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Economics of SERM
Sports and Entertainment Marketing
What is Economics The study of how goods and services
are produced, distributed, and
consumed
People have limited amounts of time
and money and must decide on the
best way to spend it
A business wants to find a way to get
customers to spend those resources (time and
money) on their products or services
Making Economic Choices
Each economic decision a customer
makes involves an opportunity cost Opportunity cost - the value of the
next best alternative that you give up
when making a choice
Examples:
new video game vs. a new pair of shoes
Tickets to a sporting event vs. tickets to a
movie
Scarcity Customers have limited
money and time to
spend on sports and
entertainment
Producers have limited
resources for making
their products
This lack of resources is
called scarcity
Question! Answer with your group
How are the sports and
entertainment industries
affected by scarcity?
How are the sports and
entertainment industries
affected by opportunity cost?
Economic FactorsControllable FactorsPriceValue
Uncontrollable Factors Income Population
Controllable Economic Factors Price – the value in money (or its
equivalent) placed on a goods or services
Usually in dollars ($40 for a sweater)
Can be an exchange of goods that is
perceived to be equal
Ex: Exchanging products for advertising
space
Companies can control how much they
charge for products based on competition
and cost of production
Controllable Economic FactorsValue – a matter of anticipated
satisfaction
Great deal of satisfaction = more value
More value = higher price
Companies can create value in their
products in several ways
Limited edition
Short supply
Status
Uncontrollable Economic Factors
Income – how much people
make and how much money
they have to spend
How does the economy
affect income?
SER industries cannot control
consumer income or
discretionary income
Uncontrollable Economic Factors
Population – the number of
people in a given area
Available consumers to
purchase a product
SER industries cannot control
the population of a given area
Population may effect where a
product is sold or what product
is sold
Question! Answer with your group
How are the sports and
entertainment industries affected
by controllable economic factors?
(price, value)
What about uncontrollable
economic factors?
(income, population)
Unemployment Rate
How many people are
out of work
How do you think high
unemployment could
affect the sports and
entertainment
industries?
Competition: The MoviesDIRECT Sell same product in
same geographic area Regal Fox Theatre
Brambleton Cobb Theater
Leesburg Alamo Draft house
One Loudoun
INDIRECT Sell similar but not
identical products to the same customers Red Box Netflix Movie rental stores
Competition: Review
Price When a business
uses the price of their product to compete in the marketplace
Non-Price When a business
uses other product features (such as quality, image or service) to compete in the marketplace
Question! Answer with your group
List direct and indirect competition for
the following:
KFC (fried chicken dinner)
Lifetime fitness gym membership
Why is competition good for SER
customers?
Why is it important for businesses to
always be watching the competition?