Transcript Chapter 2

Do Now
What is risk?
What does Harbor Yard or Bluefish Stadium
do to reduces the risk of injury to an
attendee during a concert or game?
Chapter 2
Slide 1
Sports and Entertainment Marketing
© Thomson/South-Western
Chapter 2
Sports and Entertainment
Means Business
2.1 Sports and Entertainment
Economics
2.2 Risk Management
Sports and Entertainment Marketing
© Thomson/South-Western
Lesson 2.2
Risk Management
Goals
 Define risk and describe the categories
and classifications of risk.
 Name and describe four strategies for
risk management.
Chapter 2
Slide 3
Sports and Entertainment Marketing
© Thomson/South-Western
RISKING IT ALL
 risk
 the possibility of financial gain or loss or
personal injury
Chapter 2
Slide 4
Sports and Entertainment Marketing
© Thomson/South-Western
Three Categories of Risk
1. Natural risk
 occurs from unavoidable weather
conditions
2. Human risk
 dishonest customers and employees
 inadequately trained employees
3. Economic risk
 occurs due to changes in the economy
Chapter 2
Slide 5
Sports and Entertainment Marketing
© Thomson/South-Western
Three Additional Classification
of Risk
1. gain or loss risk
 speculative risk
 either a gain or loss could result
 pure risk
 a chance of an event occurring that could only
result in a loss
Chapter 2
Slide 6
Sports and Entertainment Marketing
© Thomson/South-Western
Three Additional Classification
of Risk
2. controllable or uncontrollable risk
 controllable risk
 if a loss can be prevented or the likelihood of its
occurrence reduced
 uncontrollable risk
 nothing can be done to prevent the risk
Chapter 2
Slide 7
Sports and Entertainment Marketing
© Thomson/South-Western
Three Additional Classification
of Risk
3. Insurable or Uninsurable risk
 insurable risk
 a pure risk for which the chances of loss are
predictable and the amount of the loss can be
estimated
 uninsurable risk
 the chance that a dollar loss could occur
 the amount of the loss cannot be estimated
Chapter 2
Slide 8
Sports and Entertainment Marketing
© Thomson/South-Western
 What are four steps a sports venue could
take to avoid risk of injury to fans
attending games?
Chapter 2
Slide 9
Sports and Entertainment Marketing
© Thomson/South-Western
MANAGING RISK
 risk management
 preventing, reducing, or lessening the
negative impacts of risk by using the
strategies of risk avoidance, risk insurance,
risk transfer, and/or risk retention
Chapter 2
Slide 10
Sports and Entertainment Marketing
© Thomson/South-Western
Strategies to Manage Risk
1. Risk Avoidance – precautions to avoid
risky situations
2. Risk Insurance – buy insurance for
predictable risk
3. Risk Transfer – put the liability on
another company or even the customer
4. Risk Retention – retain money to cover
the cost of a given risk
Chapter 2
Slide 11
Sports and Entertainment Marketing
© Thomson/South-Western
Lesson 2.1
Sports and Entertainment
Economics
Goals
 Define profit and explain the profit
motive.
 Describe types of economic utility.
Chapter 2
Slide 12
Sports and Entertainment Marketing
© Thomson/South-Western
THE PROFIT MAKERS
 profit
 the amount of money remaining from revenues
after all expenses are paid
 revenue
 the money a business receives from the sales of goods and
services
 profit motive
 making decisions to use resources
in ways that result in the greatest
profit
Chapter 2
Slide 13
Sports and Entertainment Marketing
© Thomson/South-Western
Cultural Opportunities for
Profits
 Worldwide distribution revenue is
critical for movie profits.
 China has a tremendous movie market.
 The government censors movies for
content
 Pirated movies diminish theater
sales
Chapter 2
Slide 14
Sports and Entertainment Marketing
© Thomson/South-Western
ECONOMICS
 economics
 the study of how goods and services are
produced, distributed, and consumed
-
Chapter 2
Slide 15
Sports and Entertainment Marketing
© Thomson/South-Western
 macroeconomics
 the study of the economics of the entire
society
 microeconomics
 the study of the relationships between
individual consumers and producers
 Sports and entertainment marketers are
focused on microeconomics.
 relationships with consumers
Chapter 2
Slide 16
Sports and Entertainment Marketing
© Thomson/South-Western
Sports and Entertainment
Economics
 economic utility
 the amount of satisfaction a person
receives from the consumption of a
particular product or service
Chapter 2
Slide 17
Sports and Entertainment Marketing
© Thomson/South-Western
Types of Utility
 form utility
 when the physical characteristics of a product or
service are improved
 time utility
 making the product or service available when the
customer wants it
 place utility
 the product is available where it is wanted
 possession utility
 the product or service is available at an affordable
price
Chapter 2
Slide 18
Sports and Entertainment Marketing
© Thomson/South-Western
 List four types of economic utility.
Chapter 2
Slide 19
Sports and Entertainment Marketing
© Thomson/South-Western