Case Study: The London 2012 Olympic Games

1. What are the tradeoffs that Williamson faces?

The tradeoffs Williamson faces are numerous, for example, hitting the ticket
revenue target but with a slumping attendance rate percentage. Although
Williamsons primary responsibility in these Games is to develop policies for pricing
and distributing the 7.9 million tickets for the games while maximizing attendance
and generating revenue to meet the games target; he must consider the impact various
factors such as ticket prices and audience appeal for different sports will have on the
ultimate outcome.
He faces the unique situation of finding the right balance and mix of activities to
implement in order to meet the stated goals presented to him by his stakeholders. In
reviewing the tradeoffs, one great concern is empty seats. Empty seats are not
necessarily due to poor ticket sales. In fact, during the 2008 Olympic games in
Beijing, many venues were sold out, but were plagued with half filled stadiums. The
challenge is in two parts. Williamsons team must sell the tickets. Then they have to
get the people that bought tickets to show up to that event. Williamson must establish
ticket prices that attract the right people to the right event, and also ensure they are
selling tickets to people interested in that sport. Strong ticket sales will earn revenue
for the Olympic games, but poor attendance will create a public relations issue.
Williamson must set prices that reflect the popularity of the sport, generate revenue,
and ensure attendance to the Games all while staying within the boundaries of EU
law, which prohibits the LOCOG from offering discounted prices to local but not
other EU citizens. This combination effect is a daunting challenge for Williamson.
Who are the key stakeholders and what is their influence on the tradeoffs?
The key stakeholders are the London Organizing Committee of the Olympics
Games (LOCOG) and their Director Chris Townsend, Joanna Manning-Cooper, Head
of Public Relations & Media, the Organizing Committee for the Olympic Games
(OCOG) and the International Olympic Committee (IOC). Their influence on the
tradeoffs exist in that LOCOG viewes ticket revenue as vital to the legacy of the 2012
Games and that missing either the revenue or attendance target is unacceptable. While
the PR group wants to position the 2012 Games as Everybodys Games which
means a portion of tickets would have to be at prices locals and the public could
afford. The OCOG and the IOC both have a vested interest in maximizing the ticket
revenue and attendance as the latter significantly impacts broadcast rating and
perception around the world of the 2012 Games as being successful. Williams and his
team must take all these criteria into consideration if they are to be successful.
What are the implications of the tradeoffs
First, the fact that the Games will be broadcast to approxiametly 5 billion television
viewers, having half-empty arenas would give the impression that ticket sales were
poor (even if they were not) and would significantly impact the atmosphere and
enthusiasm effect the LOCOG wants to achieve. Missing the revenue target due to
lack of ticket sales will impact the % of revenue the OCOG expects to receive toward
the staging of the Games. The tradeoffs may lead to Williamson meeting the goals of
one group but not another; each scenario with its own unique set of consequences.
Ultimately, the 2012 London Games success and perception of success from viewers
and participants resides in meeting the specific needs of each in ways the maximizes
stakeholder expectations.

2. Of what value is the historical Olympic data helping Williamson decide on the
number of tickets he can sell and how to price them?
While having historical data typically assists one in forecasting and making
decisions, in the case of the 2012 Games, the data on pricing of tickets for past Games
for Beijing and Athens (Exhibit 9), provided only limited guidance to Williamson for
pricing the London Olympics. A number of factors make the process of setting ticket
policies unique to each host city. As the case states, host cities possess unique taste,
culture & atmosphere and sports have vaying appeal because of this. Athens is a
small city and had limited capacity of the venues and Beijings ticket prices were
artificially low in an attempt to make them affordable to locals. Other factors limiting
the usefulness of the data include the accessbilty to the host city; London is more
accesible than China thus broadening the demand for tickets beyond the UK. The
London Games also planned to introduce Internet ticket sale option for which no prior
host country had done successfully. And lastly, the entire world was experiencing an
economic recession that had not been experienced since the 1930s, and no one had
the insight to predict the impact that would have had on the Londons Games. The
Sydney Games on the other hand were inspiration to the team for managing ticket
revenue. They were staged in venues and locations comparable to what was being
planned for London. This was beneficial input since the results supported the notion
that people were willing to pay attend events, which Williamson could potentailly
model his approach for the London Games after Sydneys pricing tiers and success.

3. How might his pricing strategies vary by sport? Are there price constraints on any
sports?

4. For the London Olympics, what are the characteristics of a pricing strategy
assuming the goal is to achieve the revenue target? What are the risks? assuming
goal is to maximize attendance? Risks?
A good pricing strategy has several characteristics. First, it must be attractive to sell
tickets. The price must be affordable to fans of the sport. If the ticket is priced too high,
fans will likely stay home and simply watch the games on television. Tickets must be
priced in a reasonable manner, as to attract the fans to purchase them to attend the
event in person. Tickets must also be priced reflective of the popularity of the sport. If
you price the tickets too low for a popular event, you will likely miss an opportunity to
generate revenue. If you price them too high for a scarcely popular event, you will not
generate enough ticket sales, leading to empty seats and a poor attendance showing for
an event. A good pricing strategy will balance several components of the sport. It will
balance popularity, fan base, interest, and ability to market. Williamson must consider
these factors as they determine the pricing strategy for the 2012 Olympic games.
Using the economic pricing strategies allows more fans to purchase the game tickets
at an affordable price. A little over 7.9 million tickets were made available for the
events; the sales team can use the price bundling strategy to offer several events tickets
at a one low price. The bundles range from one sport to a combination of multiple
sporting events. Bundling the tickets into a lump sum price will slightly reduce the ticket
revenue but it will guarantee ticket sales and attendance to the events. Lastly, the sales
team used the optional product pricing strategy to generate more revenue per ticket.
For example, once an individual purchase a $30 dollar ticket, they were offered the
opportunity to improve their seats for an extra "small" fee. All of the price strategies
were used to increase the number of tickets sold and to increase attendance for each
event.

5. The pricing strategy has to vary by sport. Williamson could follow the approach as
outlined in Exhibit 9 of the case which uses pricing tiers to the approach to setting the
prices for the various sporting events. This would allow him to price popular sports
and less popular sports at the optimal price to achieve the ticket sales revenue.
However, as previously discussed, ticket sales revenue is not the only goal of the
stakeholders. While, the LOCOG is mainly focused on ticket sales and revenue, they
should implement a solid marketing campaign that focuses on selling the tickets to
fans loyal to the particular sport. However, they should also market sports like table
tennis to fans as a way of introducing a new sport. Using this strategy, Williamson
and the LOCOG are likely to generate brisk ticket sales, and more importantly sell
tickets to those individuals who are likely to attend and fill the seats at the London
Olympic Games.