Similar to the rest of the world, the United Kingdom has been faced with the devastating effects of the internationalized economic crisis. But as the crisis continues to unfold, the country moves on to address its other issues as well.
One of these issues is represented by the fact that the country’s capital would represent the host of the 2012 Olympic Games. The preparations for organizing such an event are currently undergoing and they involve a series of efforts, resources and commitments.
The hosting of the 2012 Olympic Games is both an opportunity, as well as a challenge for the organizers. At this level, the process would be assessed from the marketing perspective and recommendations would be formulated based on the specifics of the problems identified.
Issues and problems
London would be hosting the 2012 Olympic Games and it is as such presented with the opportunity to add to its national pride and development. The organizing committee is also presented with the possibility to combine its resources and expertise and host one of the greatest and most important events on the globe. Still, the organizing committee is faced with important challenges at the level of marketing decisions. Specifically, it is yet uncertain as to how the committee should go about in the development and implementation of its pricing and distribution strategies.
At a more detailed level, the challenge is represented by the fact that the pricing and distribution strategies would have to simultaneously address the following four features:
(a) The maximization of the revenues
(b) The maximization of attendance
(c) The right people, and last
(d) Price accessibility.
For instance, the committee had to develop and implement a pricing strategy that ensured both accessible prices to the people in the area, but which also generated sufficient financial results for the organizers. In other words, the committee is faced with the challenge of simultaneously meeting goals that seem conflicting.
3. Analysis and evaluation
The arena where the Olympic Games would be hosted is being gradually constructed in one of the least economically advantages regions of the British capital. This situation raises two distinctive issues. On the one hand, it assumes that the infrastructural investments made in the revival of the region would support the recovery of the borough. This is a highly important feature especially since the borough where the Olympic Games are hosted has been a historically poorer county, further devastated by bombings during the Second World War, and never truly restored. In such a setting, the Olympics could bring about the restoration of the neighborhood.
On the other hand however, there is the problem that the inhabitants in the region are sometimes economically challenged, and they could not afford a high price of the tickets to the Olympic Games. In such a setting, the organizers are at a loss regarding the pricing strategy to implement. The pricing and distribution efforts are complex and they have to meet specific criteria, which is often conflicting. To better understand this, the table below was created:
Objectives
Price decision implied
Revenues maximization
– Return on investment
– High price
Attendance maximization
– Fill up the seats in the audience
– Affordable price
Right people
– Fill up the spaces with people that create the sports atmosphere
– Unknown at this point
Price accessibility
– Ticket accessibility to the people in the borough
– Low price
The table above has restated the four criteria by which the committee organizing the 2012 London Olympic Games has to decide and implement a pricing and distribution strategy. It is useful as it centralizes and succinctly reveals the issues faced by the organizers, but it is developed below, in order to provide a superior comprehension of the complexities and to create a better analysis of the real situation.
(a) The maximization of the revenues
The organizing country would be spending an increased amount of financial resources in the preparation and hosting of the Olympic Games. This virtually means that it has to recuperate its investment through implementing a beneficial pricing strategy. In this order of ideas then, it would be justifiable to implement a high price.
Another argument however to be forwarded at this stage is represented by the fact that the investments in the area would not be utilized by the Olympic Games alone. Specifically, in this setting, the investments would amortize in the decades to follow and they definitely present advantages for the London community. In this order of ideas, it might appear as unethical to charge the public in the Games for benefits that would be used by the municipality in the future period.
(b) The maximization of attendance
The Olympic Games are transmitted worldwide and it is desired for the seats to be filled in order to enhance the image and reputation of the United Kingdom. In other words, it is necessary for the stadium to be filled with people in an effort to increase the interest shown by the public in the Games.
Aside from the global image of the stadium, the maximization of the attendance rate is necessary during the totality of the Games. Specifically, tickets tend to be sold out for the commencement of the games, the swimming contests and the finals. The other events are less popular and there is the need to attract more people to them. In such a setting, a conclusion is drawn that prices should be accessible to the population, rather than focused on revenue maximization.
(c) The right people
The organizers of the 2012 London Olympic Games are focused on attracting the right people. In their words, these right people are the “knowledgeable fans who added to the energy and atmosphere of the event” (case).
