Stephen Luxton Dylan Page ECON 4311 Family Packages at the Ballpark in Arlington

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1 Family Packages at the Ballpark in Arlington We both are very big baseball fans, especially of the Texas Rangers. Recently while we were at a game at The Ballpark in Arlington we saw a sign up for a family package that included 2 Adult tickets, 2 child tickets, 4 regular sized sodas, 4 hotdogs, and a game program. Well we are both in this class and we sat their saying that hey that s commodity bundling. Commodity bundling is when the seller places two or more items to be sold together at a reduced price as to entice you to buy both when you would normally only purchase one or the other. Well we both began to wonder if this was actually a good deal for the customers or if this was just another way for Tom Hicks to put more money in his pocket that he will never spend on pitching, but that s a whole other paper in itself. We wondered if customers just saw the ad for the package and automatically assumed that it was a good deal since it was all together. Commodity bundling can help to maximize firm s profits because they allow the consumer to buy products that they wouldn t normally buy. It s just like when you see a computer at Best Buy that comes along with a monitor, printer and even internet service. They allow the producer to sell all of their items as opposed to having the customer buy just the computer tower and go buy a monitor from another store and a printer from yet another. This is exactly what it seems the Rangers are trying to do here. At the stadium you are allowed to bring in food and drinks and many people do take advantage of that. We both believe that since you are allowed to do that and concessions are not selling to as many people at the stadium that are hungry they put together these family plans to try

2 and let you have a complete ballpark outing. We are pretty sure that we will find there to be a discounted price for the package, but the exact amount we are not sure of. They offer three different packages ranging from $55, $77, and $99. The differences in the prices are the closeness to the field. We think that the package will actually be a better deal for the stadium than for the consumer. Most consumers would consider going to a baseball game a normal good. Baseball fans believe this because as income increases the demand for going to the game also increases. We feel that since they are going to the game than they probably have a higher reservation price than that of most other consumers that maybe can not afford to go. Therefore the people who are spending a lot at the ballpark are less likely to go out and see if this actually is a good deal or not. Those who going to the ballpark is a little more of a budget constraint might try to find the best deal possible. Well we are both poor college kids so we wanted to see if we actually were getting the best deal for our money if we were to purchase one of these(although neither have kids so I suppose that would completely negate going and buying a family pack for us). We decided that we would go and actually get all the prices for the items that are being offered in the package and see if it is actually a good deal for the consumers. We also decided that we would see exactly what price level was getting the better deal on the package if any at all were. We figured we would also take a survey and see exactly how much families sitting in these sections were spending at the ballpark to determine whether or not they were actually getting the items that the already bought discounted or if this was enticing them into buying goods that they normally would not purchase at the stadium.

3 To do all this we had to take an exhausting day and go to the stadium and actually interview these people while maybe catching a little baseball in there when we could(or vice-versa). The breakdown of each individual family package is shown below: Family Packages prices broken down Upper Lower Corner Price of Package $55 $77 $99 Adult seat in section $13 $22 $27.50 Kid seat in section $5 $22 $27.50 Hot dogs $2.25 $2.25 $2.25 Regular Drink $2.25 $2.25 $2.25 Program $5 $5 $5 Total without package $59 $111 $133 Savings from package $4 $34 $34 The people that save the most from buying the package are the ones that are purchasing the more expensive tickets. We saw this and wanted to figure out how much each family was spending already at the ballpark with buying cokes and hotdogs and ticket prices. We figured we would see exactly how many people in each one of these sections that the packages were offering were already spending at the ballpark. Our theory was that the people that were sitting in the cheaper seats would be less likely to purchase any extras while at the game. They were probably less willing to go for over $2.50 for a hot dog or coke but came more for the atmosphere and to see some baseball. We surveyed 10 families of 3 from each section that the packages were offered from and man that was no easy task. It s not all that easy to find families of 4 that are sitting in the specific levels that we were looking for but oh well that just meant we had to go back to the stadium again. We asked each one to tell us how much they spent coming here to the game

4 between buying tickets, programs if they were bought, and if any money was spent at the concession stand. The totals and averages are shown in the graphs below: and up Upper Level Lower Level Corner Percentage of Each level and up Lower Level and up Upper Level and up Corner Lower Level 20% 10% 0% 30% 40% and up

