Transcript Chapter 2.1 & 2.2 Notes - Campbell County Schools

Chapter 2
Sports and Entertainment
Means Business
Sports and Entertainment Marketing
© Thomson/South-Western
Lesson 2.1
Sports and Entertainment
Economics
Learning Targets
 I can define profit and explain the profit
motive.
 I can list and describe the FOUR types
of economic utility.
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Terms
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Profit
Profit Motive
Microeconomics
Macroeconomics
Economics
Economic Utility
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THE PROFIT MAKERS
 Revenue
 the money a business receives from the
sales of goods and services.
 Money coming “in” to the business.
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 Profit
 the amount of money remaining from
revenues after all expenses have been
paid.
 Goal of any business is to earn (make) a Profit.
 Profit Motive
 making decisions to use resources in ways
that result in the greatest profit.
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Opportunities for Profits
 Worldwide distribution revenue is critical for profits.
Example: Movies
 Avg. Box Office income increases 50% to 100%
Avatar - highest ticket sales in last 100yrs with $2,788,007,625
Domestic (released just in USA) $760,507,625
vs.
International (released in multiple countries) $2,027,500,000 (+70%)
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 Marketers must always understand the
markets in which they target and sales occur.
 China’s market - over 1.3 Billion people
Sounds like a good market for movie makers correct?
Not so fast……
 the government censors movies for content.
 pirated movies diminish theater sales.
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 In addition to U.S. ticket sales, name two other large sources of
revenue for U.S. film studios.
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International Sales
DVD Sales
Rentals (Redbox, Netflix, etc).
Movie Merchandise
 In addition to ticket sales, name two other large sources of revenue
for the Cincinnati Bengals.
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Apparel and Merchandise Sales
Broadcast (TV / Radio)
Licensing Agreements
Sponsorships
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ECONOMICS
 Economics
 the study of how goods and services are;
 Produced
 Distributed
 Consumed
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 Macroeconomics
 the study of the economics of the entire society.
 Microeconomics
 the study of the relationships between individual
consumers and producers.
Macro (large scale) / Micro (small scale)
NOTE - Sports and Entertainment marketers
are focused on Microeconomics.
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 Economic Utility
 Ability of a product/service to satisfy one or more
needs or wants of a consumer.
 the amount of satisfaction a person receives from
the consumption of a particular product or service.
NOTE – consumers (fans) are more likely to
purchase products/services if it provides higher
utility than their other choices/options.
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Four Types of Marketing Utilities
 Form, Time, Place, and Possession make up
the Utility Marketing Model.
 Utility Marketing – Benefits
 Helps businesses to make better choices by allowing
them to gain a better understanding of consumer
demands
 Utility Marketing – Drawbacks
 Consumers purchase products for reasons than the four
types of utilities….emotion, necessity, boredom, etc.
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Types of Utility
 Form Utility
 when the physical characteristics of a product/service are
improved thus increasing the attractiveness of the
product/service to a group of consumers.
 Can result in changes to tangible parts of the product/service.
 Time Utility
 making the product or service available when the customer
wants it.
 24/7 Grocery Stores, Gas Stations, Wal-Mart, McDonalds
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Types of Utility
 Place Utility
 the product is available where it is wanted.
Note – making things convenient for consumers is a good business
practice.
 Possession Utility
 the product or service is available at an affordable price.
 Offering options to consumers regarding payment options;
24months Same as Cash, Cash Back, Credit Cards, Rent-To-Own,
Installment Loans, % off Coupons.
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Example: __________ Utility
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Example: ___________ Utility
Then…
Now…
Appearances can be deceiving…
Same great taste as always…
Something’s never change…
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Example: __________ Utility
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Example: _________ Utility:
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Textbook Assignment:
Encore pg. 36
Answer questions: 1, 2, 3
Utilize Microsoft Word – type your answers.
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Economic Utility Ad Assignment: 25pts
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List examples of FIVE products/services that have been updated (changed or modified) via one
or more of the economic utilities - Form, Time, Place, Possession.
 Research
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Internet
Newspaper
Magazines
you need to find
Do not use any of the examples we have discussed in class (exit slip Examples from Wednesday)
 Utilize PowerPoint to demonstrate a “Compare / Contrast” of your findings.
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New vs. Old
List which utilities you believe have been changed
Describe how this was accomplished/why you feel this is so.
