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Shank Professor of Marketing and Chair Department of Management and Marketing Northern Kentucky UniversityUnderstanding the Sports Industry: Understanding the Sports Industry Sport - Source of diversion or physical activity engaged in for pleasure Sports as Entertainment - Reebok president Robert Meers, “We’ve recognized for several years that sport is part of entertainment. The market now is really sports, fashion and music. We can’t expect to ignore reality and survive.” Growth of the Sports Industry: Growth of the Sports Industry 11th largest of all U.S. industry groups Nation’s output for sports goods and services estimated at $213-350 billion annually How do we measure growth in the sports industry? Growth measured in….. Attendance Figures Media Coverage Employment Figures (4.5 million jobs) International Markets Growth of Sports Industry: Growth of Sports Industry The sports industry generates estimates of 213 to 350 billion dollars per year in revenues. As ESPN founder Bill Rasmussen points out, “The games are better, and well the athletes are just amazing and it all happens 24 hours a day. America’s sports fans are insatiable.” Attendance is increasing: The NFL experienced a record number of fans in the 1999 season (15,710,970) The NBA 1999-2000 season also produced a small increase (1%) for the NBA MLB reached 20 million fans faster than any other year in history and attendance increased again (3%) NHL continues to grow in attendance and popularity. Tracing average attendance over the past few years, regular season numbers have increased from 14, 749 (‘93-’94) to 16,359 (‘99-’00) NASCAR had 11 million people attend its events in 1999 Sports Sponsorship Spending Exceeds $1 Billion Dollar Mark New Leagues (AF2, XFL, WPFL, WSA, WNHL) Growth of Sports Industry: Growth of Sports Industry Media Coverage is Increasing 200 million people watched NBC coverage of the Summer Olympic Games and 3.7 billion people who watched worldwide ESPN, the original sports-only network launched in 1979, reaches some 76 million homes with its 4900 hours of sports programming and remarkably ESPN2 reaches 65 million viewers. $2.3 billion to secure the broadcast and cable rights for the Olympic Games in 2004, 2006, and 2008 $2.64 billion paid by NBC and Turner Sports to televise NBA contests, $18 billion paid by the networks for the NFL, $2.5 billion for post season MLB New sports networks, such as the Golf Channel, SpeedVision, and the Women’s Sports Network Internet, satellite stations and pay-per-view cable television are growing in popularityOpportunities in the Sports Industry: Academics: Opportunities in the Sports Industry: Academics Over 200 Academic Programs in Sports Administration NKU Marketing Track and proposed programOpportunities in the Sports Industry: Careers: Opportunities in the Sports Industry: Careers Upwards of 4.5 million Sports Related Jobs in Sports Administration 13 career areas in sport. These include: event suppliers, event management and marketing, sports media, sports sponsorship, athlete services, sports commissions, sports lawyers, manufacturers and distribution, facilities and facility suppliers, teams, leagues, college athletics, and finance Marketing & Public Relations Professional Sports Intercollegiate Sports Youth Sports Olympic Sports Organizations Regional and National Sport Commissions Amateur Sports Corporate Sports Marketing Sports Marketing Firms Licensing Firms What is Sports Marketing?: What is Sports Marketing? Sports Marketing - The specific application of marketing principles and processes to sports products and to the marketing of non-sports products through association with sportSimplified Model of the Consumer-Supplier Relationship in the Sports Industry: Simplified Model of the Consumer-Supplier Relationship in the Sports Industry Consumers Spectators Participants Corporations Products Events Sporting Goods Personal Training Sports Information Producers/Intermediaries Sports Labor Sanctioning Bodies Sponsors Media Agents Equipment Manufacturers Classification of Sports Spectators : Classification of Sports Spectators Individuals Corporate In-Person MediatedClassification of Sports Participants: Classification of Sports Participants Unorganized Sports Participants Organized Sports Participants Amateur Youth Recreational Instructional Youth Recreational Elite Schools Intercollegiate Professional Minor/Secondary MajorThe Sports Product: The Sports Product Sports Product - A good, a service or any combination of the two that is designed to provide benefits to a sports spectator, participant