TLDR A top sports organization saw a drop in ticket and merchandise sales due to pricing inefficiencies and market pressures. By adopting Value-Based Pricing and Customer Journey Mapping, it achieved a 25% increase in ticket sales and a 15% rise in merchandise revenue, underscoring the need to align pricing with customer value.
TABLE OF CONTENTS
1. Background 2. External Analysis 3. Internal Assessment 4. Strategic Initiatives 5. Audit Management Implementation KPIs 6. Stakeholder Management 7. Audit Management Best Practices 8. Audit Management Deliverables 9. Comprehensive Pricing Strategy Audit and Revamp 10. Digital Engagement and Fan Experience Enhancement 11. Audit Management Process Improvement 12. Additional Resources 13. Key Findings and Results
Consider this scenario: A leading spectator sports organization is confronting a critical strategic challenge related to audit management of its pricing strategy.
The organization has observed a 20% decline in ticket sales and a 15% drop in merchandise revenue over the past two years, reflecting external pressures such as increased competition and changing consumer preferences. Internally, inefficiencies in pricing strategy and lack of dynamic pricing mechanisms are prevalent. The primary strategic objective is to overhaul its pricing strategy to enhance revenue streams and fan engagement.
This spectator sports organization is witnessing significant challenges in sustaining and growing its revenue base. Initial analysis suggests that the core issues may stem from outdated pricing models and a failure to effectively segment and target its diverse fan base. As digital platforms transform how fans engage with sports, the organization's static pricing strategy appears increasingly misaligned with market expectations and competitive realities.
Emerging trends in the spectator sports industry include the rise of e-sports, increased fan engagement through digital platforms, and a shift towards experiential consumption. These dynamics suggest major changes in industry dynamics, including:
The STEEPLE analysis highlights significant technological, social, and economic factors influencing the industry. Technological advancements in streaming and digital engagement platforms are reshaping fan expectations, while economic uncertainties could affect discretionary spending on entertainment. Social trends towards personalized and interactive experiences suggest the need for strategic repositioning.
For a deeper analysis, take a look at these External Analysis best practices:
The organization possesses a robust brand and loyal fan base but struggles with leveraging its assets to meet evolving market demands. Its strengths include a strong brand presence and a dedicated fan base. However, weaknesses in adapting to digital trends and developing dynamic pricing models are evident.
SWOT Analysis
Strengths include brand loyalty and a historical legacy in the sports community. Opportunities lie in leveraging digital platforms for enhanced fan engagement and adopting dynamic pricing to capitalize on high-demand events. Weaknesses are seen in the current static pricing model and slow adoption of digital transformation. Threats encompass the rising popularity of e-sports and alternative entertainment options, along with fans' sensitivity to pricing.
Gap Analysis
The Gap Analysis reveals significant discrepancies between the organization's current pricing strategies and the dynamic, segmented approaches adopted by leading competitors. This gap extends to digital engagement, where there is a clear opportunity to utilize data analytics for more personalized fan experiences and pricing models. Bridging these gaps is critical for sustaining competitiveness and growth.
Digital Transformation Analysis
The Digital Transformation Analysis emphasizes the urgent need for the organization to integrate advanced analytics and AI to inform its pricing strategy and fan engagement efforts. Currently, the utilization of digital tools is suboptimal, hindering the organization's ability to dynamically price tickets and merchandise or to offer personalized fan experiences.
KPIS are crucial throughout the implementation process. They provide quantifiable checkpoints to validate the alignment of operational activities with our strategic goals, ensuring that execution is not just activity-driven, but results-oriented. Further, these KPIs act as early indicators of progress or deviation, enabling agile decision-making and course correction if needed.
These KPIs provide insights into the effectiveness of strategic initiatives in driving both top-line growth and deeper fan engagement. They also reflect the organization's agility in adapting to market dynamics and evolving consumer preferences.
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Successful implementation of strategic initiatives depends on the active involvement and support of key stakeholders, including the marketing team, digital transformation unit, pricing strategy consultants, and the fan community.
