IDEAS home Printed from https://ideas.repec.org/a/wly/navres/v55y2008i1p59-75.html
   My bibliography  Save this article

Optimal timing of switches between product sales for sports and entertainment tickets

Author

Listed:
  • Matthew J. Drake
  • Serhan Duran
  • Paul M. Griffin
  • Julie L. Swann

Abstract

Like airlines and hotels, sports teams and entertainment venues can benefit from revenue management efforts for their ticket sales. Teams and entertainment venues usually offer bundles of tickets early in their selling horizon and put single‐event tickets on sale at a later date; these organizations must determine the best time to offer individual tickets because both types of ticket sales consume the same fixed inventory. We model the optimal a priori timing decision for a seller with a fixed number of identical tickets to switch from selling the tickets as fixed bundles to individual tickets to maximize the revenue realized before the start of the performance season. We assume that bundle and single‐ticket customers each arrive according to independent, nonhomogeneous Markovian death processes with a linear death rate that can vary over time and that the benefit from selling a ticket in a package is higher than from selling the ticket individually. We characterize the circumstances in which it is optimal for the seller to practice mixed bundling and when the seller should only sell bundles or individual tickets, and we establish comparative statics for the optimal timing decision for the special case of constant customer arrival rates. We extend our analytical results to find the optimal time for offering two groups of tickets with high and low demand. Finally, we apply the timing model to a data set obtained from the sports industry. © 2007 Wiley Periodicals, Inc. Naval Research Logistics, 2008

