What Record Concerning Fuschallicious World Tour - Report Example

Marketing Strategy Report for So What Record For Fusch!allicious World Tour [Enter the date of submission] Prepared by [Enter your name] Table of Contents Table of Contents 2 1.The Best advertising strategy for the Fusch!alicious World Tour 3 2.The band to support the Fusch!alicious world Tour 5 3.Justification of Fusch!a’s concert ticket prices amidst bad press 7 4.Calculating the market prices of tickets to stop scalpers 7 Conclusion 8 Appendix 1 – The Best advertising strategy for the Fusch!alicious World Tour 9 Appendix 2 - The band to support the Fusch!alicious world Tour 14 Appendix 4 - Calculating the market prices of tickets to stop scalpers 20 Introduction Typically, marketing of concerts event is usually undertaken so as to increase ticket sales and subsequently the profits generated from the concerts. Therefore, to achieve this objective, the Fusch!a’s management team at So What Record should adopt an appropriate marketing strategy that would maximize the audience and potential ticket buyers. However, to establish the reliable and effective marketing strategy appropriate market analysis should be undertaken. 1. The Best advertising strategy for the Fusch!alicious World Tour To maximize the weekly audience when marketing the Fusch!alicious world tour, the management team at So What Records should choose an appropriate marketing strategy. One of the marketing options is to use the total sponsorship amount of $22,000,000 spread evenly over the 32 weeks of the tour, while the second marketing option is to use only a total of $ 12,000,000 for marketing. Table 1 illustrated below shows the comparison of the weekly audience for the respective marketing strategies. Table 1 Marketing strategy A (Budget $22,000,000) Marketing strategy B (Budget $12,000,000) Weekly audience 2, 077,375 1,455,532 Table 2, illustrated below shows the established number of advertisement types for the respective marketing strategy. Table 2 Marketing strategy A (Budget $22,000,000) Marketing strategy B (Budget $12,000,000) Free-to-air TV 15 1 Pay TV 11 11 Prime Time Radio 15 15 Afternoon Radio 25 25 Bill boards 4 4 As indicated in table 2, the pay TV, prime time radio, afternoon radio and bill boards, advertisement types will be exhausted in both of the advertisement strategies. However, when the total amount of $22,000,000 is used for marketing only 15 weekly advertisements will be made on free-to-air TV; while for the $12,000,000 marketing budget only one weekly advertisement will be made on free-to-air TV. Therefore, the best marketing strategy to use that would maximize and provide a weekly audience of 2,077,375 people is to use the total budget of $22,000,000 on advertisements by having 15 weekly free-to-air TV, 11 weekly pay TV, 15 weekly prime time Radio, 25 weekly afternoon Radio and 4 weekly billboards advertisements. Table 3, illustrated below shows the population of 10 randomly selected countries. Table 3 ID Country Population 23 Ireland 4,585,400 26 Estonia 1286540 12 Poland 38,533,789 24 New Zealand 4,464,100 13 Canada 35,056,064 25 Botswana 2024904 3 United States 315,676,000 5 Japan 127,360,000 18 Sweden 9,566,945 4 Brazil 193,946,886 Based on the population of the respective 10 randomly selected countries, the best marketing strategy with a weekly audience of 2,077,375 people would be appropriately sufficient in Ireland, Estonia, Poland, New Zealand, Canada, Botswana and Sweden, but too little in the United states, Japan and Brazil. This is because the populations in the United States, Japan and Brazil are relatively larger. 2. The band to support the Fusch!alicious world Tour Different bands have varying rating based on their popularity and preference. Therefore, the selection of the best band to provide support for the Fusch!alicious world tour should largely be based on the band’s rating and appeal. The box plot illustrated in figure 1 below shows the typical rating of the respective bands. Box plots of Concert Ratings by Band duaxy002 Figure 1 As indicated in the box plot above, the typical concert rating for the Hives, Royal republic and cage the Elephant is 5, 5 and 3 respectively. Thus, a larger percentage of people rate the Hives and the Royal Republic as exceptionally good. However, the ratings received for cage the Elephants is quite evenly balanced. Table 4, illustrated below, provides further information of the ratings for the respective bands. Table 4 The Hives Royal Republic Cage the Elephants Q score 58% 65% 60% The Q-score is usually indicative of the band’s appeal. Therefore, as illustrated in table 4, the Royal Republic has an exceptional Q-score. Hence, based on the typical rating and the Q-score of the respective bands, the Royal Republic should be selected to provide support during the Fusch!alicious world tour. This is because typically, a larger percentage of people rate the Royal Republic as exceptionally good. In addition, The Royal Republic has the highest Q score and hence the strongest appeal compared to the other two bands. 