CONTENTSecarter2/W10 SPRTS 405/Sports... · NFL pregame shows. For example, Jimmy Kimmell (of the Man Show fame) does seg ments on Fox NFL Sunday and George Lopez appears on HBO's

CONTENTS

Preface xix

PART I CONTINGENCY FRAMEWORK FOR STRATEGIC SPORTS MARKETING 1

CHAPTER 1 Emergence of Sports Marketing 2

What Is Sports Marketing 3

Understanding the Sports Industry 4 Sport as Entertainment 4 A Marketing Orientation 5 Growth of the Sports Industry 6 Spotlight on International Sports Marketing Can Man U Score in America 9 The Structure of the SportS Industry 11 The Consumers ofSport I2 The Sports Product 16 Different Types of Sports Products 17 The Multidimensional Nature of the Sports Product 22 Producers and Intermediaries 23 Sports Marketing Hall ofFame Mark McCormack 26

Basic Marketing Principles and Processes Applied to Sport 27 The Sports Marketing Mix 27 The Exchange Process 28 The Strategic Sports Marketing Process 29 Canadiens Targeting Younger Fans with a New Club 30

Summary 30

Key Terms 31

Review Questions 32

Exercises 32

Internet Exercises 32

Endnotes 32

CHAPTER 2 Contingency Framework for Strategic Sports Marketing 34 Globetrotters Dribble Out a New Marketing Plan 35

Contingency Framework for Strategic Sports Marketing 36 Contingency Approaches 37 Strategic Sports Marketing Process The Heart of the Contingency Framework 39

Planning Phase 40 Understanding Consumers Needs 40 Market Selection Decisions 40 Spotlight on International Sports Marketing Major League Baseball International Segmenting

the Market Based on Where People Live 41 Marketing Mix Decisions 45

ix

bull X Contents

Implementation Phase 48 Organizing 49 Leadership and Interaction 49 Resource Acquisition and AIocation 50 Coordinating and Timing ofActivities 50 Information Management 51

Control Phase 51 Measuring Results 51 Revolving Sponsors a Big Part ofSports 52 Spotlight on Sports Marketing Ethics Move Toward Athletic Reform Long Overdue 56

Summary 57

Key Terms middot58

Review Questions 58

Exercises 58


Endnotes 59 CRA CHAPTER 3 External and Internal Contingencies 60

External Contingencies 60 Competition 61 Technology 62 Cultural and Social Trends 67 Physical Environment 68 Political Legal and Regulatory Environment 69 Demographics 71 The Economy 72 Monitoring the External Contingencies 73

Internal Contingencies 75 Vision and Mission 75 Organizational Objectives and Marketing Goals 76 Organizational Strategies 78 Organizational Culture 82

Assessing the Internal and External Contingencies SWOT Analysis 83 Spotlight on Sports Marketing Ethics Sports Offers a Human Timeout from the Inhumanity 84

Summary 86

Key Terms 87

Review Questions 87

Exercises 87


Endnotes 88

Case Part I 90

C1PART II PLANNING FOR MARKET SELECTION DECISIONS 93

CHAPTER 4 Research Tools for Understanding Sports Consumers 94 Marketing Research in Action The Albany River Rats 95 Research Budgets Increase as Leagues Seek Growth 96

The Marketing Research Process 98 Defining the Problem or Opportunity 98 Understanding the Value ofSponsorship 100

CONTINGENCY FRAMEWORK FOR STRATEGIC SPORTS

MARKETING

I

c

EMERGENCE OF SPORTS MARKETING After completing this chapter you should be able to

bull Define sports marketing and discuss how the sports industry is related to the entertainment industry

bull Describe a marketing orientation and how the sports industry can use a marketing orientation

Examine the growth of the sports industry

bull Discuss the simplified model of the consumer-supplier relationship in the sports industry

bull Explain the different types of sports consumers

bull Define sports products and discuss the various types of sports products

bull Understand the different producers and intermediaries in the simplified model of the consumer-supplier relationship in the sports industry

bull Discuss the elements in the sports marketing mix

bull Explain the exchange process and why it is important to sports marketers

bull Outline the elements of the strategic sports marketing process

M ary is a typical soccer mom At the moment she is trying to determine how to persuade the local dry cleaner to provide uniforms for her daughters Catholic