or sponsor. Types of Sports Products: Types of Sports Products Sporting Events Athletes Arenas/Stadia Sporting Goods $60.2 billion industry comprised of four segments (equipment, transportation, apparel, and footwear) Collectibles and Memorabilia Sports Training Fitness and Health Services Sports Camps and Instruction Sports Information Newspapers, Internet, Magazines, Radio, etc. The Sports Marketing Exchange Process: The Sports Marketing Exchange Process Something of Value Something of Value Exchange Players Exchange PlayersOverview of the Contingency Framework for Strategic Sports Marketing : Overview of the Contingency Framework for Strategic Sports Marketing Foundation of any sports organization is to design and maintain a sound, yet flexible strategic framework Strategic framework that is suited to the sports industry is the contingency framework. Why? Flexible and adaptable to changes in the marketing environmentContingency Framework for Strategic Sports Marketing : Contingency Framework for Strategic Sports Marketing fit fit EXTERNAL CONTINGENCIES Competition Legal/Political Demographics Technology Culture Physical Environment Economy INTERNAL CONTINGENCIES Organizational Vision Organizational Mission Organizational Objectives & Mktg Goals Org Strategy Org Culture Planning 1. Understanding Consumers Needs a. Mktg Research b. Consumers as Participants c. Consumers as Spectators 2. Market Selection Decisions a. Market Segmentation b. Target Markets c. Positioning 3. Marketing Mix Decisions a. Sports Products b. Pricing c. Promotion d. Place Implementation Control THE STRATEGIC MARKETING PROCESS: THE STRATEGIC MARKETING PROCESS THE PLANNING PHASE STEP 1.Understanding Consumers Needs 1. Mktg Research 2. Consumers as Participants 3. Consumers as Spectators STEP 2: MARKET SELECTION DECISIONS 1. Segmentation Alternative 2. Target Markets 3. Positioning STEP 3: MARKETING MIX THE IMPLEMENTATION PHASE THE CONTROL PHASEActivities Associated with Implementation: Activities Associated with Implementation Organizing Leadership and Interaction Resource Acquisition and Allocation Coordination and Timing of Activities Information ManagementControl Phase: Control Phase Sales Analysis Profitability Analysis Customer Satisfaction Marketing AuditEnvironmental Contingencies: Environmental Contingencies Competition Technology Culture/Social Trends Physical Environment Regulatory/Legal/Political Demographic Trends EconomyInternal Contingencies: Internal Contingencies Organizational Vision Organizational Mission Organizational Objectives & Mktg Goals Organizational Strategy Organizational CultureOrganizational Mission: Organizational Mission Written statement about the organization’s present situation and the direction of the organization. (what business we are in and who we serve) The Green Bay Packers mission is to be a dominating force in professional football’s competitive arena On the field, the Packers will continually strive to present their fans with the highest level of performance quality available In their operating activities and relations with the NFL, the Packers will also continually strive for excellence in the quality of work performed Overall, the Packers will commit themselves to doing their part in representing the State of Wisconsin with competitiveness, respect and dignityORGANIZATIONAL OBJECTIVES vs MARKETING GOALS: ORGANIZATIONAL OBJECTIVES vs MARKETING GOALS Organizational Objectives - Signposts along the road which help an organization focus on its long-range purpose stated in the mission statements. Typically include both financial and strategic dimensions Examples of financial include: growth in revenues; growth in profits Examples of strategic include: enhance corporate image; increase customer satisfactionSWOT Analysis: SWOT Analysis Internal Strengths and Weaknesses a. Resource capabilities b. Marketing Mix Considerations External Opportunities and Threats Marketing Research -Systematic process of collecting, analyzing and interpreting data to reduce the risk in decision-making: Marketing Research -Systematic process of collecting, analyzing and interpreting data to reduce the risk in decision-making What kinds of studies would need to be done in sports marketing? When to use in the context of the marketing plan? How to conduct a marketing research study?Marketing Research Process: Marketing Research Process Problem/Opportunity Definition Choosing a Research Design Type Choosing a Data Collection Method Designing a Data Collection Form Choosing a Sampling Technique & Collecting Data Data Analysis Final Report PreparationAbbreviated Research