Marketing: Custom Edition for Texas A&M University 17th Edition by William Pride,Ferrell

Exercise 18

Take You Out to the Ball Game? Let Me Check the Price First
When the Chicago White Sox play the Chicago Cubs, the Sox raise single-game ticket prices, because the cross-town rivalry attracts so many local fans. The Atlanta Braves raise ticket prices when the Yankees come to town, knowing that fans will flock to the stadium for this matchup. The San Francisco Giants, Minnesota Twins, Oakland Athletics, and other baseball teams also change single-game ticket prices depending on demand. This trend toward dynamic pricing is now spreading to other sports. The Washington Capitals hockey team and the Washington Wizards basketball team are two of a growing list of teams that use this pricing approach for single-game tickets (not for season tickets).
Before baseball's Giants instituted dynamic pricing, team marketers wondered how fans would react. "They are familiar with this type of pricing in the airline and hotel industry," says the head of ticket sales, "but this was a big leap for a sports team to implement the idea into the box office." Although the Giants had been varying prices depending on which team was visiting, its marketers knew that demand was higher at certain points in the season and on different days of the week. Switching to dynamic pricing enables the Giants to stimulate demand during slower periods and increase revenue during periods of peak demand.
The Chicago White Sox team uses dynamic pricing because "we want to get as many bodies in the park as possible," explains the head of marketing. The team has a committee that meets weekly to review sales data for individual games and for the season, and decide on price changes for the coming week. Except for seats that have been sold to season ticket holders, single-game tickets may be priced up or down at any time. Buyers who get their tickets well in advance usually get the best prices, especially for games scheduled early in the season and games against teams that aren't high in the standings. Filling seats also means higher revenues from team merchandise, parking fees, and food sales.
Marketers for the Minnesota Twins like the flexibility of dynamic pricing. In the past, they had to set prices months before the season started, to have time to print brochures and tickets. Now they can make last-minute price adjustments after checking weather forecasts, team rankings, player trades, pitching lineups, and other factors. If they've priced tickets for a particular game too low-meaning sales are much better than expected-or too high, they can boost ticket sales by making price changes as game day approaches. The Twins also use dynamic pricing to get fans excited about specially priced "Steal of the Week" single-game tickets that are offered online only.
Will all major league sports teams eventually adopt dynamic pricing? The answer depends on whether fans raise a fuss over price changes, and whether the teams currently using it are successful in filling seats and raising revenue. Some teams are testing such pricing on a small scale, applying it only to designated seating sections or specific games to determine public reaction. But if a baseball team hits a home run in pricing, chances are good that it will expand this dynamic approach to the rest of its stadium and the rest of its schedule.
What other marketing mix variables must teams consider when using dynamic pricing to set ticket prices? Why?