Price and Non-price Promotions in Minor League Baseball and the Watering Down Effect

Abstract

Game promotions are believed necessary to help increase attendance in minor league baseball. As such, many game promotions are presented. In major league baseball as well as for many other products, a watering down effect exists when sales promotions are offered too frequently. As minor league baseball offers more promotions than major league baseball, it is reasonable to expect to find a similar condition. Attendance and promotion data were collected from 31 randomly selected minor league teams over the course of an entire season. Regression analysis showed that a watering down effect was present only for price game promotions. For non-price game promotions and for game promotions overall, there was no watering down effect.

Price and Non-price Promotions in Minor League Baseball and the Watering Down Effect

Game promotions in minor league baseball are held mainly to increase attendance to games. Indeed, pundits believe fans of minor league baseball have come to expect the added value of a special event or giveaway when attending a minor league game. Minor league ball clubs are cognizant of this expectation. Most of them on a regular basis provide fans with more than just a baseball game. They offer them entertainment activities, free souvenirs, or ticket and concession discounts.

Can there be too much of a good thing? Have minor league baseball fans become less appreciative and perhaps less motivated to attend games because what was once an added bonus to their price of admission has now become an expected part of the minor league game experience? Is there a “watering down” effect on attendance to games with a promotion? Specifically, do minor league ball clubs with an increased number of promotions see a reduced return on their promotional investment in the form of a smaller increase in attendance for games with promotions?

In major league baseball, there is a slight “watering down” effect for ball clubs with an increased number of promotions (McDonald & Rascher, 2000). In the minor leagues, where almost all ball clubs have a greater number of promotions than major league ball teams, it can be assumed that this same effect would occur, perhaps to an even greater extent.

A major objective in marketing professional sports is to increase attendance to games and matches. In minor league baseball, this objective is particularly important (McDonald & Rascher, 2000). Both price and non-price sales promotions have long been used to increase attendance and market product in the minor leagues. Attendance to minor league baseball is currently just below 40 million (in 2004) after being approximately 39 million for each of the three previous seasons (Minor League Baseball, 2005).

A long held belief by pundits in professional team sports is that a winning team is essential to increase attendance. Research has found, however, that a winning team has little to no effect on attendance in minor league baseball (Branvold, Pan, & Gabert, 1997). Other methods must be used, minor league baseball executives have learned, to draw spectators to the ballpark.Promotions, whether through special events or in-game, are believed necessary to provide spectators with the added entertainment value needed to help attract them to the games.Like many other entities in the leisure services industry, minor league baseball provides it customers with both price and non-price promotions (Wakefield & Bush, 1998).

In this study, we are concerned with “game promotions,” those promotions that are the main promotion or special event for each game a ball club has with such a promotional activity. Game promotions are often coupled, so that more than one is offered on a single date. Often, more than one price or one non-price promotion is offered together and sometimes a combination of price and non-price promotions is provided.

Literature Review

Baseball Promotions and Attendance

Little scholarly activity has been generated on promotions in minor league baseball. Minor league baseball executives believe, however, that games promotions are a powerful incentive to attract spectators and fans to games (Baade & Tiehen, 1990). As such¸ games promotions are often heavily advertised and promoted (Bernthal & Graham, 2003). In major league baseball promotions increase attendance by 14% (McDonald & Rascher, 2000). We can assume the effect is greater in minor league baseball.

Major league baseball attendance has been explained by a model using attendance data from two baseball seasons and accounted for .69 of the variance of attendance (Noll, 1974). The model was later altered to include 18 seasons and accounted for .84 of the variance (Baade & Tiehen, 1990). However, the researchers suggested that promotional activity might explain the attendance unaccounted for in their model (1990).

Overall, game promotions may not be a strong enough motivator to increase attendance than most minor league executives believe (Bernthal & Graham, 2003). These promotions might merely shift the attending from one game to another for some spectators (McDonald & Rascher, 2000; Baade & Tiehen, 1990). If so, there would no effect on increasing the season attendance level. However, the more fans at a game, the more excitement that is generated and the more likely these fans will attend other games and create buzz about the experience (1990).