Proposal: Abbreviated Research Proposal PROBLEM STATEMENT RESEARCH OBJECTIVES METHODOLOGY Sample Procedures DATA COLLECTION INSTRUMENTDesigning A Questionnaire: Designing A Questionnaire Specify Information Requirements Determine Method of Administration Determine Content of Questions Determine Form of Response Determine Exact Wording of Questions Determine Question Sequence Pretest and Revise if NecessaryAdult Sport Participant MarketGeneral Observations: Adult Sport Participant Market General Observations Majority of American Adults Do Not Participate in Many of the Most Common Sports Numbers Conflicting; Surgeon General’s Report (only 15% of adults say that they exercise regularly) Why?Most Popular Sports : Most Popular Sports Participant Consumption Behavior: Participant Consumption Behavior Actions performed when searching for, participating in, and evaluating the sports activities that consumers feel will satisfy their needs and desires.Conceptual Model of Consumer Behavior: Conceptual Model of Consumer Behavior Internal External Personality Perception Attitudes Motivation Learning Culture Reference Groups Family Social Class Needs/Desires Decision-Making Problem Recognition Information Search Alternative Evaluation Participate Post-participation Evaluation Past Experience Decision Making Process: Decision Making Process Problem Recognition Information Search Alternative Evaluation Participate Post-Participation Evaluation Psychological Factors: Psychological Factors Personality Perception Attitudes Motivation Learning Why Do We Participate?: Why Do We Participate? Personal Improvement - Better Health, Sense of Accomplishment, Develop Positive Values, etc. Sport Appreciation - Enjoy the game and competition Social Facilitation - Spend time with others, feel part of a groupSociological Factors: Sociological Factors Culture Reference Groups Family Social ClassUnderstanding Spectators as Consumers: Understanding Spectators as Consumers Examining the differences Sometimes there is overlap, but usually treated as separate and distinct markets Heavy Participants - More likely to be male, better educated, more minorities, and younger than spectators Factors Influencing Attendance: Factors Influencing Attendance Fan Motivation Factors Game Attractiveness Factors Economic Factors Competitive Factors Demographic Factors Stadium Factors Value to the Community Sports Involvement Fan Identification Fan Motivation Factors: Fan Motivation Factors Self-Esteem Enhancement (BIRGing and CORFing behaviors) Diversion from everyday life Entertainment Value Eustress or Positive Stress Economic Value Aesthetic Value Need for Affiliation Family Ties Model of Sportscape: Model of Sportscape Stadium Access Facility Aesthetics Scoreboard Quality Seating Comfort Pleasure Desire to Stay Repatronage Layout Accessibility Space Allocation Signage Perceived Crowding Factors Affective Response BehaviorsUnderstanding Spectators as Consumers What do fans value? : Understanding Spectators as Consumers What do fans value? Reasonably priced parking ($8) & tickets ($25) Adequate parking/access Reasonably priced foods Home team with a winning record Close Score Home team star regarded as top 10 player Reasonably priced souvenirs Game that ends in less than three hrs Wide Variety of Snack FoodsSport Involvement: Sport Involvement Perceived interest and personal importance of sports to spectators Two dimensions of sport involvement: Importance of Sport & Affect (feelings) High involvement consumers attend more games, consume more sports through media such as newspapers, Internet, mags, & more likely to identify sponsors Fan Identification: Fan Identification Related to sport involvement Defined as the personal commitment and emotional involvement customers have with a sports organization Level of fan identification: Low (social); Medium (focused); High (vested) Why do we want high identification? Higher attendance,decreased price sensitivity, decreased performance-outcome sensitivityMarket Selection Decisions: Market Selection Decisions STP: Understanding Segmentation, Targeting, and PositioningSegmentation - Grouping consumers together with common needsSegmentation Bases:: Segmentation - Grouping consumers together with common needs Segmentation Bases: Demographic Geographic Psychographic Benefits Geodemographic BehavioralTargeting - Evaluating the Various Segments and Selecting the one(s) that promise the best ROMI: Targeting - Evaluating the Various Segments and Selecting the one(s) that promise the best ROMI Successful Targets Must Be: Sizable Measurable Reachable Demonstrate Behavioral