Price Elasticity of Ticket Demand in the Professional Basketball League in Japan: A Case Study of Simulating Ticket Purchase Rates Using Conjoint Analysis

By Ninomiya, Hiroaki | Sport Marketing Quarterly, December 2015 | Go to article overview

Price Elasticity of Ticket Demand in the Professional Basketball League in Japan: A Case Study of Simulating Ticket Purchase Rates Using Conjoint Analysis


Ninomiya, Hiroaki, Sport Marketing Quarterly


(ProQuest: ... denotes formulae omitted.)

Introduction

As in any profitable enterprise, sport organizations must know the kinds of goods and services preferred by their customers to succeed in attracting spectators. One approach to understanding consumer behavior is through the elements of the traditional marketing mix-product, promotion, place, and price (Kotler & Armstrong, 2004). Specifically, the price paid for a particular good or service is often a significant factor in a consumer's decision-making process (Meir & Arthur, 2007).

With particular regard to sport organizations, ticket pricing is an important variable in marketing research. Previous studies have explored how variations in ticket pricing influence spectator attendance. For example, Rishe and Mondello (2003) quantitatively examined the cross-sectional differences in ticket prices across teams in the National Football League in the US as well as the reasons for increases in the size and direction of seasonal price. Further, Rishe and Mondello (2004) performed the same empirical investigation for the four major sport leagues in the US.

The measurement of changes in the reaction of sport consumers to ticket price is called price elasticity of demand, which is used in the present study to assess how sensitive consumers are to price fluctuations (Shank, 2009). In general, an increase in price leads to a decrease in demand (Fullerton, 2007), although this decline is contingent upon a variety of factors, such as the team performance, opposition team, and players in professional sports. In fact, price elasticity is used to estimate Major League Baseball season ticket demand (Hakes & Hutmaker, 2011) and football match attendance (García & Rodríguez, 2002).

On the other hand, in professional sports, high ticket prices do not necessarily indicate a decrease in the demand (Pan, Zhu, Gabert, & Brown, 1999). Some studies have suggested that the demand is price inelastic in professional sports (Siegfried & Eisenberg, 1980; Bird, 1982; Shapiro & Dryer, 2012). The literature on professional sports finds that the demand for sports team tickets is price inelastic (Krautmann & Berri, 2007).

The studies estimated the demand by analyzing secondary data of spectator attendance and ticket prices using the economic model of regression analysis. However, such models do not specify how sensitive spectators are to price fluctuations. Thus, this study examines the price elasticity of ticket demand by ana- lyzing primary data on spectators' ticket preferences by using the conjoint model. Conjoint analysis is used for measuring trade-offs in analyzing consumers' preferences and intentions to buy. It is a method for simulating how consumers might react to changes in current products (Green, Krieger, & Wind, 2001). Thus, the author uses conjoint analysis in this study for simulating how spectators react to price fluctuations.

In recent years, conjoint analysis has been used in studies on professional sport marketing for examining fan preferences (Aiken & Koch, 2009), ticket pricing strategies (Lee & Kang, 2011), and price sensitivities (Daniel & Johnson, 2004). These studies have successfully identified the role of management in professional sports. While previous studies on price elasticity have examined US sports, very few have explored the Japanese sport market. Thus, the focus of this study is the professional basketball league in Japan. The Japan Basketball League organization (JBL), whose members are non-professional teams sponsored by corporations, was founded in 1967. The JBL was called the Super League in 2001 and, with competence and popularity, became a top league in Japan. A few years later, two teams that aimed at professionalization leftthe JBL, and launched the bj-league as a new professional basketball league in 2005. As for the current state of Japanese basketball, the bj-league and the National Basketball League (NBL), whose name was changed from JBL to NBL, exist as the two top leagues. …

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