The attraction of these people is based on the need to attract audiences which participate in the events for what these events represent to them. It is important for the public to further advance the spirit of the competition and the camaraderie of the sports events. The wrong crowd could lead to the formation of conflicts in the audience, a most relevant example in this sense being represented by the clashing of the football fans, which often ends up roughly in the United Kingdom.
From the standpoint of the people to be attracted, the price and distribution considerations are conflicting. For instance, it could be argued that the proper crowd would be better educated, and as such could be filtered through imposing higher prices. Still, such a measure would be ineffective as it might also filter out those who are the right people for the sporting atmosphere, just do not have the resources for it. From this angle then, the price constraints are unknown and this feature would be considered less in the establishment of the pricing and distribution strategies.
(d) Price accessibility
Finally, the last constraint is represented by the fact that the Olympic Games are hosted in one of London’s most financially challenged regions. This virtually means that the disposable incomes of the people in the area are limited. Subsequently, the price to participating in the events of the Olympic Games should be low enough to allow the people in the community to participate in them. Their exclusion from the Games would be unethical and would also cast a shadow upon the entire Olympics.
4. Recommendations
The analysis conducted previously has led to conflicting findings. On the one hand, there are solid arguments that forward the need for a high price of the tickets in order to filter the participants and ensure a satisfactory return on the immense investments made. On the other hand however, there is the need to implement a lower price in order to increase attendance. In such a setting then, two important recommendations are made.
The first of these refers to the creation of a pricing strategy which is realistic in the real life context, rather than serving the pre-established conditions. In this order of ideas, it is recommended for the committee to implement a variable pricing strategy. This ensures that the price of the tickets reflects the investments made in the organization and hosting of the 2012 Olympic Games.
Still, while such a strategy is economically viable, it is insufficient to attain the objectives desired by the organizers. In this order of ideas, it is next recommended for the variable pricing strategy to only be used as a means of setting the average price of the tickets. Using proportions and mathematical computation derived from this mean price, the organizers should create two new prices. One of them would be a low price, affordable to the community and ensuring attendance. The other would be higher, limited, and would provide special services, and it would ensure that the organizers do register their necessary return on investment.
The second recommendation is pegged to the fact that organizers need to ensure an evenly distributed participation in the events. In other words, they have to draw attention and raise interest in the totality of the sports events, not just in those traditionally perceived as popular. In this order of ideas, it is recommended that they distributed the tickets in a targeted manner. For example, they could distribute tickets to handball events to the local handball teams, the amateur teams or the schools with a sporting profile.
Such an effort would imply additional time consumed by the targeting and separate distribution, but would also ensure that the different Olympics events get the attention required. In other words, such a strategy would allow the committee to bring in people interested in all categories of sports events and to increase the attendance at the events which are less popular among the general public by bringing in particular categories of viewers.
Additionally, targeted and differentiated distribution would also ensure that the audience is filled with the right people. People in amateur sports clubs for instance are guided by sporting principles of competition and comradely. They would as such participate in the events, fill the seats, participate in specific events and so in a manner that further promotes the atmosphere. In other words, they would be the desired “knowledgeable fans who added to the energy and atmosphere of the event” (case).
5. Conclusions
The strategies recommended are unable to meet all the criteria imposed before hand. They are mere suggestions as to how the organizers of the London 2012 Olympic Games might go about in addressing the requirements set. Where these recommendations do not meet the pre-established criteria, the organizing committee should develop and implement complementary solutions. Some examples in this sense include the following:
The complete selection of the participants and the “right people” would be impossible, but the atmosphere and safety of the stadium could be improved through the participation of special persons or by increased safety measures.
The search for additional funding options. This is necessary in order to ensure the return on the investments made, in the context in which these would be anyway used by the community. In other words, the cheaper tickets could be subsidized through additional funds collected through sponsorships from economic agents, donations or funds from the public institutions.
References:
Fullerton, S., 2009, Sports marketing, 2nd edition, McGraw Hill
Hoyle, L.H., 2002, Event marketing: how to successfully promote events, festivals, conventions and expositions
Mills, G., 2002, Retail pricing strategies and market power, Melborne Univ. Publishing Schlossberg, H., 1996, Sports marketing, Wiley-Blackwell
The London 2012 Olympic Games case
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