Why do we pay so much for Water at our favourite sporting events?

With the recent launch of the AFL season, pricing of food and beverage at venues throughout the country have made headlines.  It has been a constant frustration of consumers that not only do they pay good money to go and support their team, but they are also slugged excessively to feed the family.  Each venue is governed by its own food and beverage standards so it is nearly impossible to compare like for like, but what we do know is all prices are above what you would generally pay for the item.

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Now let’s discuss this in context of what we know about marketing.  Of the 4Ps of marketing, three are focused on delivering value to the customer by making a good product, making it assessable and communicating the products benefit.  Pricing however, provides the company a mechanism for obtaining value back from its customers (Iacobucci, 2013).  The simplistic way to think about pricing is that a business can use one of three pricing strategies for its brand or product; being low, medium or high.  Clearly, food and beverage outlets at sporting events have chosen the technique of charging customers the most they are willing to pay, the highest price.

Iacobucci also tells us that the Cs of marketing techniques directly affect pricing.  Companies could argue that inherent costs to cater at such venues and events are higher than normal, and without further facts, it would be difficult to argue otherwise.  However, on the face of it, it is hard to see why a bottle of water would cost triple of what you would pay at the supermarket.

Perhaps the most relevant C of marketing is competition.  After all, pricing is all about supply and demand.  Supply is generally limited due to Catering rights to venues are given to one provider. Therefore, once a consumer is enclosed in a venue there is no competition to the food and beverage providers.  Is this reason enough to employ the high price technique?

Below are the average prices for staples at Sporting Venues around the country. As you can see they are well over what you would expect to pay at your local supermarket or your corner deli.

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Most of the key venues in each state do allow patrons to bring in unopened water and snacks, so do we as consumers really have a right to complain when there is an alternate option?  Are we too lazy or time poor as consumers to be prepared and pack a lunch and refreshments? Is the convenience really worth it?

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What Iacobucci also tells us is pricing is the easiest of the 4P’s to change.  However, how can a stadium announce nearly a 40% reduction across the board in food and beverage prices, and still make a profit?  More to the point, what would motivate such a decision?

Are there any consequences? Remember, others are watching! Competitors will act quickly to respond to this price cut tactic. It is proven when Etihad Stadium adjusted its food and beverage pricing soon after MCG announced its price changes. Just like what normally Woolworths does after learning Coles price cut and vice versa.  But unlike Coles vs Woolworths, these sporting venues are not fighting with each other for customers. Once a consumer is stuck in the venue, the only decision to make is to buy or not to buy. If that is the case, is it as simple as reduce your price to increase your sales?

These companies clearly understand the complexity of 4Cs of marketing, and realise in situations like these they have an opportunity to maximise their profit’s as a result of the favourable marketing conditions.

What are your experiences at sporting or other such events and does it have an impact on the ultimate brand be promoted? 

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Reference Lists

Iacobucci, D. (2013) Marketing Management (MM), 4th Edition, South-Western, Cenage Learning, Mason

http://www.watoday.com.au/wa-news/domain-stadium-footy-food-prices-fans-on-par-with-australia-20150318-1m1t1u.html

http://www.afl.com.au/news/2015-03-02/mcg-slashes-food-prices

http://www.theage.com.au/afl/afl-news/etihad-stadium-joins-food-price-war-with-discounts-on-sundays-20150326-1m85r5.html

http://www.scgevents.com.au/food-and-wine/beverages

http://www.suncorpstadium.com.au/Event_Info/Food_and_Beverage_Price_List.aspx

http://www.adelaideoval.com.au/faq/117/faqs.aspx

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17 thoughts on “Why do we pay so much for Water at our favourite sporting events?

  1. The sporting venues do take advantage of favorable market conditions. My personal experience at MCG is that i had to pay far above than what i would have paid in a store. In a way the market conditions create a monopolistic advantage for the venues hence, they take full advantage of it.

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  2. I find the food is low quality and overpriced. If I go to the cricket or football I take my own lunch for these reasons (and it gives the added bonus of avoiding half time queues). Obviously people taking their own is not affecting them or they would step up a bit. Or do they rely on some people taking their own because they can’t supply everyone there? I don’t know but it would be interesting to know the answers to these questions!

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    • Hi Enorton328, Thanks for your comment. MCC CEO, Stephen Gough said, “We have listened to the fans, we understand their affordability concerns, and we are very confident that this initiative will be extremely well received”. It appears that they do know that the food is overpriced. Obivously, with this strategy, they are trying to lure in customers who think the food is overpriced and bring their own lunches.