3. Justification of Fusch!a’s concert ticket prices amidst bad press Typically, there is a relationship between the consumer price index (CPI) and the average ticket prices of concerts. Figure 2 below illustrates the scatter plot of consumer price index against the average ticket prices. Figure 2 The scatter plot illustrates that there is a directly proportional relationship between consumer price index and the average ticket prices. Therefore, the higher the consumer price index the higher the average ticket price, and vice versa. The statistical data analysis established that approximately 84.8% of the variation in the average ticket price is due to the consumer price index. Using the estimated consumer price index of 2014, the forecasted average ticket price for 2014 is $115.13. However, this is still an underestimation when compared to the typical average ticket price of $118.5 computed using the seat capacity of the respective tickets. 4. Calculating the market prices of tickets to stop scalpers To evaluate the market prices of tickets to stop scalpers, Reverb Nation an organization which provides information to concert promoters provided 40 scalping indices. A scalping index indicates the increased percentage at which a concert ticket price was sold. Therefore, an average scalping index is the generally expected inflated percentage at which the concert ticket prices are sold. Hence, the scalping index can be used to estimate the ticket income loss. The most extreme scalping index established using the sample provided by Reverb Nation is 2.63. This implies that the tickets would be sold by scalpers at 2.63 x 100 = 263% of the originally set ticket prices. Thus, given the Royal VIP ticket price as $150, scalpers would sell the Royal VIP tickets at $394.50. The total amount of income loss that would occur for the most extreme scalping index of 2.63 is approximately $2,466,760.50. Other hand for scalping indices between 2.5 and 2.63, the estimated income loss is approximately between $2,466,760.50 and $15,800,568.75. As established the estimated income loss due to scalpers is quite large. Therefore, Fusch!a management at So What Records should adjust the prices accordingly using the scalping indices so as to reduce income loss due to scalpers. Conclusion The success of the Fusch!allicious world tour, will be largely determined by the marketing strategy adopted. Therefore, to maximize the number of audience accessed, the management team should use the total amount of $22,000,000 provided by the promoter to conduct the different advertisement types as established. In addition, the best supporting band to use would be the Royal Republic. This is because the band is typically highly rated and has the strongest appeal compared to the other two bands being considered. However, the management team should consider readjusting the ticket prices appropriately based on the scalping index so as to block the scalpers and reduce the income loss due to scalping. List of Appendices Appendix 1 – The Best advertising strategy for the Fusch!alicious World Tour a) The decision, objective and constraints for the linear problem are; The decision variables; X1 = Weekly free-to-air TV advertisements X2 = Weekly pay TV advertisements X3 = Weekly Prime time Radio advertisements X4 = Weekly Afternoon Radio advertisements X5 = Weekly Billboard advertisements Objective function Weekly audience = 44,773 X1 + 44,773 X2 + 4,000 X3 + 8,809 X4 + 21,250 X5 The constraints for the decision model are as follows; 22,500 X1 + 16,850 X2 + 5,000 X3 + 3,200 X4 + 1,400 X5 ≤ $ 687,500 5,000 X3 + 3,200 X4 ≤ $200,000 X1 ≤ 22 X2 ≤ 11 X3 ≤ 15 X4 ≤ 25 X5 ≤ 4 b) The optimum solutions using the total budget of $22,000,000 are as shown below; X1 = 15 X2 = 11 X3 = 15 X4 = 25 X5 = 4 The answer report of the Lp_Excel Solver is as illustrated in the print out below; The sensitivity