Youth Organization soccer team George is the president of the local Chamber of Commerce The 10-year plan

for the metropolitan area calls for developing four new sporting events that will draw local support while providing national visibility for this growing metropoli shytan area

Sam is an events coordinator for the 10cailOK road race which is an annual fund raiser for fighting lung disease He is faced with the difficult task of trying to detershymine how much to charge for the event to maximize participation and proceeds for charity

Ramiz is the Athletic Director for State U In recent years the men s basketball team has done welJ in postseason play therefore ESPN has offered to broadcast several games this season Unfortunately three of the games will have to be played at 10 PM local time to accommodate the broadcasters schedule Ramiz is concerned about the effect this will have on season ticket holders because two of the games are on weeknights He knows that the last athletic director was fired because the local fans and boosters believed that he was not sensitive to their concerns

2

WHA1


WHAT IS SPORTS MARKETING

Many people mistakenly think of sports marketing as promotions or sports agents sayshying Show me the money As the previous examples show sports marketing is more complex and dynamic Sports marketing is the specific application of marketing prinshyciples and processes to sport products and to the marketing of nonsports products through association with sport

Mary the soccer mom is trying to secure a sponsorship that is she needs to conshyvince the local dry cleaner that they will enjoy a benefit by associating their service (dry cleaning) with a kids soccer team

As president of the Chamber of Commerce George needs to determine which sports products will best satisfy his local customers needs for sports entertainment while marketing the city to a larger and remote audience I

In marketing terms Sam is trying to decide on the best pricing strategy for his sporting event

Finally Ramiz is faced with the challenge of balancing the needs of two market segments for his teams products As you can see each marketing challenge is complex and requires careful planning

To succeed in sports marketing one needs to understand both the sports industry and the specific application of marketing principles and processes to sports contexts In the next section we introduce you to the sports industry Throughout this book we continue to elaborate on ways in which the unique characteristics of this industry comshyplicate strategic marketing decisions After discussing the sports industry we review basic marketing principles and processes with an emphasis on how these principles and processes must be adapted to the sports context

Coca Colas stadium signage is just one example of sports marketing

Source Used by permission of The Coca Cola Company

4 PART I Contingency Framework for Strategic Sports Marketing

UNDERSTANDING THE SPORTS INDUSTRY

SPORT AS ENTERTAINMENT

Webster s defines sport as a source of diversion or a physical activity engaged in for pleasure Sport takes us away from our daily routine and gives us pleasure Interestingly entertainment is also defined as something diverting or engaging Regardless of whether we are watching a new movie listening to a concert or attendshying an equally stirring performance by ShaquiJIe ONeal we are being entertained

Most consumers view movies plays theatre opera or concerts as closely related forms of entertainment Yet for many of us sport is different One important way in which sport differs from other common entertainment forms is that sport is spontaneous A play has a script and a concert has a program but the action that entertains us in sport is sponshytaneous and uncontrolled by those who participate in the event When we go to a comedic movie we expect to laugh and when we go to a horror movie we expect to be scared even before we pay our money But the emotions we may feel when watching a sporting event are hard to determine If it is a close contest and our team wins we may feel excitement and joy But if it is a boring event and our team loses the entertainment benefit we receive is quite different Because of its spontaneous nature sport producers face a host of chalshylenges that are different than those faced by most entertainment providers

Nonetheless successful sport organizations realize the threat of competition from other forms of entertainment They have broadened the scope of their businesses seeing themselves as providing entertainment The emphasis on promotional events and stashydium attractions that surround athletic events is evidence of this emerging entertainment orientation Consider the NBA All-Star Game What used to be a simple competition between the best players of the Western Conference and the best players of the Eastern Conference has turned into an entertainment extravaganza The event (not just a game anymore) lasts four days and includes slam-dunk contests a rookie game concerts 3-point shooting competition and plenty of other events designed to promote the NBAI In 1982 the league created a separate division NBA Entertainment to focus on NBA-centered TV and movie programming NBA TV has created qrginatprogramming featuring shows like NBA Player Nation Real Playoffs1nsiders Virtual GM and Hardwood Classics As Alan Brew a corporate identity specialist at Addison a branding and communication firm states The line between sport and entertainment has become nearly nonexistentz