Professional sports teams are finding it necessary to promote with greater intensity and frequency due to increasing competition from other sports and from the entertainment industry (McDonald & Rascher, 2000). It may be this frequency of promotion has led to the watering down effect on attendance to major league games (2000). Again, this same effect seems probable in minor league baseball as most ball clubs have many more game promotions than teams in the major leagues.

Sales promotions in marketing

Several studies have investigated the impact of promotional frequency and promotional discount levels (Blattberg, Briesch and Fox, 1995). Brands that are heavily promoted have reduced levels of brand equity with a resulting reduction in the consumer reference price (1995). Raju noted an over saturation effect in promotional discounts and posited that higher sales increases are more likely to occur when deep discounts are offered less frequently (1992). These price promotions have been found to be more effective for utilitarian products than hedonic products (Chandon, Wansink & Laurent, 2000). In minor league baseball, those attracted to price promotions are spectators who are price conscious and who attend infrequently (Wakefield & Bush, 1998). Over-promotion of a product can occur causing consumers to buy less of a product at its regular price (Blattberg, et al, 1995).

The long-term effect of promotions on a brand is debatable, however, with some studies finding a negative effect (Dodson, Tybout & Sternthal, 1978; Shoemaker & Shoaf, 1977), and some finding no negative effect (Neslin & Shoemaker, 1989; Totten & Block, 1987). A more recent study found both negative and positive results for the long-term impact of promotions (Boulding, Lee & Staelin, 1994). Still, a generalization that is most akin to the watering down effect is “The greater the frequency of deals, the lower the height of the deal spike.” This generalization results most probably from consumers coming to expect frequent promotions and from an alteration of the consumer’s reference price (Blattberg, et al, 1995).

The most effective sales promotions are those that provide benefits that are similar or complement the benefit inherent in the product. Non-price promotions complement the benefit and are more effective when matched with hedonic products (such as minor league baseball) while price promotions are more effective for utilitarian products (Chandon, Wansink & Laurent, 2000). Not surprisingly, in an entertainment setting, such as minor league baseball, non-price promotions add entertainment value rather than reducing the price (Wakefield & Bush, 1998).

Research Question and Hypotheses

As a watering down effect on promotions exists for major league baseball, and with many more games in minor league baseball than in the majors having a game promotion, it could be assumed that watering down effect occurs in minor league baseball. However, because such an emphasis is placed on promotions as a method of attracting spectators to minor league baseball games, team executives must believe there is no watering down effect. Therefore, the research question guiding this study is: Does a watering down effect exist with promotions in minor league baseball?

We will assume that team executives know their product well and that is the reason for them having as many games with game promotions as they do. We also note that leisure services promotions in an entertainment setting are geared toward adding entertainment value. Therefore, we hypothesize that:

H1: As the number of games with game promotions is increased, attendance
will not decrease. (No watering down effect).

Likewise, we can assume that because spectators attend a minor league baseball game to be entertained, they will welcome the opportunity to be entertained beyond the benefit of watching the ballgame by a non-price promotion, many of which provide added entertainment. Therefore we hypothesize that:

H2: As the number of games with non-price game promotions is increased, attendance will not decrease. (No watering down effect).

Price promotions are more beneficial to marketers when a utilitarian product is sold than when a hedonic product like minor league baseball is sold. Coupled with the finding that those attracted to price promotions are spectators who are price conscious and who are most likely to attend infrequently (Wakefield & Bush, 1998), we hypothesize that there will be a watering down effect with price promotions:

H3: As the number of games with price game promotions is increased, attendance will decrease.