report of the Lp_Excel Solver is as illustrated in the print out below; c) The shadow prices and the interpretation for the feasibility range for the TV, Radio and bill boards advertisement is as follows; i. The most profitable shadow price for TV advertisements is 11,243 for the pay TV advertisement, which implies that an additional pay TV advertisement would increase the weekly audience by 11,243. The feasible range for pay TV is [2, 31]. ii. The most profitable shadow prices for radio advertisements is 30,051, for the Prime time radio, which implies that an additional prime time radio advertisement would increase the weekly audience by 30,051. The feasible range for the prime time radio advertisement is [0, 24]. iii. The shadow price for bill board advertisement is 18,464, which implies that an additional bill board advertisement would increase the weekly audience by 18,464. The feasible range for the bill board advertisement is [0, 244]. d) Restricting the advertisement cost to $12,000,000 for the 32 weeks period, the optimal solution would change as follows; X1 = 1 X2 = 11 X3 = 15 X4 = 25 X5 = 4 The answer report with the new cost constraint in consideration is given below; e) The 10 randomly selected countries is as indicated in the excel output below; Appendix 2 - The band to support the Fusch!alicious world Tour a) The descriptive summary tables for the three bands are as illustrated below; Table 5 The Hives, duaxy002  Mean 4.32265599 Standard Error 0.0210351 Median 5 Mode 5 Standard Deviation 1.15156358 Sample Variance 1.32609868 Kurtosis 1.57834878 Skewness -1.63062949 Range 4 Minimum 1 Maximum 5 Sum 12955 Count 2997 Q1 4 Q3 5 IQR 1 Table 6 Royal Republic, duaxy002  Mean 4.220095694 Standard Error 0.075815345 Median 5 Mode 5 Standard Deviation 1.096049721 Sample Variance 1.201324991 Kurtosis 1.794811579 Skewness -1.508608434 Range 4 Minimum 1 Maximum 5 Sum 882 Count 209 Q1 4 Q3 5 IQR 1 Table 7 Cage The Elephant,duaxy002  Mean 3.100520833 Standard Error 0.027897876 Median 3 Mode 3 Standard Deviation 1.222423694 Sample Variance 1.494319687 Kurtosis -0.918665646 Skewness -0.072452108 Range 4 Minimum 1 Maximum 5 Sum 5953 Count 1920 Q1 2 Q3 4 IQR 2 b) Using the 1.5 IQR rule, the lower and upper bound for the three bands is as established below; i. The hives 1.5 IQR = 1.5 Q1-1.5 IQR = 2.5 Q3+1.5 IQR = 6.5 Thus, the lower and upper bound is given by [3, 5]. Hence, there are 278 outliers present in the data which include the rating of 1 and 2. Therefore, based on the 1.5 IQR the rating of The Hives can be termed as exceptionally good. ii. The Royal Republic 1.5 IQR = 1.5 Q1-1.5 IQR = 2.5 Q3+1.5 IQR = 6.5 Thus, the lower and upper bound is given by [3, 5]. Hence, there are 12 outliers present in the data which include the rating of 1 and 2. Therefore, based on the 1.5 IQR the rating of The Royal Republic can be termed as exceptionally good. iii. Cage The Elephants 1.5 IQR = 3 Q1-1.5 IQR = -1 Q3+1.5 IQR = 7 Thus, the lower and upper bound is given by [1, 5]. Hence, there are no outliers present in the data. Therefore, based on the 1.5 IQR the rating of Cage the Elephants is evenly distributed. c) Based on the results in (b) above, the distribution of the rating for the Hives is right-skewed this is further implied by the box plot of the distribution illustrated below. The distribution of the rating for the Royal Republic is also skewed to the right. Therefore, for the two samples the most appropriate measure of central tendency to use is the median, while the most appropriate measure of dispersion is the range. However, the distribution of the rating of the Cage the Elephants is approximately symmetrical, hence, the mean and the standard deviation would be appropriate to use. Box plots of Concert Ratings by Band duaxy002 Figure 3 d) The Q scores for the respective bands is as indicated below; i. Q score (the Hives) = (493/852) x 100% = 57.86% ii. Q score (the Royal Republic) = (420/651) x 100% = 64.52% iii. Q score (Cage the Elephants) = (1939/3209) x 100% = 60.42% Using the descriptive summary of a sample of 78 bands as illustrated below; 1.5 IQR = 29.1294 Q1-1.5 IQR = -13.8376 Q3+1.5 IQR = 63.8408 Therefore, the cut off value for an exceptional score is 63.84%. Appendix 3 - Justification of Fusch!a’s concert ticket prices amidst bad press a) The scatter plot of CPI vs. Average Ticket Prices ($) is as illustrated below; Figure 4 As indicated in the scatter plot, the intercept, B0 = -50.45, which is the predicated value of the