Underscoring the notion of sport as entertainment is Richard Alder president of the Atlanta Knights of the International Hockey League (IHL) who states that This is a league for the masses and not the classes [Minor league hockey] is entertainment with the ice as the stage The NHL is the coat and tie league Were not Theyre the Mercedes the best hockey league in the world We re the Chevrolet Of course more people drive Chevys Coincidentally Alder worked for 16 years as a vice president of marketing for the Ringling Brother and Barnum amp Bailey Circus3 Additional examshyples of the relationship between sports and entertainment abound

After originally trying to compete head to head against ESPN the Fox Sports Network wants to position its product as a more entertainment-based alternative With its hit show The Best Damn Sports Show leading the way Fox has six more sports entershytainment shows under development Similarly comedians have become a mainstay on NFL pregame shows For example Jimmy Kimmell (of the Man Show fame) does segshyments on Fox NFL Sunday and George Lopez appears on HBOs Inside the NFL ESPN has also started to create original programming with movies and a dramatic series

Of course one the most highly visible examples ofsporttainment is the WWE or World Wrestling Entertainment For the past two decades the WWE has managed to build a billion dollar empire that maintains the highest rated cable show and has also


produced No1 box office films No 1 NY Times bestselling books and CDs as high as No 2 on the Billboard charts Vince McMahon the founder and chairmen has been called the P T Barnum of our time

Organizations that have not recognized how sport and entertainment relate are said to suffer from marketing myopia Coined by Theodore Levitt marketing myopia is described as the practice of defining a business in terms of goods and services rather than in terms of the benefits sought by customers Sports organizations can eliminate marketing myopia by focusing on meeting the needs of consumers rather than on producing and selling sports products

A MARKETING ORIENTATION

The emphasis on satisfying consumers wants and needs is everywhere in today s marketplace Most successful organizations concentrate on understanding the conshysumer and providing a sports product that meets consumers needs while achieving the organization s objectives This way of doing business is called a marketing orientation

Marketing-oriented organizations practice the marketing concept that organizashytional goals and objectives will be reached if customer needs are satisfied Organizations employing a marketing orientation focus on understanding customer preferences and meeting these preferences through the coordinated use of marketing An organization is marketing oriented when it engages in the following activities4

bull intelJigence generation-analyzing and anticipating consumer demand monitorshying the external environment and coordinating the data collected

bull intelJigence dissemination-sharing the information gathered in the intelligence stage

bull responsiveness-acting on the information gathered to make market decisions such as designing new products and services and developing promotions that appeal to consumers

Using the previous criteria (intelligence gathering intelligence dissemination and (responsiveness) one study examined the marketing orientation of minor league baseshy

ball franchises s Results of the study indicate that minor league baseball franchises do not have a marketing orientation and that they need to become more consumer focused Although the study suggests that minor league baseball franchises have not moved toward a marketing orientation some sports organizations realize that profitability is based on adopting this business philosophy One organization that has attempted to apply a marketing orientation is the LPGA (Ladies Professional Golf Association)

The LPGAs effort to make the fans a priority is being led by Commission Ty Votaw Recently Votow laid out a five year business plan designed to increase the tour s visibilshyity and grow the tour In order to do so Votaw created a fan first initiative that has a relatively simple but important premise if fans are able to find a conn~ction with the players then they will begin or continue to support the tour To create that connection Votaw is asking players to adopt the five points of celebrity-performance relevance joy and passion appearance anlti approachability

Nancy Lopez a longtime tour veteran stated that there are so many sports vying for the attention of fans we need to to do what we can to make them go see the LPGA Whether the LPGAs marketing orientation is successful in the long term remains to be seen but in the short run it seems to be working Attendance has increased by 10 percent in 2003 TV viewership is up 22 percent on cable and 29 percent on broadcast the average purse has more than doubled and total prize money has grown some 87 percent in the same time span All these factors are positive indicators that the marketing orientation is paying dividends6

bull 6 PART I Contingency Framework for Strategic Sports Marketing

GROWTH OF THE SPORTS INDUSTRY

Sport has become one of the most important and universal institutions in our society It is estimated that the sports industry generates approximately $200 billion dollars a year As shown in Figure 11 this total is based on a number of diverse areas within the industry including gambling advertising sponsorships etc 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 Americas sports fans are insatiable7 For better or worse sports are everywhere The size of sport and sports industry can be measured in different ways Let us look at the industry in terms of attendance media coverage employment and the global market