Finally, because consumers evaluate promotions based on the dominant benefit the promotion provides (Chandon, Wansink & Laurent, 2000), and because minor league baseball is a hedonic product, spectators will put more emphasis on the non-price promotion than on the price promotion when these types of promotions are coupled for one game. Therefore, we hypothesize that a watering down effect will not be present in the combination of non-price and price promotions:

H4: As the number of games with a combination of price and non-price game promotions is increased, attendance will not decrease.

Method

Attendance data coupled with the game promotions were gathered from 31 randomly selected minor league baseball teams over the course of the 2002 season. These ball clubs included teams from each level of minor league baseball: AAA, AA, Advanced A, A, Short-season A, and Rookie. Attendance data for each game were collected from on-line box scores or through E-mail from the teams.

Game promotion data, the date and type, were found on ball clubs’ websites and pocket schedules. Game promotions were coded as consisting of price, non-price, or a combination of price and non-price promotions. Price promotions are those that provide a price discount, usually on tickets or concessions. Non-price promotions are those that contain comedy or musical acts, celebrity appearances, giveaways, sweepstakes, contests, audience participation, tributes, community events and the ever-popular fireworks presentation. Attendance was then matched to the game promotion. Like McDonald and Rascher’s study of major league baseball attendance (2000), a regression analysis was completed with attendance as the dependent variable.

Results

Over the course of the season, the 31 ball clubs generated 1231 observations of attendance and game promotions. This large number of observations should negate the effects of other variables that might have an effect on attendance.

The number of home openings (n=1905) for each ball club ranged from 32 to 72 with a mean of 68. The percentage of openings with at least one game promotion for each ball club ranged from 23% to 94% with a mean of 65%. The attendance for the openings with game promotions ranged from 128 to 15,983 with a mean of 4,157. The impact of these game promotions on attendance for each team (the difference between the promotion attendance mean and the mean of attendance for games with no game promotion) ranged from –421 to 5087 (Table 1).

For an overall view of the effects of game promotions on attendance comparisons of means were used. First, the mean promotion attendance (4,157) was compared to the mean attendance of all openings (3,824). This comparison provided an increase of attendance at games with promotions of 333 and was significant at the .001 level. This figure represents an increase of only about 9% in attendance and does not provide a true picture of the impact of game promotions. For many minor league ball clubs, there are few games that do not include a game promotion. In this sample 65% of home openings included a game promotion. Therefore, the differences are less than one might expect and other comparisons need to be made for a more complete statistical picture.

A comparison of the mean (4,157) of promotion attendance (n =1,231) to the mean (2,969) of no promotion attendance (n = 674) shows a difference of +1,177 representing a significant (t = 14.23, p < .001) increase of 40% in attendance.

As some teams have more game promotions than other teams, several questions of interest are raised. Is there a watering down effect on teams that have a greater number of promotions? Does a greater number of promotions result in less of an impact on attendance? To answer these questions regression was used to analyze the impact of the number of promotions on attendance. Analysis was completed for the effect on all game promotions and the effect on price, non-price, and a combination of price and non-price promotions. If a decrease in attendance was found from increasing the number of promotions, the regression coefficient (Beta) would be negative. Overall, for all teams the regression model showed a positive effect (F (1, 1903) = 218.98, R 2 = .10, β = .321, p < .001). Only three of the thirty-one teams had a negative coefficient (Table 2). As the majority of teams and the overall effect show an increase in attendance when the number of promotions is increased, Hypothesis one is supported. There is no watering down effect overall.

When only non-price game promotions are included in the regression model, a significant positive effect between attendance and the promotion is found (F (1, 1529) = 193.45, R 2 = .11, β = .335, p < .001). Individually, about two out of every three teams (21) had a significant positive effect (Table 3). Comparing the mean attendance of non-price promotion games (4,792) with the mean attendance of no promotion games(2,969) for all teams produces a significant (t =17.96, p < .001) increase in attendance of 61%. Hypothesis two is supported. Attendance does not decrease when the number of non-price promotions is increased. There is no watering down effect.