Stakeholder Groups | R | A | C | I |
---|---|---|---|---|
Marketing Team | ⬤ | ⬤ | ||
Digital Transformation Unit | ⬤ | ⬤ | ||
Pricing Strategy Consultants | ⬤ | |||
Fan Community | ⬤ | ⬤ | ||
Internal Audit Team | ⬤ |
We've only identified the primary stakeholder groups above. There are also participants and groups involved for various activities in each of the strategic initiatives.
Learn more about Stakeholder Management Change Management Focus Interviewing Workshops Supplier Management
To improve the effectiveness of implementation, we can leverage best practice documents in Audit Management. These resources below were developed by management consulting firms and Audit Management subject matter experts.
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The implementation team utilized the Value-Based Pricing framework to guide the overhaul of the organization's pricing strategy. Value-Based Pricing, which focuses on determining the perceived value of a product or service to the customer rather than historical costs, proved invaluable for this initiative. It enabled the organization to align ticket and merchandise prices more closely with the value fans perceive in attending games or purchasing products. The team embarked on the following steps:
Additionally, the Economic Value to the Customer (EVC) model was employed to further refine the pricing strategy. This model helped the organization quantify the economic value of its offerings to fans by comparing them with the next best alternative. The steps taken included:
The results of implementing these frameworks were significant. The organization witnessed a 25% increase in ticket sales revenue within the first year post-revamp, alongside a 15% increase in merchandise sales. This success was attributed to the more nuanced understanding and application of value-based and economic value pricing strategies, which resonated well with the diverse fan base.
For the digital engagement initiative, the team applied the Customer Journey Mapping framework. This framework was instrumental in visualizing the complete journey a fan takes from initial interest to post-event engagement, highlighting opportunities to enhance the fan experience at each touchpoint. By adopting this approach, the organization was able to:
The Jobs to be Done (JTBD) framework complemented the Customer Journey Mapping by focusing on the underlying needs and goals that drive fans to engage with the organization. The implementation process involved:
The combination of Customer Journey Mapping and JTBD frameworks significantly improved fan engagement metrics, with a reported 40% increase in digital platform interactions and a 30% rise in fan satisfaction scores. These frameworks helped the organization to not only understand but also effectively meet the evolving needs and expectations of its fans.
The organization adopted the Continuous Auditing and Continuous Monitoring (CACM) framework for enhancing its audit management processes. CACM allowed for the real-time assessment of risks and controls, making it an ideal choice for dynamically adjusting pricing strategies in response to market changes. The steps taken included:
In parallel, the Risk Management Framework (RMF) was applied to systematically identify, assess, and manage the pricing strategy's risks. This involved:
The results from implementing the CACM and RMF were transformative, leading to a more agile and responsive pricing strategy. Revenue volatility was reduced by 30%, and the organization was better positioned to capitalize on market opportunities, demonstrating the effectiveness of these frameworks in supporting dynamic and risk-aware pricing strategies.
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Here is a summary of the key results of this case study:
The strategic initiatives undertaken by the organization have yielded significant positive outcomes, particularly in terms of revenue growth from ticket and merchandise sales, enhanced fan engagement, and reduced revenue volatility. The successful application of Value-Based Pricing and EVC models demonstrates a deep understanding of the organization's value proposition to its fans, leading to a more effective pricing strategy. Similarly, the use of Customer Journey Mapping and JTBD frameworks has evidently improved fan engagement and satisfaction, indicating a well-executed digital transformation strategy.
However, the results also highlight areas for improvement. While revenue and engagement metrics have improved, the report does not fully address whether these increases have translated into long-term fan loyalty or how they compare to industry benchmarks. Additionally, the reduction in revenue volatility, while impressive, suggests that there may still be underlying issues in predicting market trends and fan responses. An alternative strategy could have included more aggressive investment in predictive analytics and machine learning technologies to further refine pricing and engagement strategies based on real-time data and trend analysis.
Given the results and areas for improvement, the recommended next steps include: further investment in advanced analytics and AI to enhance predictive capabilities for pricing and fan engagement; conducting a comparative analysis with industry benchmarks to identify additional areas of opportunity; and developing a long-term fan loyalty measurement framework to assess the impact of current strategies on fan retention and advocacy. These steps will ensure that the organization not only maintains its current growth trajectory but also builds a more resilient and fan-centric business model for the future.
Source: Pricing Strategy Audit for Spectator Sports Organization, Flevy Management Insights, 2024
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