average ticket prices, when the consumer price index is set to zero. The slope of the regression line, B1 = 4.273, which implies that a unit change in the consumer price index, changes the average ticket prices by 4.273. The coefficient of determination; R2=0.848, which implies that the consumer price index explains 84.8% of the variability in the average ticket prices. However, in this particular the intercept of the regression line B0 = -50.45, is not meaningful. This is because the average ticket prices cannot assume a negative value. b) Using the regression model established in (a) to estimate the average ticket prices, given the estimated consumer price index for 2014 is 38.75; The estimated average ticket price for 2014 is $ 115.13. c) The mean and the weighted mean ticket prices are as indicated below; i. The mean ticket price is given by; ii. The weighted mean ticket price is given by; For this particular case the best average price to use is the weighted mean ticket prices. This is because it further puts into consideration the seat capacity for the respective ticket prices in the venues of the concerts. Appendix 4 - Calculating the market prices of tickets to stop scalpers a) The histogram of the scalping index is as illustrated below; Figure 5 The descriptive statistics of the scalping index is as illustrated in the table below; Table 8 Descriptive Summaries of Scalping Index, duaxy002 Mean 2.3748914 Standard Error 0.020515984 Median 2.377531103 Mode #N/A Standard Deviation 0.129754476 Sample Variance 0.016836224 Kurtosis -0.692352299 Skewness -0.102594513 Range 0.514955134 Minimum 2.077 Maximum 2.591955134 Sum 94.99565599 Count 40 The histogram of the scalping index as illustrated in figure 2 above is approximately symmetrical. This implies that the scalping index is approximately normally distributed. On further analysis, the sample distribution of scalping index has a skewness = -0.103 which implies that the distribution of approximately symmetrical, the kurtosis = -0.6964, which implies that the distribution of the scalping indices is relatively flat. Therefore, it can be concluded that the scalping index is approximately normally distributed. b) Based on the empirical rule, approximately 99.7% of sample observation fall within 3 standard deviation of the mean. Given that the sample mean = 2.37 while the standard deviation = 0.13; The sample scalping index data has a minimum of 2.077, and a maximum of 2.592. Hence, the maximum value falls within the 3 standard deviations of the mean but the minimum value falls outside the range of the 3 standard deviations. c) The probability and range for the required indices are as follows; i. The probability that the scalping index will exceed the upper bound in (b) above is as follows; This probability is as indicated in the figure below; ii. The scalping index that are between the probabilities 0.8413 and 0.9772 are as follows;   Thus the scalping indices that are between the probabilities 0.8413 and 0.9772 are within the range of [2.5, 2.63]. d) The amount of money lost to scalpers is given by; Money lost to scalpers = (Scalping Index-1) x Scalping Index Probability x Original Ticket Price x Number of Tickets scalped Original ticket price = $ 150 Number of scalped tickets = 442, 500 tickets For the scenario in c (i) above, Money lost to scalpers = (Scalping Index-1) x Scalping Index Probability x Original Ticket Price x Number of Tickets scalped Money lost to scalpers = (2.63-1) x 0.0228 x 150 x 442,500 Money lost to scalpers = 1.63 x 0.0228 x 150 x 442,500 Money lost to scalpers = $ 2,466,760.50 For the scenario in c (ii) above; the amount of money lost to scalpers is related to the scalping index of between [2.5, 2.63]. For a scalping index of 2.5; Money lost to scalpers = (Scalping Index-1) x Scalping Index Probability x Original Ticket Price x Number of Tickets scalped Money lost to scalpers = (2.5-1) x (1-0.8413) x 150 x 442,500 Money lost to scalpers = 1.5 x 0.1587 x 150 x 442,500 Money lost to scalpers = $ 15,800,568.75 For a scalping index of 2.63; Money lost to scalpers = (Scalping Index-1) x Scalping Index Probability x Original Ticket Price x Number of Tickets scalped Money lost to scalpers = (2.63-1) x (1-0.9772) x 150 x 442,500 Money lost to scalpers = 1.63 x 0.0228 x 150 x 442,500 Money lost to scalpers = $ 2,466,760.50 Thus, for the scenario in c (ii) above, the money lost to scrappers will be in the range of [$ 2,466,760.50, $15,800,568.75]. Read More