When only price game promotions are included in the regression model, a significant negative but weak effect between attendance and the promotion is found (F(1, 926) = 31.87, R 2 = .03, β = -.182, p < .001). Individually, 10 teams had a significant negative effect. Ten other teams, perhaps knowledgeable of this effect offered zero or only one price promotion (Table 4). Comparing the mean attendance of price promotions (2,157) with the mean attendance of no promotion (2,969) for all teams reveals a significant (t = -6.76, p < .001) decrease in attendance of 20%. Hypothesis three is supported; there is a watering down effect on price game promotions.

When a combination of non-price and price game promotions are included, a significant positive but weak effect is found (F(1, 793) = 14.32, R 2 = .02, β = .133, p < .001). For the individual teams, 11 of them had a significant positive effect. Twelve teams had zero or only one game with this combination of promotions (Table 5). Comparing the mean attendance of these combination of promotions games (3,556) with the mean attendance of no promotion (2,969) for all teams produces a significant (t = 2.54, p < .024) increase in attendance of 20%. Generally, Attendance does not decrease when the number of games with a combination of price and non-price promotions is increased. Hypothesis four is supported. There is no watering down effect.

Discussion and Implications

For the most part, game promotions do increase attendance to games. Unlike in major league baseball where a watering down effect has been found (McDonald & Rascher, 2000), in minor league baseball the more games with game promotions that are held, the more attendance will be generated for each game. However, there is a difference in attendance impact generated by different types of promotions.

There is no watering down effect for non-price promotions. When the number of games with non-price promotions is increased, there is an increase in attendance for almost all teams. Teams that do not see a significant increase should examine their operation to understand why they do not attract more spectators for non-price promotion games. Perhaps it is due to not advertising those games enough or it could be due to some other situation. For example, one ball club that did not see a significant increase is the Hudson Valley Renegades. Upon examination of their attendance figures it is learned that they always operate near capacity of their 4,494 seat ball park, whether they have a promotion or not. Therefore, the size of their ballpark appears to be the problem.

With game promotions that are price promotions, there is a watering down effect. Increasing the number of games with price promotions does not significantly increase attendance for almost all teams. In fact, for many teams there is a significant decrease in attendance when having a higher number of price game promotions. This suggests that spectators do not place much importance on, or see little value in, lower prices for the baseball product. These findings are consistent with the findings (see Wakefield & Bush, 1998) that leisure services customers find more value in promotions that have hedonic benefits such as increased entertainment.

When combining price and non-price game promotions for a single game, there is not a watering down effect for most teams. However, the effect on an increase in attendance is weak. The non-price game promotion dominates the price promotion but is seriously weakened by the effect of the price promotion, and therefore, does not produce a strong impact on attendance.

This study is limited in that it did not examine the attitudes of spectators towards the types of game promotions. It did, however, use attendance as somewhat of a proxy for favorable and unfavorable attitudes towards the game promotions. This study also is limited by the fact that it did not consider the advertising weight or effort that was made toward making spectators aware of an upcoming promotion. Obviously, this effort should have an effect on the impact on attendance from each game promotion.

Future studies into baseball and sports promotions should examine the overall season effect of promotions on attendance. Do spectators “cherry pick” games with specific promotions to attend? That is, do fans merely shift attending one game to attending another game because the later game has a promotion? If so, seasonal attendance impact would vary little with or without promotions. Because of the wide variance of impact on attendance from team-to-team in this study, research may be pertinent on the amount of advertising that is done to promote the game promotions. How many fans are aware of the promotion before coming to the ballpark? Does increased communication about game promotions affect the impact on attendance of those promotions? Is one form of advertising game promotions more effective than other forms? Furthermore, examining the promotion-proneness of spectators may provide insights into which game promotions are most salient for those who are most promotion-prone.

As minor league baseball executives search for new and different promotions to bring spectators to their ballparks, they would not be amiss to concentrate on non-price promotions for an increased impact on attendance. They should limit the number of price game promotions to only a very few per season, and they should evaluate the potential return on investment when they couple non-price and price promotions.

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