ATTENDANCE Not only does sport spawn legions of soccer moms and dads who faithfully

attend youth sport events but also for the past several years fans have been flocking to major league sports in record numbers The NFL experienced a record-setting year in paid attendance with 176 million fans watching in 2002 for an average attendance of 66100 In addition 90 percent of NFL games sold out last year in time to lift TV blackouts which was the highest percentage ever The 2002 to 2003 season produced a small attendance decrease (06 percent) at NBA games with an average of 16887 fans enjoying the action However the league is poised to rebound on the shoulders on rookie LeBron James After a poor showing in 2002 because of the labor strife attenshydance for Major League Baseball finished down 04 percent in 2003 The commisshysioners office attribues part of the slide to the poor economy the war in Iraq and other uncontrollable factors like the SARS scare in Toronto8 Even with a soft econshyomy NHL attendance nearly matched that of the NBA in 2002-2003 and was subshystantially higher than a decade ago Similar to the other leagues paid attendance fell about 1 percent league-wide but overall attendance was still close to an all-time high

MEDIA COVERAGE Although millions of Americans attend sporting events each year even more of us

watch sports on network and cable television or listen to sports on the radio For examshyple while 67603 fans were in attendance at Super Bowl XXXVII in San Diego an estimated 41 percent of the country was watching on TV9 Likewise some 171 million people watched NBC coverage of the Summer Olympic Games from Sydney Australia 10 however this number is minimal compared with the estimated 7 billion people who watched worldwide ESPN the original sports-only network launched in 1979 reaches 87 million homes with 4900 hours of live original sports programming and ESPN2 reaches 85 million viewersY

Traditional networks are trying to keep pace with the demand for sports programming The four major networks devote in excess of 2000 hours to sports proshygramming annually and a family with cable has access to 86000 hours of sports TV NBC spent a record $23 billion to secure the broadcast and cable rights for the Olympic Games in 20042006 and 2008 In addition NBC paid $127 billion to televise the Olympics in 2000 and 2002 Recently NBC extended its stronghold on the Olympics by winning the broadcast rights to the 2010 and 2012 Games for $22 billion Add to this the four-year deal worth $264 billion paid by NBC and Turner Sports to televise NBA contests or the $18 billion paid by the networks to the NFL and you can see the value of sports to the league and the networks12 These numbers show no signs of slowing down in the future In 1999 CBS agreed to pay $11 billion for a six-year contract with the NCAA

The huge demand for sports broadcasting has led to the introduction of more sport-specific channels New sports networks such as the College Sports Television (wwwcstvcom) Blackbelt TV the Tennis Channel and the Womens Sports Network

7


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wait until Sunday to se-e wbi the Godfthi[ rms yo fI it~

out the- I CJlxrM I stm s tyrdn on ABC and E5PN

The growth of sports information on the Web Source Reprinted courtesy of ESPNcom

are emerging because of consumer demand This practice of narrowcasting reaching very specific audiences seems to be the future of sports media

In addition to traditional sports media new media such as the Internet and pay-per-view cable television are growing in popularity Satellite stations such as DIRECTV allow spectators to subscribe to a series of sporting events and playa more active role in customizing the programming they want to see For example DIRECTV offers the NHL Center Ice package where subscribers can choose from 40 out-of-market (ie not local) regular season NHL games per week for just $139

EMPLOYMENT Another way to explore the size of the sports industry is to look at the number of

people the industry employs The Sports Market Place Registry an industry directory has more than 24000 listings for sports people and organizations 13 A USA Today report estimates that there are upward of 45 million sports-related jobs in marketing entrepreneurship administration representation and media 14 Some estimates range as high as 6 million jobs In addition to the United States the United Kingdom employs some 400000 people in their $6 billion a year sports industry IS Consider all the jobs that are created because of sports-related activities such as building and staffing a new stadium The Sports Business Directory lists 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

The number of people working directly and indirectly in sports will continue to grow as sports marketing grows Sports marketing creates a diverse workforce from the

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llroiIl -------~1LYJ SPOTLIGHT ON INTERNATIONAL SPORTS MARKETING IIIII]J---------

