![]() ![]() ![]() They compared concession purchases in weeks with low and high movie attendance. Looking at detailed revenue data for a chain of movie theaters in Spain, Wesley Hartmann, associate professor of marketing at Stanford GSB, and Ricard Gil, assistant professor in economics at University of California, Santa Cruz, proved that pricing concessions on the high side in relation to admission tickets makes sense. That’s because while ticket revenues must be shared with movie distributors, 100 percent of concessions go straight into an exhibitor’s coffers. Although concessions account for only about 20 percent of gross revenues, they represent some 40 percent of theaters’ profits. Indeed, movie exhibition houses rely on concession sales to keep their businesses viable. That means more customers coming to theaters in general, and a nice profit from those who are willing to fork it over for the Gummy Bears. Putting the premium on the “frill” items, it turns out, indeed opens up the possibility for price-sensitive people to see films. The findings empirically answer the age-old question of whether it’s better to charge more for a primary product (in this case, the movie ticket) or a secondary product (the popcorn). By charging high prices on concessions, exhibition houses are able to keep ticket prices lower, which allows more people to enjoy the silver-screen experience. Research from Stanford GSB and the University of California, Santa Cruz suggests that there is a method to theaters’ madness-and one that in fact benefits the viewing public. Movie theaters are notorious for charging consumers top dollar for concession items such as popcorn, soda, and candy. ![]()
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