Westlake Eagles is a NBDL (National Basketball Development League) team in Westlake, Ohio (a city with population of 107,000) It is one of sixteen teams with close affiliation to NBA With about 400 season ticket holders currently, the team is considering expansion to the Lakefront market (pop 200,000), which is next door to the city of Westlake The objective of such a move is to acquire more season ticket holders from Lakefront, which is traditionally considered a market of Cavaliers in Cleveland, an NBA team With location convenience and much lower prices, as well as a more intimate court experience, Westlake Eagles believe that they are not competing with Cavaliers and have a lot to offer to the Lakefront market A team of marketing researchers has collected some information for this decision Average population of Westlake, Erie, Portland (Maine), Des Moines, and other home cities of NBDL is around 80,000 Average number of season ticket holder of the sixteen teams is 250 They estimated that to capture a market like the size of Lakefront, the fixed cost is likely to be $100,000 (salary marketing budget) The average game attendance of a NBDL game is roughly 5,600 Of the 400 season ticket holders, the most popular price levels are Basic ($125) and VIP ($300) The ratio of the two is around 6 to 1 The variable cost per season ticket holder is $50 for Basic level and $100 for VIP level A What is the number of season ticket holders they need to acquire if an additional $20,000 profit is required B Given the population of Lakefront, how many potential season ticket holders are there in the new market (Note use the Westlake Eagles market penetration rate) C Based on the breakeven number and the market potential of Lakefront, is it a good idea to enter this market D Instead of entering the Akron market, the management is considering an alternative growth strategy by offering a new six game package to the Canton market If the new six game package at $90 (out of 12 home games, variable cost $30) is proposed for the original Westlake market, what is the growth strategy

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Posted on Sep 18, 2020

Westlake Eagles is a NBDL (National Basketball Development League) team in Westlake, Ohio (a city with population of 107,000). It is one of sixteen teams

Westlake Eagles is a NBDL (National Basketball Development League) team in Westlake, Ohio (a city with population of 107,000). It is one of sixteen teams with close affiliation to NBA. With about 400 season ticket holders currently, the team is considering expansion to the Lakefront market (pop. 200,000), which is next door to the city of Westlake. The objective of such a move is to acquire more season ticket holders from Lakefront, which is traditionally considered a market of Cavaliers in Cleveland, an NBA team. With location convenience and much lower prices, as well as a more intimate court experience, Westlake Eagles believe that they are not competing with Cavaliers and have a lot to offer to the Lakefront market.

A team of marketing researchers has collected some information for this decision:

Average population of Westlake, Erie, Portland (Maine), Des Moines, and other home cities of NBDL is around 80,000
Average number of season ticket holder of the sixteen teams is 250.
They estimated that to capture a market like the size of Lakefront, the fixed cost is likely to be $100,000 (salary+ marketing budget).
The average game attendance of a NBDL game is roughly 5,600.
Of the 400 season ticket holders, the most popular price levels are Basic ($125) and VIP ($300). The ratio of the two is around 6 to 1.

The variable cost per season ticket holder is $50 for Basic level and $100 for VIP level.

A. What is the number of season ticket holders they need to acquire if an additional $20,000 profit is required?

B. Given the population of Lakefront, how many potential season ticket holders are there in the new market? (Note: use the Westlake Eagles market penetration rate)

C. Based on the breakeven number and the market potential of Lakefront, is it a good idea to enter this market?

D. Instead of entering the Akron market, the management is considering an alternative growth strategy by offering a new six-game package to the Canton market. If the new six-game package at $90 (out of 12 home games, variable cost $30) is proposed for the original Westlake market, what is the growth strategy?