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  3. They have a captive audience so to speak & exploit it. The choices or brands are limited so you have to pick from what’s on offer. I’m guessing there’s some kind of deal in relation to what brands are sold where ie Coke at Maccas & Pepsi at Hungry Jacks. The AFL would have sponsorship deals with some companies/brands. There’s no justification for overpricing low quality food. I too take my own food & drink to the football. Maybe it’s the convenience, maybe it’s part of the whole experience.

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  4. In my experience, I have always taken my own food and drinks, like sandwiches and water, to sporting events, particularly the football and the Australian Open Tennis. It’s just something my parents have always done! The only time I’ve ever really purchased food is when I’ve been in the mood for something fried, like chips, that I obviously couldn’t bring from home. Even my Uncle brings a bag of buns and a thermos full of hot dogs to the footy so he doesn’t have to pay concession prices, but I think he’s in the minority there! I remember the first time I saw him do it, I was so embarrassed because i’d never seen anyone goto that extreme before!
    However, it’s not unusual for me to buy bottles of water, soft drinks or Gatorade over the course of a long summer’s day in the sun at the tennis. But I go into days and events like those knowing and willing to spend a bit more on those types of things.
    I think a major reason Sporting events have the ability to charge so much is because there is almost literally no other option for consumers. It’s not like they could pop off to the supermarket between quarters of football or sets of tennis to pick up something cheaper. If they want something like water, they’re definitely going to pay for it! You could settle for only buying one bottle of water, say, and going to the bathroom and refilling it every time it gets low, instead of purchasing multiple bottles in one day.
    What I find fascinating is the difference between the cost of food and drinks as well as the rules regarding bringing your own at the same venue, but for different events, like at Rod Laver Arena for the tennis vs. a concert. The prices have always been higher and the rules have been much more strict for concerts, but I have to ask, why?

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    • Regarding your last point, I haven’t necessarily seen that before. WA has the Perth Arena which hosts a range of events from Concerts, Tennis, Basketball etc and I don’t believe they mix and match to suit but I will do some more research.

      Thanks

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  5. Excellent example of where pricing of a product is taking full advantage customer demand. The price of water at the footy is something that has always bothered me, and I feel that it seems to increase every year.
    Despite the numerous complaints and uproar about the price of food and drinks at stadiums, most of them have ignored it (until this year anyways). It is also important to not that in most stadiums, there is a monopoly where the stadium operators are responsible for setting the price of food and beverages. I’ve been to sporting venues in Europe where there were independently owned food stall that were able to not only provide a much larger selection but also much cheaper food. I’ve also noted that there were many more people purchasing food and drinks… It would also be interesting consider if this would ever be introduced in Australia? and if so if there would be business’ specifically set up to counter the high price of water (e.g. sell only water for $1 a bottle).

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    • Hi Manoje – thanks for your input. Its interesting what you say about Europe, with our research for this topic we also looked internationally and found Australia’s model appears to follow that of the US, ive attached a link that highlights it. They are also paying well over for staples in stadiums in the US but what is interesting their is such a vast difference between the most expensive and the least expensive. From what we have learnt their is obviously a marketing technique behind this.

      http://www.sports-management-degrees.com/stadium/

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  6. I’m an MCC member and find myself at the MCG nearly every week supporting my beloved PIes! I don’t tend to buy food during the game, firstly because I don’t like junk food, but secondly because I tend to have lunch or dinner before the game outside the ground. I also consider that as I am only at the ground for a few hours it is possible to go without eating for this short time period!

    Over the past 20 years I have noticed the prices for food and beverages at the MCG have increased dramatically, and much more than what inflation would dictate. It is interesting to note that the food vans outside the ground actually sell pies, hot chips and drinks at prices that are lower than inside the ground. For just a few extra steps, and the slight annoyance of going through gate security, you can save a lot of money by purchasing your food on the outer.

    And as already mentioned in above posts, another option to avoid paying through the nose for food at the MCG is of course to bring your own sandwiches, sweets and drinks. A little inconvenient for some, but otherwise you can really pay for the convenience of having your food prepared for you by someone else in a catering stall at the ground.

    It will be interesting to see what the ‘rewind to 2007’ prices actually do for food sales at the MCG this year. Is it really price that is putting people off, or is it more of a health choice to steer clear of this calorie laden food?