Can Man U Score in America

On match day the devout begin to congregate on Chester Road in Manchester about a 15-minute walk from their cathedral The road takes them past man y shrines There is Bishop s Blaize a local pub where supshyporters chant from the Ma nchester United hymnal 30 minutes before game time At the corner of Chester and Sir Matt Busby Way (so named for an inspirational coach of the past) the faithful take a left and pass a giant mural featuring the faces of legendary team members such as George Best and Eric Cantona Finally the proshycessional winds over some railroad tracks to one of the most hallowed grounds in soccer Old Trafford home to the 125-year-old Manchester United Red Devils footshyball club

The veneration of Manchester United is hardly restricted to a gritty British city however Man U is the true prophet of football or soccer to a devoted worldshywide following of 53 million fans according to polls done for the club by researcher MORL In fact it is the most popular team in the world-making the New York Yankees Dallas Cowboys and Los Angeles Lakers seem bush league by comparison And it has leveraged its hold on its fans into a global business that spreads far beyond soccer

Maggie English a 43-year-old customer-services manager in London is one of them I have traveled all over Europe to support them she says I went eight years without missing a game I went to Turkey three times for the day and Russia once for the day to see them play Adds Graham May 39 a building-contracts manshyager in North Manchester I would be a millionaire if I hadnt spent so much on football

Such true believers help explain how Man U turns such a handsome profit In fiscal 2002 the publicly traded club kicked out $503 million in profits on $230 million in revenues and it expects to generate revenues this year of $260 million club officials say

To spin that much cash Man U goes far beyond its prishymary sources-ticket sales and a lucrative TV deal with Rupert Murdochs British Sky Broadcasting Group PLClt sells everything from Man U coffee mugs to bedsheets and scarves It runs its own subscription-TV service ManuTV that beams game highlights and player interviews to 75000 subscribers over four channels airing six hours a day seven days a week It sells its own credit cards home mortgages consumer loans and insurance policies It runs an online auction business similar to eBay Inc and is opening a string

of Red Cafe restaurants from Singapore to Manchester Says Marketing Director Peter Draper We are trying to package loyalty and affinity

In July Man U will take another big step to expand its global following when it takes its star-studded show to the United States for four largely sold-out exhibition matches in Seattle Los Angeles Philadelphia and New York The clubs aim is twofold to penetrate America s $15 billion annual professional sports market and to persuade Wall Street to invest in a growing global brand_This is about the long-term development of the marketplace says Peter F Kenyon CEO of Manchester United PLC

That may be easier said than done First Man U may have to make the trip without its biggest star goldenshyhaired midfielder and tabloid idol David Beckham who has led the team to 8 English Premier League champishyonships in the past 11 years Rumors have swirled for months that Beckham will move to another European club which would bring Man U a transfer fee in the $50 million range Indeed on June 10 the club announced that it had reached agreement with Barcelona-a deal Beckham promptly vetoed But some such deal may soon take place with Real Madrid and AC Milan thought to be among the contenders

Even if Beckham makes the US tour its hardly clear that Americans are ready to embrace pro soccer True 28 million Americans play the game The US Mens National Team reached the quarterfinals of the 2002 World Cup the US Women s National Team conshytinues to dominate competitions and attract crowds and the United States will play host to the Women s World Cup this fall Americans are even flocking to see Bend Ie Like Beckham a film about a young Englishwoman of Indian descent who wants to play professionally

But beyond those successes soccer struggles to gain a foothold in the crowded American sports market Even though Major League Soccer the top professional league here has been making steady attendance gains the 10shyteam league still loses money and has not yet attracted a broad fan base Skeptics abound I think soccer in the United States is a participation sport and not a spectator sport says Craig Tartasky president of Vertical Sports Marketing a Bethesda (MD) conSUltancy

While in the United States Man U officials will be trying to capitalize on the curiosity factor Finance direcshytor Nick Humby will head to Wall Street to try to interest investors in the clubs business model-one that combines

(Continued)


(Continued)

a winning tradition with shrewd stewardship of the Man U brand With its US sponsors Man U wiD be running socshycer clinics in cities where it plays exhibition matches-and trying to squeeze as much publicity out of the US media as possible

