SPMA 2P27- Midterm #2 Questions with Correct Solutions| Latest Update Graded A+
Willingness to pay: What is it? The concept often used in economics and market research
Measures the maximum amount of money that an individual is willing and able to spend or pay
for a particular product or service
Represents the value that a person places on obtaining a specific product or experiencing a
particular service
Value varies from person to person as well as from market to market
Willingness to pay: Why care? An important concept in pricing strategies!
It helps sports organizations determine the optimal price point for products and services
Willingness to pay: Influencing Factors Six important factors
1. Utility
2. Income
3. Preferences
4. Market conditions
5. Perceived value
6. Budget constraints
1. Utility The perceived satisfaction or benefit that an individual derives from a product or
service
The greater the utility, the more you are willing to pay
,Income Individual or household income levels
Preferences Personal preferences, tastes, and individual priorities
Market conditions The ability of substitutes or alternatives in the market
Perceived value The product or service quality, brand reputation, and convenience
Budget constraints The amount of disposable income a person has available
Willingness to pay: Approaches How can sport organizations measure willingness to pay if its
subjective?
Questionnaires
Market Research
Auctions
Questionnaires The most common approach used in WTP
Individuals (e.g. fans) respond to questions about their preferences and willingness to pay for
specific products or services
Contingent valuation In a hypothetical scenario, individuals are directly asked how much
they would pay for a product or a service
Can include closed-ended questions (e.g., Likert scale)
Can include open-ended questions
Bidding-style games
, Discrete choice experiments Presents respondents with a predetermined series of choices
between different product or service bundles, each with varying prices
By analyzing the choices people make, researchers estimate the willingness to pay for specific
attributes, features of products or services
Willingness to pay: Market Research Relying on external, secondary sources of information
about the market
Involves analyzing...
Historical sales data for products or services
Reviewing financial statements of competitors (if available)
Public data (e.g., Statistics Canada census)
Customer behaviour over time
Willingness to pay: Auctions Less used for willingness to pay by sport organizations, but
relevant in the industry
Simulates individuals purchasing a product or service
Value spend is used as information for their willingness to pay
Pricing An important facet within sport marketing
4 P's
The amount of money an organization charges for a product or service
Ticket Pricing The dollar value for price admission to a sport event
What influences ticket pricing? Supply and demand
Ticket Pricing: Supply and demand Price elasticity
Willingness to pay: What is it? The concept often used in economics and market research
Measures the maximum amount of money that an individual is willing and able to spend or pay
for a particular product or service
Represents the value that a person places on obtaining a specific product or experiencing a
particular service
Value varies from person to person as well as from market to market
Willingness to pay: Why care? An important concept in pricing strategies!
It helps sports organizations determine the optimal price point for products and services
Willingness to pay: Influencing Factors Six important factors
1. Utility
2. Income
3. Preferences
4. Market conditions
5. Perceived value
6. Budget constraints
1. Utility The perceived satisfaction or benefit that an individual derives from a product or
service
The greater the utility, the more you are willing to pay
,Income Individual or household income levels
Preferences Personal preferences, tastes, and individual priorities
Market conditions The ability of substitutes or alternatives in the market
Perceived value The product or service quality, brand reputation, and convenience
Budget constraints The amount of disposable income a person has available
Willingness to pay: Approaches How can sport organizations measure willingness to pay if its
subjective?
Questionnaires
Market Research
Auctions
Questionnaires The most common approach used in WTP
Individuals (e.g. fans) respond to questions about their preferences and willingness to pay for
specific products or services
Contingent valuation In a hypothetical scenario, individuals are directly asked how much
they would pay for a product or a service
Can include closed-ended questions (e.g., Likert scale)
Can include open-ended questions
Bidding-style games
, Discrete choice experiments Presents respondents with a predetermined series of choices
between different product or service bundles, each with varying prices
By analyzing the choices people make, researchers estimate the willingness to pay for specific
attributes, features of products or services
Willingness to pay: Market Research Relying on external, secondary sources of information
about the market
Involves analyzing...
Historical sales data for products or services
Reviewing financial statements of competitors (if available)
Public data (e.g., Statistics Canada census)
Customer behaviour over time
Willingness to pay: Auctions Less used for willingness to pay by sport organizations, but
relevant in the industry
Simulates individuals purchasing a product or service
Value spend is used as information for their willingness to pay
Pricing An important facet within sport marketing
4 P's
The amount of money an organization charges for a product or service
Ticket Pricing The dollar value for price admission to a sport event
What influences ticket pricing? Supply and demand
Ticket Pricing: Supply and demand Price elasticity
