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Olympics Analysis

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Submitted By nosko
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Challenge: The challenge for the London Organizing Committee for the Olympic Games (LOCOG) is to create a ticket pricing strategy for the various events that meets our multiple objectives.
Ticket Pricing Recommendation: We recommend a tiered pricing strategy that considers our three objectives: 1) revenue maximization, 2) accessibility, and 3) attendance. To meet these objectives we divided the potential consumers into segments (see Exhibit 1) based on the product features that each segment values. We then adjusted ticket prices relative to the segment's price sensitivity, willingness to pay, and utility derived from the Olympic events. The methodology we applied to our model was focused on indirect pricing discrimination primarily allowing for self-selection based on different tiers of events (based on projected popularity), event round (preliminaries v. finals), and seat location. We complemented this methodology with several targeted strategies aimed at increasing both attendance and accessibility. The model we recommend (see Exhibit 2 for full list of prices for various events) balances revenue generation with accessibility. We project revenues of approximately $653M, but preserve relatively low price points on millions of tickets, making the games accessible to the masses. Our prices were set with the strategy outlined in Exhibit 3. We divided events into two categories: events that sought to maximize revenue or accessibility and aligned them with the appropriate customer segments (as outlined below) based primarily on the segment's estimated price sensitivity. The majority of the revenue is derived by placing a premium on the four most historically popular events, which also feature two of the 2012 Olympics' biggest stars (Phelps & Bolt), football (soccer), basketball and sports where the UK has historically won medals. This combined with

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