5 Upper Level 10% 10% 0% 20% % and up Corner 0% 20% % and up These graphs show how the higher the price of the ticket the more money that the people are spending at the ballpark. This sounds like a simple observation, but the higher priced ticket customers were tending to spend more than just buying the tickets to get into the stadium. They seem to be buying hotdogs and cokes from the concession stands and not bringing in the cooler from homes with sandwiches and water in it. It seems that the stadium is giving the people that normally purchase items from the concession stands a bigger discount or also to try and entice consumers into purchasing one of the more

6 expensive packages. Since the people that normally sit in the upper level seating are less likely to purchase anything from the concession stand they are not too worried about making a bargain for them. What they are worried about doing is to try and get the consumers who are doing their research and looking for the best deal to purchase one of the more expensive ticket packages. Seeing all these numbers really began to make us wonder who buys the packages the most as in what price level of packages are sold the most. We figured that probably the most packages sold would be the $99 and $77 levels. The reason we thought this was because at the $55 level you are only saving $4 as opposed to saving $34 from each of the other two. If we are right on this we believe it is because the people who are already sitting in the upper level do not seem to normally buy any products from the concession stand and if they are only saving $4 by buying this package but can save $24 by not buying it at all they will probably to choose to not buy the package. The reason behind our theory is because everyone has a price reservation: the price that they are willing to pay without looking around for a better deal or to see if the current deal is really saving you that much. The people sitting in the less expensive seats are probably more likely to check this deal out to see just how great of an offer that it is. To figure out how much of each level is sold we called the Rangers ticket office and spoke to one of their managers there. It took him quit awhile to find it all but after looking for along time he was finally able to give us the number of packages sold within the last month and the number of each price level. Either that or he got tired of us and just made up some numbers but I doubt that. Here is a pie chart to show the breakdown of the three different levels sold.

7 Percentage of all Family Packages bought 37% 18% 45% Upper Lower Corner This was not all that surprising to us seeing the numbers. With only 18% of the packages sold going to the upper level this was just what we expected since the upper is not as good of a deal as the rest of the other packages. We assume this to be true because the people that are normally sitting in the Upper Level section according to the charts earlier are not as likely to spend as much money anywhere else in the stadium as opposed to the other two price levels. In fact over 40% of the people that we surveyed had not spent any more money than the family package cost at the ballpark, saying that they were happy with either not buying anything from the concession stands or buying less than the package offers. Price reservation can also help to explain why the Lower Level was the most sold package. Once again people who would buy the Upper Level would see that they only save $4 on it, but if you were to go the Lower Level you could save $34. We believe this is happening because once again the people that would normally sit in the Upper Level have a lower price reservation and would want to find the best deal for their money. They would see that the Lower and the Corner sections would save them $34 each, but I believe that since there is no real difference in savings only a difference in the

8 location of the seats the consumers were not as willing to pay another $22 to sit in the Corner section. To sum it all and go back to the original question of whether this commodity bundling actually saved the customer money the answer is yes it does. Now that being said the relative price that you are being saved is not that much with the Upper level tickets. We originally said that this commodity bundling would save the consumer some money. We also said that there would be consumers who were concerned about the best deal for their dollar. Other baseball fans would have a lower price reservation than others. The data that we gathered showed that the upper level package only saved you $4 while the Upper and Corner level saved you $34 each. Also we found out that typically people that are sitting in the Upper level are not as likely to go and purchase goods from the concession stands as are people who are sitting lower in more expensive seats. That is why the ballpark makes the lower ones the better deal because it is trying to show people that they can save more money and get a better deal if they choose to go with one of the other packages. So with all this data that we have collected I would say that we were pretty correct in our assumptions about the family packages that are offered at The Ballpark in Arlington. We said that the package would save you money and that people with a low price reservation would be out looking for the best deal that they could find. All that was proven in our research with finding that each package does save you money but the best deals are found in the two more expensive ones. The part about consumers with a lower price reservation looking for the best deal can be shown with the Lower level sales being

9 the most out of all three and actually accounting for almost half of all the sales of the family packages. This was actually a fun project to do, we got to watch some baseball which was great and walk around and see the stadium some more. Dylan works out at Rawlings so we were actually able to just go out of the side and into the stadium to collect the data. Of course some stops had to be made along the way to check out the game. We would like to thank Tony the security guard at Rawlings for letting us wonder around and not requiring us to have a ticket. It saved a couple college kids from having to spend money they didn t have. Now if only they offered packages like that for us that included 4 ADULT tickets and some beers instead of the sodas we would be in great shape. I mean really almost $7 for a beer out there?

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