Wall Street may well listen because Man Us busishyness acumen is on par with Beckhams uncanny ability to curve a free kick around an opposing wall of players into a corner of the goal The debt-free club used its own cash to build a 67700-seat stadium that sells out every match We always invest at a level we can afford says Humby Management also insists on rigorous financial discipline that limits players salaries to 50 percent of revenues compared wi th the 70 percent or even 100 pershycent at some other English teams Man Us willingness to let Beckham go while it may alienate some fans reflects the teams iron rule that no player must loom larger than the team as a whole Coach Sir Alex Ferguson apparently irritated by Beckham s glamourshyboy lifestyle-his wife Victoria is a former Spice Girl shybenched him in several games this spring And the huge transfer fee would buy Man U other stars experts say the team has its eye on Brazilian striker Ronaldinho

Man U also prospers because its popularity has attracted big multinational consumer companies Nike

Inc last year agreed to pay $450 million over 13 years to design and supply new clothing and equipment and take over Man Us entire merchandising business givshying it more global punch The scale that we brought was unattainable for them says Nike co-President Charlie Denson Man U is also teaming up with other iconic brands such as Pepsi and Budweiser

But will the clubs popularity rub off in the United States It counts about 4 million hard-core US fans according to MORI but it will need millions more to make that backing financially meaningful The stakes are high since Man U is already approaching saturation in Europe and Asia No soccer team has penetrated the US market and Man U needs to do so says Jeffrey Bliss president of Javelin Group a sports-marketing consultant in Alexandria Va

Certainly a big US splash could lay the groundshywork for more growth But it may be a long time before Man U generates US adherents like Chris Mann a 57shyyear-old English factory worker who plans to catch a pair of the US games Man U is my life he says We call it the religion We call Old Trafford the cathedral You have to go worship the team Now the question is whether the prophet of football can spread the word to those soccer heathens in America

Man Us Money Machine

TOlal Revenue 2002 $230 million

Ticket sales 39 Primarily home games at 67700-seat stadium at Old Trafford the biggest in England Every game sells out

Media 36 Sale of live TV rights for English Premier League games and European and English cup matches Two-thirds comes from EPL and English cup TV rights the rest from European cup

Commercial 18 Income from key sponsorships such as Nike and Vodafone and Man Us emerging financial-services business

Merchandising 7 Royalties from merchandise sales with Beckham paraphernalia especially hot

Source Stanley Holmes Heidi Dawley and Gerry Khermouch Business Week June 2003 No 38 p 108 httpwwwbusinessweekcomlindexhtml

players who create the competition to the photographers who shoot the competition (see Appendix A for a discussion of careers in sports marketing)

GLOBAL MARKETS Not only is the sports industry growing in the United States but it is also growing

globally As the previous spotlight on international sports marketing discusses


Manchester United is a premier example of a powerful global sports organization that continues to grow

THE STRUCTURE OF THE SPORTS INDUSTRY

There are many ways to discuss the structure of the sports industry We can look at the industry from an organizational perspective In other words we can understand some things about the sports industry by studying the different types of organizashytions that populate the sports industry such as local recreation commissions national youth sports leagues intercollegiate athletic programs professional teams and sanctioning bodies These organizations use sports marketing to help them achieve their various organizational goals For example agencies such as the United States Olympic Committee (USOC) use marketing to secure the funding necessary to train and enter American athletes into the Olympic Games and Pan American games

The traditional organizational perspective however is not as helpful to potential sports marketers as a consumer perspective When we examine the structure of the sports industry from a consumer perspective the complexity of this industry and challenge to sports marketers becomes obvious Figure 12 shows a simplified model of the consumer-supplier relationship The sports industry consists of three major elements consumers of sport the sports products that they consume and the supplishyers of the sport product In the next sections we explore each of these elements in greater detail

RGURE 12 Simplified Model of the Consumer-5upplier Relationship in the Sports Industry

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Products Events Sporting goods Personal training

for sport Sports information

Sports marketing fills the stands

Producers and Intermediaries Ownership Sanctioning bodies Sponsors Media Agents Equipment manufacturers


THE CONSUMERS OF SPORT

The sports industry exists to satisfy the needs of three distinct types of consumers spectators participants and sponsors