You must have addressed each of the four economic utilities (Form, Time, Place, Possession).
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Campbell’s Soup
 Change in Form Utility – changed physical appearance
to a smaller more colorful “microwavable” container.
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Textbook Assignment pg. 36
1.)
B – the study of the economics of the entire society.
2.)
D – making decisions to use resources in ways that result in the
greatest profit.
3.)
Think of a sports or entertainment event you
have attended. How could the form utility have
been improved?
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Lesson 2.2
Risk Management
Learning Targets
 I can define risk and list the categories and
classifications of risk.
 I can name and describe two of the four
strategies for risk management.
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Terms
 Risk
 Risk Management
 Liable
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RISKING IT ALL
 Risk
 the possibility of financial gain or loss or personal
injury.
 There are 3 Main Categories of Risk
 Natural Risk
 Human Risk
 Economic Risk
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Categories of Risk
 Natural Risk
 occurs from unavoidable weather conditions.
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Categories of Risk
 Human Risk
 dishonest customers and employees.
 inadequately trained employees.
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Categories of Risk
 Economic Risk
 occurs due to changes in the economy.
Note - No guarantee that consumer demand will remain consistent.
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Classifications of Risk
1. Gain/Loss
2. Controllable/Uncontrollable
3. Insurable/Uninsurable
 Speculative Risk (Gain)
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Three possible outcomes exist in speculative risk:
something good (gain)
something bad (loss)
nothing (staying even)
Investing in the stock market and Gambling on sports are two
examples of Speculative Risk(s). Each offers a chance to make
money, lose money or walk away even.
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 Pure Risk (Loss)
 There are only two possibilities;
1. something bad happening
2. nothing happening.
It is unlikely that any measurable benefit will arise from a pure
risk.
Example – a flood closes a golf resort for 2 months, the loss of
business is a Pure Risk since there is no possibility of gain from
the event.
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 Controllable Risk
 loss can be prevented or the likelihood of its occurrence can be
reduced.
Example – if your home has Smoke Detectors and a Fire
Extinguisher your family has taken steps to control the risk of loss
due to fire.
Example – our school?
- Extreme Weather and Fire Drills
- Lock Down Drills
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 Uncontrollable Risk
 nothing can be done to prevent the risk.
 No control.
Example – nothing you could do to prevent the loss if a sinkhole
swallows your car.
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 Insurable Risk
 (pure risk) loss is predictable and the amount of the loss can be
estimated.
Example – car accident….loss can be calculated using statistics
based on similar losses in the past.
 Uninsurable Risk
 dollar loss could occur…loss cannot be estimated.
Example – REDS 2014 season is a bust. REDS have losing
season, don’t make the playoffs causing ticket sales to drop, the
loss of revenue is an uninsurable risk.
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Movie Theater
Risk Classifications
Uncontrollable Risk
Controllable Risk
Risk Type – Tornado
Risk Type – Fire
Golf Resort
Risk Type – Heat Wave
Risk Type – Golf Cart in the lake
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Uninsurable Risk
Insurable Risk
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MANAGING RISK
 Risk Management
 preventing, reducing, or lessening the negative
impacts of risk by using the strategies of risk;
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Risk Avoidance
Risk Insurance
Risk Transfer
Risk Retention
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Risk Avoidance
 (must) need to plan to avoid risky situations.
 Liable
 the business/team is legally responsible for damages/injuries
that occur.
Jury: Dodgers negligent in Giants fan's beating
The jury found damages of about $18 million
but said the Dodgers were responsible for only
a quarter of the sum. The rest of the
responsibility was split between the two men
who beat fan Bryan Stow
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Risk Insurance
 Risk Insurance
 pays for predictable losses.
 Premium
 amount (cost) paid for insurance.
 Typically paid monthly, Quarterly, Semi-Annually, or Annually
 Deductible
 amount (payment) due to receive insurance benefits.
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Textbook Assignment:
 Encore pg. 41
 Answer Questions: #1, #2, and #3
 Email your responses to the questions.
[email protected]
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Textbook Assignment:
 Encore pg. 41
1.
2.
3.
B – Thunderstorm
A–
1.
Gain or Loss Risks
2.
Insurable Risks
3.
Controllable Risks
Make the facility is well-lit, has adequate fire exits, staffed
with security personnel, employees have been trained for
emergency situations.
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