nor’easters play at Springfield College, which had been converted into a 3,600-seat open arena. The college provided the stadium for free in exchange for 100% of the parking revenue.
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