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  7. I think that it is clever of the AFL, whilst not having direct control over pricing of food and beverages at Australian stadiums to exert influence to try and mitigate any negative publicity linked to the code over the ridiculous and ever increasing prices being charged to football fans at the major Victorian stadiums given the link to the AFL itself. Despite only being partially successful and having addressed pricing at the MCG only at this stage, they have made a statement as the codes governing body, have considered the consumer perceptions of price in this instance and taken a proactive position with some positive outcomes (albeit at only one stadium at this stage). I am sure this will not go unnoticed by football fans. Obviously it is critical to address ancillary pricing issues as well as core issues associated with the core product itself such as ticket pricing etc. Let’s hope the other stadiums around the country fall in line with the MCG’s catering companies move and prices are reduced at other major stadiums around the country. It may even increase attendance if it becomes a more affordable night out for the family…….

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  8. Thanks for your blog. Water in particular meets one of our most basic physiological needs and vendors take full advantage of our willingness to pay. Some healthy competition amongst catering companies to drive down prices would be great and we should be asking governing bodies what policies they have in place to support this.

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  9. I have personally been going to the MCG for years watching sporting events – primarily AFL.

    While current prices still seem high and ridiculous to many (which they probably are) the change of food prices at the MCG this year has had an effect on my decisions as a consumer.

    It would be a vary rare occasion in the past when I would buy anything to eat or drink at the ground; opting to bring my own snacks.

    However this year with prices dropping considerably, by about $3 for most snacks and drinks (from memory), I have purchased at least one item to eat and drink at every game I have attended this year (four). That is probably more than what I have purchased in the past four seasons!

    It would be interesting to see how many people have a similar view to myself on the prices in the past compared to now. Meaning how many people will buy something at a match when in the past they did not.

    Just yesterday I attended a match with a friend who had not grown up in Melbourne, and was attending his first AFL match at the MCG. He was tossing up whether to buy something to eat or not- he decided against it, later stating as a passing comment that “the prices are way to high.” It’s funny to think I now view the current prices as ‘cheap’ from past experiences, and how someone like my friend who lacks those past experiences views the current prices as ‘expensive.’

    Maybe all of these years our sporting grounds have just been building up to some big pricing scheme just waiting to fool many of us into buying their high priced food and drinks as they now appear to be affordable.

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  10. From reading my reading, it seems that a consistent theme in pricing strategies is that customer value -based pricing is best for obtaining the ceiling price for a product and is most effective when there is limited competition. Seems the these venues have figured this out and are making the most of charging the highest possible.

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  11. I think its also the authorities of stadium. Since they dont allow people to bring food in the stadium with respect to security purposes, this gives the retailers to make more money. So its not the brand thats charging the higher price, its the middlemen that are making profits by selling them at a higher price.

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  12. Yes!!!! I totally agree with you. Sporting events or any other events take advantages from the customers by charging higher prices for foods and beverages they sale inside the venues. Are the foods nice and have high quality? Nope, they are just standard foods and nothing out of the ordinary. It is ridiculous and does not make any sense. As what you said, they are taking the advantages by not having any competitors in the venue. The customers do not have any other options but to buy them and with the policy no foods and drinks are allowed, this increases the selling power of the vendors.

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  13. I have attended the MCG many times with the family to watch the football and have purchased food there, purchased it outside the venue before the game and packed food and drinks to take in. It usually depends on time, given it is a few hours drive to get there. It is interesting when I talk to friends and colleagues about what they do, whether they take their own food or buy it at the venue, given food and drinks are quite expensive. Something I find interesting is that some people do not park at the venue due to cost and choose to park further away to get cheaper parking, but then they will spend that money they have saved on parking to buy food and drinks in the venue rather than carrying a bag with their food and drink in it because it is a long walk. If you look at theme parks and zoos for example, they charge huge prices for often poor quality food. You can take your own which some do, but again when talking with people about this, it is interesting how many people think it is just easier to buy it there so you don’t have to carry anything, or don’t have to go back to the car to get it when you are ready to eat. Then others, who take wheelie esky bags with all their food and drinks in it and walk around for hours with it, to save on paying the huge prices. For some families it is not affordable to pay for the family to eat out on top of the price to go to the event, and in my experience it is often the families who are more likely to take their own. It will be interesting to see whether the price cuts will in fact change the habits of families, will they change over for lower prices and have the convenience, or are people those consumers already set in their in their ways.

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