Suggested Citation

  • Matthew J. Drake & Serhan Duran & Paul M. Griffin & Julie L. Swann, 2008. "Optimal timing of switches between product sales for sports and entertainment tickets," Naval Research Logistics (NRL), John Wiley & Sons, vol. 55(1), pages 59-75, February.
    • Handle: RePEc:wly:navres:v:55:y:2008:i:1:p:59-75
    DOI: 10.1002/nav.20266
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/nav.20266
    Download Restriction: no
    File URL: https://libkey.io/10.1002/nav.20266?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Youyi Feng & Guillermo Gallego, 1995. "Optimal Starting Times for End-of-Season Sales and Optimal Stopping Times for Promotional Fares," Management Science, INFORMS, vol. 41(8), pages 1371-1391, August.
    2. Paul Kvam & Joel S. Sokol, 2006. "A logistic regression/Markov chain model for NCAA basketball," Naval Research Logistics (NRL), John Wiley & Sons, vol. 53(8), pages 788-803, December.
    3. James C. Bean & John R. Birge, 1980. "Reducing Travelling Costs and Player Fatigue in the National Basketball Association," Interfaces, INFORMS, vol. 10(3), pages 98-102, June.
    4. Salinger, Michael A, 1995. "A Graphical Analysis of Bundling," The Journal of Business, University of Chicago Press, vol. 68(1), pages 85-98, January.
    5. Guillermo Gallego & Robert Phillips, 2004. "Revenue Management of Flexible Products," Manufacturing & Service Operations Management, INFORMS, vol. 6(4), pages 321-337, January.
    6. David Boyd & Laura Boyd, 1998. "The home field advantage: Implications for the pricing of tickets to professional team sporting events," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 22(2), pages 169-179, June.
    7. Patrick DeGraba & Rafi Mohammed, 1999. "Intertemporal Mixed Bundling and Buying Frenzies," RAND Journal of Economics, The RAND Corporation, vol. 30(4), pages 694-718, Winter.
    8. R. Venkatesh & Wagner Kamakura, 2003. "Optimal Bundling and Pricing under a Monopoly: Contrasting Complements and Substitutes from Independently Valued Products," The Journal of Business, University of Chicago Press, vol. 76(2), pages 211-232, April.
    9. Phillip Leslie, 2004. "Price Discrimination in Broadway Theater," RAND Journal of Economics, The RAND Corporation, vol. 35(3), pages 520-541, Autumn.
    10. R. Preston McAfee & John McMillan & Michael D. Whinston, 1989. "Multiproduct Monopoly, Commodity Bundling, and Correlation of Values," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 104(2), pages 371-383.
    11. Wedad Elmaghraby & P{i}nar Keskinocak, 2003. "Dynamic Pricing in the Presence of Inventory Considerations: Research Overview, Current Practices, and Future Directions," Management Science, INFORMS, vol. 49(10), pages 1287-1309, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Andrea Baldin & Trine Bille, 2018. "Modelling preference heterogeneity for theatre tickets: a discrete choice modelling approach on Royal Danish Theatre booking data," Applied Economics, Taylor & Francis Journals, vol. 50(5), pages 545-558, January.
    2. Anton Ovchinnikov & Béatrice Boulu-Reshef & Phillip E. Pfeifer, 2014. "Balancing Acquisition and Retention Spending for Firms with Limited Capacity," Management Science, INFORMS, vol. 60(8), pages 2002-2019, August.
    3. Övünç Yılmaz & Rob F. Easley & Mark E. Ferguson, 2023. "The future of sports ticketing: Technologies, data, and new strategies," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 22(3), pages 219-230, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jing-Sheng Song & Zhengliang Xue, 2021. "Demand Shaping Through Bundling and Product Configuration: A Dynamic Multiproduct Inventory-Pricing Model," Operations Research, INFORMS, vol. 69(2), pages 525-544, March.
    2. Bulut, Zümbül & Gürler, Ülkü & Sen, Alper, 2009. "Bundle pricing of inventories with stochastic demand," European Journal of Operational Research, Elsevier, vol. 197(3), pages 897-911, September.
    3. Ashutosh Prasad & R. Venkatesh & Vijay Mahajan, 2017. "Temporal product bundling with myopic and strategic consumers: Manifestations and relative effectiveness," Quantitative Marketing and Economics (QME), Springer, vol. 15(4), pages 341-368, December.
    4. Gürlera, Ülkü & Öztop, Salih & Sen, Alper, 2009. "Optimal bundle formation and pricing of two products with limited stock," International Journal of Production Economics, Elsevier, vol. 118(2), pages 442-462, April.
    5. Mayer, Stefan & Klein, Robert & Seiermann, Stephanie, 2013. "A simulation-based approach to price optimisation of the mixed bundling problem with capacity constraints," International Journal of Production Economics, Elsevier, vol. 145(2), pages 584-598.
    6. Hemant K. Bhargava, 2012. "Retailer-Driven Product Bundling in a Distribution Channel," Marketing Science, INFORMS, vol. 31(6), pages 1014-1021, November.
    7. Rustam Ibragimov & Johan Walden, 2010. "Optimal Bundling Strategies Under Heavy-Tailed Valuations," Management Science, INFORMS, vol. 56(11), pages 1963-1976, November.
    8. Rustam Ibragimov, 2004. "Shifting paradigms: on the robustness of economic models to heavy-tailedness assumptions," Econometric Society 2004 Latin American Meetings 105, Econometric Society.
    9. Li, Minqiang & Feng, Haiyang & Chen, Fuzan & Kou, Jisong, 2013. "Numerical investigation on mixed bundling and pricing of information products," International Journal of Production Economics, Elsevier, vol. 144(2), pages 560-571.
    10. Syed Asif Raza & Rafi Ashrafi & Ali Akgunduz, 2020. "A bibliometric analysis of revenue management in airline industry," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 19(6), pages 436-465, December.
    11. Kopczewski, Tomasz & Sobolewski, Maciej & Miernik, Ireneusz, 2018. "Bundling or unbundling? Integrated simulation model of optimal pricing strategies," International Journal of Production Economics, Elsevier, vol. 204(C), pages 328-345.
    12. Takanori Adachi & Takeshi Ebina & Makoto Hanazono, 2017. "Endogenous Product Boundary," Manchester School, University of Manchester, vol. 85(1), pages 13-40, January.
    13. Amit Gayer & Avishay Aiche & Eli Gimmon, 2022. "Online sequential bundling: profit analysis and practice," Electronic Commerce Research, Springer, vol. 22(4), pages 1351-1375, December.
    14. Ashutosh Prasad & R. Venkatesh & Vijay Mahajan, 2010. "Optimal Bundling of Technological Products with Network Externality," Management Science, INFORMS, vol. 56(12), pages 2224-2236, December.
    15. Kamel Jedidi & Sharan Jagpal & Puneet Manchanda, 2003. "Measuring Heterogeneous Reservation Prices for Product Bundles," Marketing Science, INFORMS, vol. 22(1), pages 107-130, July.
    16. Shin-yi Wu & Lorin M. Hitt & Pei-yu Chen & G. Anandalingam, 2008. "Customized Bundle Pricing for Information Goods: A Nonlinear Mixed-Integer Programming Approach," Management Science, INFORMS, vol. 54(3), pages 608-622, March.
    17. Takanori Adachi & Takeshi Ebina & Makoto Hanazono, 2011. "Option Package Bundling," KIER Working Papers 785, Kyoto University, Institute of Economic Research.
    18. Chakravarty, A. & Mild, A. & Taudes, A., 2013. "Bundling decisions in supply chains," European Journal of Operational Research, Elsevier, vol. 231(3), pages 617-630.
    19. Lorin M. Hitt & Pei-yu Chen, 2005. "Bundling with Customer Self-Selection: A Simple Approach to Bundling Low-Marginal-Cost Goods," Management Science, INFORMS, vol. 51(10), pages 1481-1493, October.
    20. Roesler, Anne-Katrin & Deb, Rahul, 2021. "Multi-Dimensional Screening: Buyer-Optimal Learning and Informational Robustness," CEPR Discussion Papers 16206, C.E.P.R. Discussion Papers.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:navres:v:55:y:2008:i:1:p:59-75. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1002/(ISSN)1520-6750 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.