VariationPositioning - Finding a Way to Fix Your Product in the Minds of Consumers: Positioning - Finding a Way to Fix Your Product in the Minds of Consumers Perceptual Mapping Six Attributes of Sports: Six Attributes of Sports Strength, Speed vs Methodical,Precise Movements Athletes only as participants vs Athletes + recreational participants Skill Emphasis on Impact with Object vs Skill Emphasis on Body Movement Practice Primarily Alone vs Primarily With Others A Younger Participant in the Sport vs Wide Age Range of Participants Less Masculine vs More MasculineSports Product Concepts: Sports Product Concepts Sports Product - Good, Service or Combination of the two that is designed to provide benefits to a sports spectator, participant or sponsor.Goods and Services as Sports Products (The Good/Service Continuum): Goods and Services as Sports Products (The Good/Service Continuum) Intangibility -- cannot be seen, felt, tasted Inseparability -- simultaneous production and consumption Heterogeneity -- potential for high variability Perishability -- cannot be inventoried or savedClassification Of Sports Products: Classification Of Sports Products Product Mix - All the Different Products and Services a Firm Offers Product Line - Groups of Individual Products that are Closely Related in Some Way Product Item - Any Specific Version of a Product that can be Designated as a Distinct OfferingProduct Characteristics: Product Characteristics Branding Product Design Product Quality Total ProductBranding: Branding Name,design, symbol or any combination Broad purpose of branding is for a product to distinguish and differentiate itself from all other products Some Great Sports Names include the Macon Whoopie, Louisiana Ice Gators Brand Names: Brand Names What’s in a name? Easy to say, generate positive feelings and associations Translatable into a successful logo Consistent with rest of product lines, city, or organization Legally and ethically permissible Branding Process: Branding Process Brand Awareness Brand Image Brand Equity Brand Loyalty Licensing: Licensing Contractual agreement whereby a company may use another company’s branding in exchange for a royalty or fee Booming business (e.g., NBA has 150 licenses) with 13.65 billion NFL (3.6) NBA (2.6) Colleges (2.0) MLB (1.9) NHL (1.2) CAPS (Coalition to Advance the Protection of Sports Logos)Sports Product Quality : Sports Product Quality Quality of Services Quality of GoodsSlide58: Nature of Service Quality EXPECTED SERVICE LEVELS PERCEIVED SERVICE LEVELSExpected Service Levels: Expected Service Levels Service Promises (ads, price) Word-of-Mouth Past ExperiencePerceived Service LevelsService Quality Dimensions: Perceived Service Levels Service Quality Dimensions Tangibles -- Physical facilities, appearance of personnel, equipment Reliability -- Ability to perform the service dependably, accurately, consistently Responsiveness -- Willingness to provide prompt service to customers Assurance -- Trust, knowledge and courtesy of employees Empathy -- Caring, individualized attention to customersQuality of Goods Dimensions: Quality of Goods Dimensions Performance Features Conformity to Specifications Reliability Durability Serviceability Aesthetic DesignProduct Design - Aesthetics, Style and Function of the ProductRELATIONSHIP AMONG PRODUCT DESIGN, TECHNOLOGY AND PRODUCT QUALITY: Product Design - Aesthetics, Style and Function of the Product RELATIONSHIP AMONG PRODUCT DESIGN, TECHNOLOGY AND PRODUCT QUALITY Technological Environment Product Quality Product DesignNew Sports Products From the Perspective of the Organization: New Sports Products From the Perspective of the Organization New-to-the-World Products New Product Category Entries Product Line Extensions Product Improvements RepositioningsNew Sports Products From the Perspective of the Consumer: New Sports Products From the Perspective of the Consumer Discontinuous Innovations Dynamically Continuous Innovations Continuous Innovations New Product Development Process: New Product Development Process Idea generation Screening Business analysis/Concept Testing Development Test Marketing CommercializationNew Product Screening Checklist: New Product Screening Checklist General Characteristics of New Product/Service profit potential existing and potential competition size of overall market level of investment level of riskNew Product Screening Checklist: New Product Screening Checklist Marketing Characteristics of New Product/Service fit with marketing capabilities effect on existing products and services appeal to current consumer markets existence of differential advantage impact on