Britain wins Olympic gold for business

The Life: At first sight it is hard to see how the Olympics holds any lessons for business. But companies can learn a thing or two from organisers, according to business professors.

Olympiad XXX holds a number of lessons for the business world - particularly in the area of pricing. Johannes Eisele / AF

As a sporting event with an opening ceremony featuring a parade of athletes, performers and even farmyard animals it is, admittedly, not easy to see what businesses can learn from the Olympic Games.

But business professors say Olympiad XXX, which starts today in London, holds a number of lessons - particularly to do with pricing.

"If the promoter of a sports event was to do something that wasn't seen to be fair, people would talk about it very quickly, so sports events organisers had to think about the public reaction much more quickly than firms typically would have done," says Marco Bertini, the assistant professor of marketing at London Business School.

And if a company's pricing is not seen as fair, it puts off customers, he says.

"Inherently what it does is create a conflict with the consumer."

Businesses are missing the opportunity to communicate better with their customers to understand what they want, which would in turn boost business.

It is something the organisers of the London Olympics have been aware of. And companies could emulate their approach by following five principles.

1 Think about pricing in a more relational way. Organisers of the Olympics have achieved this in a number of ways, including introducing a scheme that allowed teenagers under the age of 19 to pay their age for a ticket, while there were also discounts for older people .

2 Think about pricing in a more proactive way. Companies sometimes react badly to market conditions, such as the retailers in the Emirates who have been caught illegally raising food prices during Ramadan. This type of approach angers customers, says Mr Bertini. Organisers of the Olympics made sure public transport was free for ticket holders in London and some outlying areas, thereby helping to solve congestion in the capital, too.

3 Be flexible with pricing. The London Olympics team has done this by introducing five different prices for each event, where usually there are only three ."It's a very simple thing but just by having five you can stretch out the appeal of that particular event and catch more people," says Mr Bertini.

4 Be transparent. Olympic organisers ran an email campaign in 2009 that gave information about how the balloting for tickets would take place and they have been generally good at using email to communicate with people, says Mr Bertini. "I think the lesson for business is ... transparency is a good thing to think about because it forces you to improve. It shows you that you have nothing to hide," he adds.

5 Manage market standards for fairness. The London Games organisers conducted research to see what people wanted and one thing was clear: to attend the opening ceremony and to pay no more than £20 (Dh113.75) for it, which was "a completely unrealistic expectation" says Mr Bertini. In the end, a select number of seats were made available at that price. Businesses facing similar dilemmas should explain the constraints on a company and reasons behind their decisions, he says.

"If you follow these five principles, customers are more likely to understand what you want to do. They are more likely to empathise with your business and your current situation.

"They might want to share more information and you can create more value together," he says.

And that is something the London team is also striving to do.

When the spectacle rolls out of town in three weeks' time the Games will leave behind a legacy. The Olympic Village will be transformed into more than 2,800 homes, almost 1,400 of which will be affordable homes for sale and rent.

"London will be left with this great development, a sustainable development and a completely new and revitalised area that was built on sustainable principles," says Ioannis Ioannou, the assistant professor of strategy and entrepreneurship at London Business School.

All in all, then, a gold for Britain's efforts so far.