Operations, Information and Decisions Papers

Document Type

Journal Article

Date of this Version

1-2012

Publication Source

Production and Operations Management

Volume

21

Issue

1

Start Page

49

Last Page

68

DOI

10.1111/j.1937-5956.2011.01249.x

Abstract

We study how the seat value perceived by consumers attending an event in a theater/stadium depends on the location of their seat relative to the stage/field. We develop a measure of seat value, called the Seat Value Index, and relate it to seat location and consumer characteristics. We implement our analysis on a proprietary data set that a professional baseball franchise in Japan collected from its customers, and provide recommendations. For instance, we find that customers seated in symmetric seats on left and right fields might derive very different valuations from the seats. We also find that the more frequent visitors to the stadium report extreme seat value less often when compared with first-time visitors. Our findings and insights remain robust to the effects of price and game-related factors. Thus, our research quantifies the significant influence of seat location on the ex-post seat value perceived by customers. Utilizing the heterogeneity in seat values at different seat locations, we provide segment-specific pricing recommendations based on a service-level objective that would limit the fraction of customers experiencing low seat value to a desired threshold.

Keywords

seat value, empirical research, revenue management application, customer behavior, ordinal logit models.

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Date Posted: 27 November 2017