The attractiveness of an event market should be studied for a specific event category at a time. The various parameters that need to be evaluated are:
Required investment:
As the company grows, assets like technology, stage material, etc. may be acquired to cut costs in the long run. Therefore, investment required might increase to include other assets like sound and light systems that may be currently outsourced separately for separate events.
New competitive threat is critical in that freelancers with the niche expertise and the required contacts to negotiate great deals can inflict damage to a leader unless converted into a useful ally.
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Risk in an environment of high demand coupled with moderate competition is relatively lower than the risk perception in a situation of low demand and high competition.
Event life expectancy:
All event categories are evergreen, only the type of event may differ.
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Price elasticity to market demand, cyclically and seasonality of demand are also indicators of the attractiveness of the event category market. This is so because if demand varies greatly as price varies then it is a very unstable market. Though within this instability, if the demand only reduces moderately or not at all then the market can be considered average
The ideal though is a situation where in the demand is not affected in spite of a rise in prices. This leads us to a bleak picture in the Indian context since events as a marketing tool is not yet very popular except for major sporting events like cricket. This is essentially due to the television coverage and therefore extended mileage associated with the event. But event savvy MNC’s like Coke, PepsiCo and others are fuelling the drive towards quality events.
Market growth in value terms is yet another powerful indicator. Declining and stationary markets obviously are bad environments. Moderate to good market growth conditions are obviously better environments to be in. As corporate clients become more event savvy, more companies will budget for events in their annual plans, giving rise to better business prospects.
Market size (in Rs. crores) is one of the more critical assessment parameters. From current estimates, the market size is approximately 1500 million and this is likely to grow to greater than Rs. 5000 millioiras corporate clients become more event sawy.
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Profitability actual or estimated is another critical factor. A profitability rate of 12% is considered normal in the events industry, though the future with its price wars will see profitability of, events decline.
Segmentation:
The ease with which the market for events can be segmented also plays a role in defining market attractiveness. Clients are essentially corporations with well-defined target audience and markets for impact. A research database will help segment the market with greater ease if it is known as to which of the benefits clients really want.
Seasonality Certain times of the year like the monsoon season significantly affect the demand for events. But since these phenomena are pretty much anticipated, there is only a partial effect on the functioning and these situations are mostly planned for. In fact, seasonal events can be designed and scheduled to make the best of seasonality effects.
One of the most irritating parameters, the regulatory climate and the political interference need to be tackled by assessing how much are quality, specifications, price, and environmental concerns going to be affected. If its little or none, then it’s definitely a good market for the concerned event agency.
Return on investment (compared to company yardstick) Moderate competition; smaller set up implies higher return on investments. But as the events agency itself grows larger, greater competition and overheads will imply greater investments and therefore relatively lower return on investment.
Yet another critical parameter for estimating market attractiveness is the ease of handling logistics. National and international tie-ups for logistical assistance give a geographic reach which competitors cannot copy easily. This can mean a good advantage to the events agency.
One of the quickest and proxy means of estimating market attractiveness is by the number of events generated over a time period. An event per agency per client every 6 to 12 months indicates a very healthy environment and thus an attractive market. As event savvy companies increase in number and give annual contracts, the number of events sponsored will go up thus increasing the event market attractiveness.