Alltel Pavillion Case Study Stuff.docx - 7-4 ALLTEL...

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7-4 ALLTEL Pavilion 1. The best description of the strategy of an entertainment business such as the ALLTEL Pavilion is differentiation. The mission statement includes: “a concert… it’s better live .” A live concert is certainly not the least expensive entertainment. What brings a customer to the ALLTEL Pavilion is top name acts and the experience of enjoying previous shows. The Pavilion knows that and strives to make every customer’s experience a pleasant one. Some students may argue that the Pavilion employs both differentiation and low price strategies – the differentiation strategy for nationally well-known performers and low price for local or regional talents. Even though the ticket prices for less popular artists are relatively low, attending a concert is not an activity purchased after comparing prices of different types of entertainment. Patrons attend a concert because it is fun, and not because it is inexpensive. The most important critical success factor for the continuous success of the Pavilion is to ensure that patrons have a good experience, realizing that the patrons each concert have different expectations. For example, the audience of a Jimmy Buffet concert is likely to be different from that other shows. For each show, the Pavilion considers fundamentally who the customers are, how the show will entertain these customers, and how to market the show. 2. The determination of the breakeven point is not straight-forward. It requires the student to understand how both types of customers contribute to the Pavilion’s profits – the paying ticket holders and the comp ticket holders. To determine the breakeven point:
Y = $285,453 This is approximately $285,453/($26.99+1.91+7.66+3.52=$40.08) = 7,122 ticket holders, at the $26.99 average per capita revenue from ticketing and assuming the per capita revenues for parking, concessions, and merchandise Alternatively, Q = $263,245/($40.08 - $3.049=$37.03) = 7,109 paying ticket holders (small rounding difference) where: $3.049 is total unit variable cost made up of $1.74 of variable expense

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