SEM Chap 02

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Sports and Entertainment Marketing© Thomson/South-Western

Chapter Chapter Chapter Chapter

Sports and Entertainment

Means Business

2.1 Sports and Entertainment2.1 Sports and Entertainment

EconomicsEconomics

2.2 Risk Management2.2 Risk Management

2.3 Business Ethics2.3 Business Ethics

2.4 Financial Analysis2.4 Financial Analysis

2

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Sports and Entertainment Marketing© Thomson/South-WesternChapter 2Slide 2

Winning Strategies

one of the largest music content providers

cost savings achieved through outsourcingof manufacturing

in 2005, income grew due to legitimatesales of digital music

the music industry embraces ever-changingtechnology and helps drive the economy

EMI

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Sports and Entertainment Marketing© Thomson/South-WesternChapter 2Slide 3

Lesson 2.1


Economics

Goals

Define profit and explain the profitmotive.

Describe types of economic utility.

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Terms profit

profit motive

economics

economic utility

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THE PROFIT MAKERS profit

the amount of money remaining fromrevenues after all expenses are paid

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the money a business receives from thesales of goods and services

profit motive making decisions to use resources in ways

that result in the greatest profit

revenue

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Cultural Opportunities for

Profits

Worldwide distribution revenue iscritical for movie profits.

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China has a tremendous movie market.

the government censors movies for

content pirated movies diminish theater sales

Marketers must understand the markets

in which sales occur.

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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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ECONOMICS economics

the study of how goods and services are

produced, distributed, and consumed

--

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the study of the economics of the entiresociety

microeconomics

the study of the relationships betweenindividual consumers and producers

Sports and entertainment marketers arefocused on microeconomics.

relationships with consumers

macroeconomics

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Economics

economic utility

the amount of satisfaction a person

receives from the consumption of aparticular product or service

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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 thecustomer wants it

place utility the product is available where it is wanted

possession utility the product or service is available at an affordable

price

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List four types of economic utility.

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Lesson 2.2

Risk Management

Goals

Define risk and describe the categoriesand classifications of risk.

Name and describe four strategies for risk management.

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RISKING IT ALL risk

the possibility of financial gain or loss or

personal injury

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Categories of Risk natural risk occurs from unavoidable weather

conditions human risk dishonest customers and employees

inadequately trained employees

economic risk occurs due to changes in the economy

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Additional Classification of

Risk

gain or loss risk

speculative risk

either a gain or loss could result

pure risk

a chance of an event occurring that could onlyresult in a loss

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if a loss can be prevented or the likelihoodof its occurrence reduced

uncontrollable risk

nothing can be done to prevent the risk

controllable risk

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a pure risk for which the chances of lossare predictable and the amount of the losscan be estimated

uninsurable risk the chance that a dollar loss could occur

the amount of the loss cannot beestimated

insurable risk

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What is meant by a controllable risk?

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MANAGING RISK risk management

preventing, reducing, or lessening thenegative impacts of risk by using thestrategies of risk avoidance, risk insurance,risk transfer, and/or risk retention

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Risk Avoidance Sports and entertainment marketers

need to plan to avoid risky situations.

liable

the business is legally responsible for damages that occur

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Risk Insurance risk insurance

pays for predictable losses

premium

cost of insurance

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Risk Transfer Some risks can be transferred to

another company or even to the

consumer. contracting with third parties for services

including releases from liability on event

tickets

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Briefly describe four strategies for managing risk.

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Lesson 2.3

Business Ethics

Goals

D

efine ethics. Discuss the impacts of unethical

behavior.

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Terms ethics

principles

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DO ETHICS COUNT? ethics

a system of deciding what is right or wrong

in a reasoned and impartial manner

Business should be conducted withintegrity, trust, and fairness.

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Ethics and Character Matter principles

high standards of rules and guidelines

character development

a progression in behavior where peopleadvance from childish behavior to mature

behavior based on principles Young people need good role models.

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How does a person¶s character develop?

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BUSINESS BEHAVIOR People and businesses should act

ethically while pursuing a profit.

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Seeking an Advantage Sometimes it is hard to continue to act

ethically when you observe people

who receive a benefit from actingunethically.

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When Being Bad ProfitsOnly fans can really influence the

behavior of ethically challenged

athletes and celebrities.

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Effective and EthicalGood decisions are both ethical and

effective.

Good decisions are the right choices for the long term.

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How can the bad behavior of celebritiesbe controlled?

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Lesson 2.4

Financial Analysis

Goals

Discuss sources of funding andrevenue for sports and entertainmentbusinesses.

Describe four tools for financial

analysis.

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Terms return on investment

forecast

budget balance sheet

income statement

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IT TAKES MONEY Profit is the primary purpose of sports

and entertainment marketing.

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Finding Funding Investors generally provide the funding

for an event to cover all the costs that

must be incurred before tickets are ever sold.

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the income from a venture that isdistributed to investors

return on investment

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Money Sources Funds to repay investors are raised

through

ticket sales

broadcast rights

licensing

facilities

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Name three sources of revenue fromsports and entertainment.

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WHERE IS THE MONEY? forecast

a plan that predicts the expenses to be

incurred and the revenues to be received

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BUDGETS budget

a plan for how available funds will be spent

The purpose of a budget is to controlcosts so they do not exceed the fundsavailable.

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Financial Statements

balance sheet

net worth = assets ± liabilities

shows net worth at a specific point in time

income statement

shows revenues and expenses for a

specific period of time reveals company¶s profit or loss

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What is the purpose of a forecast?

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PERFORMANCE INDICATORS

EVALUATED

Communicate pricing strategies for supplyand demand.

Analyze relevant data to determine varyingticket prices for home games.

Explain the need for and use of additionalrevenue from higher-priced tickets.

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Explain the benefits of increased revenuefor consumers of foot-ball tickets.

Demonstrate knowledge of appropriatepricing strategies.

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SEM Chap 02

Documents

Transcript of SEM Chap 02