image Production Characteristics of new Product/Service fit with production capabilities ability to produce at competitive prices availability of labor and material resourcesProduct Life Cycle: Total Industry Sales Product Life Cycle INTRO GROWTH MATURITY DECLINE TIME $$ Awareness Differentiate Maintain Eliminate or ExtendDiffusion of Innovations - Rate at which new sports products spread throughout the marketplace: Diffusion of Innovations - Rate at which new sports products spread throughout the marketplace Factors Influencing the Rate of Diffusion: New Product Characteristics Perceived Newness of the Innovation Nature of the Communication NetworkDiffusion of Innovations: Diffusion of Innovations Types of Adopters Innovators Early Adopters Early Majority Late Majority LaggardsPromotional Concepts: Promotional Concepts COMMUNICATION - Process of establishing a “oneness” between the sender and receiver PROMOTION MANAGEMENT - Focus of the promotional element of the marketing mixPromotion Mix Elements: Promotion Mix Elements Sales Promotions Public or Community Relations Sponsorship Personal Selling AdvertisingCommunications Process: Communications Process Source Receiver Decoding Medium Encoding Message Feedback Noise Promotion Planning: Promotion Planning Target Market Considerations Promotional Objectives Establishing Promotional Budgets Choosing an Integrated Promotional MixTarget Market Considerations: Target Market Considerations Push Strategy Pull StrategyPromotional Objectives The Hierarchy of Effects: Promotional Objectives The Hierarchy of Effects Unawareness Awareness Knowledge Liking Preference Conviction ActionPromotional Budgets: Promotional Budgets Arbitrary Allocation Competitive Parity Percentage of Sales Objective and Task MethodIntegrating the Promotional Mix: Integrating the Promotional Mix Integrated Marketing Communications - Concept by which a sports organization carefully integrates and coordinates its many promotional mix elements to deliver a unified message about the organization and its productsBuilding An Advertising Strategy: Building An Advertising Strategy MARKETING STRATEGY AD OBJECTIVES BUDGETING CREATIVE DECISIONS MEDIA STRATEGIES AD EVALUATIONAd Objectives(awareness, inform, change attitudes, purchase): Ad Objectives (awareness, inform, change attitudes, purchase) INDIRECT OBJECTIVES - ENHANCE CORPORATE IMAGE DIRECT OBJECTIVES - STIMULATE DEMAND FOR THE SPORTS PRODUCTAd Budgeting: Ad Budgeting ALL YOU CAN AFFORD COMPETITIVE PARITY PERCENTAGE OF SALES OBJECTIVE AND TASK Creative Strategies: Creative Strategies IDENTIFYING THE BENEFITS OF THE SPORTS PRODUCT DESIGNING THE AD APPEAL DEVELOPING THE AD EXECUTIONDesigning The Ad Appeal: Designing The Ad Appeal Health Appeals Emotional Appeals Fear Appeals Sex Appeals Pleasure or Fun AppealsDesigning The Ad Execution: Designing The Ad Execution One or Two Sided Messages Comparative Message Slice-of-Life or Lifestyle Message Scientific Message TestimonialsMedia Strategy: Media Strategy SPECIFY THE MEDIA OBJECTIVES (REACH, FREQUENCY, CONTINUITY) SELECTING THE MEDIA VEHICLESPersonal Selling: The Strategic Selling Process: Personal Selling: The Strategic Selling Process Buying Influences Red Flags Response Modes Win-Results The Sales Funnel Ideal Customers Sales Promotions: Sales Promotions Premiums Contests and Sweepstakes Sampling Point of Purchase Displays CouponsPublic Relations: Public Relations Publicity (news releases, press conferences) Participation in Community Events Producing Written Materials (press guides) LobbyingSponsorship: Sponsorship Investing in a sports entity to support overall organizational objectives and marketing goals. IEG estimates $6.8 billion spent on sponsorship and of this $4.6 billion will be spent on sports Not unlike other forms of communication, sponsors must fight the clutter and find the perfect matchThe Sponsorship Process: The Sponsorship ProcessSponsorship Objectives: Sponsorship Objectives Direct Sales Increases Indirect Awareness Competition (ambush mktg- planned effort to associate themselves with an event -- I Love LA) Reaching Target Markets (Allows us to reach consumer where they live and play) Relationship Building Image Building Sponsorship Budgeting: Sponsorship Budgeting Sample costs of sponsorship Corporate Box at the United Center $220,000 Title sponsor of Tot Trot $7500 Official Supplier for MLB $10 million Premier League $15 million Initial Costs, but there is maintenance and leveragingSponsorship Acquisition: Sponsorship Acquisition 1) Determine Scope of the Sponsorship (sports event pyramid with global, international, national, regional