The Use of Price Discrimination in Ticket Sales for Special Events

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BANKU AUGSTSKOLA

SWISS BUSINESS SCHOOL

Case Study

“The Use of Price Discrimination in Ticket Sales for Special Events”

Master of Business Administration Program

“International Finance and Banking”

Full time study 1MS group students

Aleksandrs Rogovs

Margarita Ozola

Alina Aleksandrova

Anna Korcagina

Anita Nenna Nebo

Riga 2012

Table of contents

Table of contents2

Introduction3

1.Positive and negative consequences for buyers and sellers of the special event tickets in case the fixed price approach is used4

1.1.Positive consequences for the buyers4

1.2.Negative consequences for the buyers6

1.3.Positive consequences for the sellers7

1.4.Negative consequences for the sellers8

1.5.The summary of all positive and negative consequences9

1.6.Examples of fixed price approach10

Contribution of each of the members of the group12

List of the sources13

Introduction

A big number of people are keen on attending special events. Many have got a favourite artist, attendance of whose performance is associated with a huge amount of positive emotions. Others enjoy attending sports matches and supporting their favourite teams. For the fans such events are just about pleasure. But for the organizers this is a hard work. One of the biggest problems for them is to set the right price level for the tickets. In case organizers set too low prices, they will lose a lot of potential revenue. On the other hand, if the ticket prices are too high, then a lot of seats will not be sold. Certainly this will also influence the revenue of the ticket sellers negatively.

Organizers can use fixed price approach or price discrimination approach while setting the prices of special event tickets. In our assignment we will compare these two pricing approaches and will try to find out the positive and negative consequences of each of them for both buyers and sellers. We will also study in details other factors that have to be taken into account by the organizers of the special events. Furthermore we will describe the concept of price elasticity of demand. This will be done in order to understand how this concept can be used to try to increase the revenues. We will also try to be creative and to think of additional tools that are not related to the price, but can increase the attendance level and therefore the revenues of the organizers.

All of the above mentioned assignments will be performed to in order to deepen our theoretical knowledge of pricing strategies and to understand how this knowledge can be used in the real life.

Positive and negative consequences for buyers and sellers of the special event tickets in case the fixed price approach is used

As it is known, there is a great number of pricing approaches that special event organizers can implement. Undoubtedly each approach has its own advantages and disadvantages. This clause of the work concentrates on the fixed price approach. Positive and negative consequences for buyers and sellers of the special event tickets in case if the fixed price approach is used will be discussed in this clause. Firstly let’s concentrate on the positive consequences of the fixed price approach for the buyers.

1 Positive consequences for the buyers

According to the price discrimination concept the differences in the price level lead to a dualistic effect for the buyers.[1] On one hand, some groups of consumers benefit from the lower prices. On the other hand, other groups of buyers face higher prices. This means that people with high level of income pay higher prices in order to provide the opportunity for the people with low level of income to purchase the product at lower prices. On contrast, under fixed price...
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