and local events) 2) Determine the athletic platform (entity and level of competition)Sponsorship Implementation and Evaluation: Sponsorship Implementation and Evaluation Number of mentions in popular media Media Equivalencies Sales figures (pre and post) Attitude change (pre and post) Number of distributors (pre and post)Distribution Concepts: Distribution Concepts Ability of consumers to gain access to products in a timely and convenient fashion Moving product from producer to consumer via the various channels of distributionSports Distribution Issues: Sports Distribution Issues Sports Retailing Stadium as “Place” Sports Media Sports Retailing Mix: Sports Retailing Mix Products Pricing Distribution PromotionRetail Image/Store Personality: Retail Image/Store Personality Factors include (in general): atmospherics location employees/sales personnel clientele merchandise assortment promotional activities Stadium as “Place”: Stadium as “Place” New Sports Venues Ticket Distribution IssuesSports Media as Distribution: Sports Media as Distribution Delivering the Sports Product to Consumers Via Media Rising Cost of Media Rights Media as a Portion of the Revenue Mix New Trends in Sports MediaPricing Concepts: Pricing Concepts Price is a Statement of Value Value = Perceived Benefits Price of Sports Product Essence of pricing is the exchange process - An attempt to quantify the value of what is being exchanged Internal and External Determinants of Pricing: Internal and External Determinants of Pricing Internal Product Promotion Distribution Cost Organizational Objectives External Consumer Demand Competition Legal Economy TechnologySlide103: RELATIONSHIP OF PRICE TO SOME OTHER MARKETING MIX ELEMENTS Related to product life cycle Communicates something about the product Promotion geared towards information about price Product lines with different prices attract different segments of consumersEstimating Consumer Demand: Estimating Consumer Demand Consumer Tastes Availability of Substitute Sports Products Consumer IncomePricing Strategies: Pricing Strategies Differential Pricing Strategies New Sports Product Pricing Strategies Psychological Pricing Strategies Product Mix Pricing Strategies Cost-Based Pricing Strategies Differential Pricing: Differential Pricing Second Market DiscountingNew Sports Product Pricing: New Sports Product Pricing Penetration Pricing Price SkimmingPsychological Pricing: Psychological Pricing Prestige Pricing Referent Pricing Odd-Even Pricing Traditional PricingProduct-Mix Pricing: Product-Mix Pricing Bundle Pricing Captive Pricing Two-Part PricingCost-Based Pricing: Cost-Based Pricing Cost-Plus Pricing Target Profit Pricing Break-Even PricingPrice Adjustments: Price Adjustments Price Reductions and Price Increases Price DiscountsImplementation Issues : Implementation Issues Communications Staffing Staffing and Skills Coordination Rewards Information Creativity BudgetingStrategic Control Issues: Strategic Control Issues Planning Assumptions Control Process Control Contingency Control Planning Assumptions Control: Planning Assumptions Control “Are the premises or assumptions used to develop this marketing plan still valid?” Examine the external environmental factors and the sports industry factorsProcess Control: Process Control Monitoring Strategic Thrusts Milestone Review Financial AnalysisContingency Control: Contingency Control “How can we protect our marketing strategy from unexpected events or crises that could affect our ability to pursue the chosen strategic direction?” Developing a Crisis PlanGrowth of Sports Industry: Growth of Sports Industry The sports industry generates estimates of 213 to 350 billion dollars per year in revenues. As ESPN founder Bill Rasmussen points out, “The games are better, and well the athletes are just amazing and it all happens 24 hours a day. America’s sports fans are insatiable.” Attendance is increasing: The NFL experienced a record number of fans in the 1999 season (15,710,970) The NBA 1999-2000 season also produced a small increase (1%) for the NBA MLB reached 20 million fans faster than any other year in history and attendance increased again (3%) NHL continues to grow in attendance and popularity. Tracing average attendance over the past few years, regular season numbers have increased from 14, 749 (‘93-’94) to 16,359 (‘99-’00) NASCAR had 11 million people attend its events in 1999 Sports Sponsorship Spending Exceeds $1 Billion Dollar Mark New Leagues (AF2, XFL, WPFL, WSA, WNHL) You do not have the permission to view this presentation. In order to view it, please contact the author of the presentation.