THE SPECTATOR AS CONSUMER If the sporting event is the heart of the sports industry then the spectator is the

blood that keeps it pumping Spectators are consumers who derive their benefit from the observation of the event The sports industry as we know it would not exist without spectators Spectators observe the sporting event in two broad ways they attend the event or they experience the event via one of several sports broadcast media

Spectator consumers are also of two types Some are individuals whereas others are corporations As shown in Figure 13 there are two broad types of consumers individual consumers and corporate consumers Similarly there are two broad ways in which consumers can become spectators in person or via the media This creates four distinct consumer groups Individuals can attend events in person by purchasing single event tickets or series (season) tickets Not only do individuals attend sporting events but so too do corporations Today stadium luxury boxes and conference rooms are designed specifically with the corporate consumer in mind Many corporate conshysumers can purchase special blocks of tickets to sporting events At times there may be a tension between corporate consumers and individual consumers needs Many believe that corporate consumers able to pay large sums of money for their tickets are pushing out the individual consumer and raising ticket prices

Both individual spectators and corporations can also watch the event via a media source The corporate consumer in this case is not purchasing the event for its own viewing but rather acting as an intermediary to bring the spectacle to the end user groups or audience For example CBS (the corporate consumer) purchases the right to televise the Masters Golf Tournament CBS then controls how and when the event is experienced by millions of individual spectators who comprise the televishysion audience

RGURE 13 Classification ofSpectators

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Historically the focus of the sports industry and sports marketers was on the specshytator attending the event The needs of the consumer at the event were catered to first with little emphasis on the viewing or listening audience Due to the power of the corporate consumer the focus has changed to pleasing the media broadcasting the sporting event to spectators in remote locations Many season ticket holders are dismayed each year when they discover that the starting time for events has been altered to fit the ESPN schedule Because high ratings for broadcasted sporting events translates into bre a thtaking deals for the rights to collegiate and professional sports those who present Sporting events are increasingly willing to accommodate the needs of the media at the expense of the on-site fan The money associated with satisfying the needs of the media is breathtaking For example in 1997 the NFL signed a contract with a major teleVision network for nearly $18 billion dollars 16 Less than a month later the players also reaped the benefits of this contract by having the salary cap raised to slightly oVer $75 million in 2003 Identifying and understanding the different types of spectator consumption is a key consideration for sports marketers when designing a marketing strategy

THE PARTICIPANT AS CONSUMER

In addition to Watching sports more people are becoming active participants in a variety of sports at a variety of competitive levelsY Table 11 shows frequent particshyipation in sports fitness and outdoor activities As the number of participants grows the need for sports Inarketing expertise in these areas also increases

As you can See there are two broad classifications of sports participants those that participate in unorganized sports and those that participate in organized sports

Fantasy sports blurring the line between spectator and participant

Source Reproduced with permission of YAHOO Inc


TABLE 11 Frequent Participants (in millions of people)

Fitness (exercise with equipment) Number of Participants Free Weights (100+ daysyear) 15826000 Treadmill (100+ daysyear) 11 266000 WeightResistance Machines (100+ daysyear) 9354000

Fitness (nonequipment) Fitness Walking (100+ daysyear) 17160000 Stretching (100+ daysyear) 16749000 RunningJogging (100+ daysyear) 10485000

Team sports Basketball (25+ daysyear) 16982000 Soccer (25+ daysyear) 7783000 Softball (25+ daysyear) 5438000

Racquet sports Tennis (25+ daysyear) 3954000 Table Tennis (25+ daysyear) 2355000 Racquetball (25+ daysyear) 1054000

Outdoor activities Fishing (15+ daysyear) 15561000 Camping (15+ daysyear) 10220000 Hiking (15+ daysyear) 8181000

Winter sports Downhill Skiing (15+ daysyear) 1385000 Snowboarding (15+ daysyear) 985000 Snowmobiling (15+ daysyear) 704000

Water sports Jet Skiing (15+ daysyear) 1589000 Water Skiing (15+ daysyear) 1240000 Sailing (15+ daysyear) 927 000

Extreme sports Inline Skating (25+ daysyear) 6854000 Skateboarding (52+ daysyear) 3442000 Mountain Biking (25+ daysyear) 1732000

Noncompetitive sports Recreational Walking (52+ daysyear) 40085000 Recreational Swimming (52+ daysyear) 15427000 Recreational Biking (52+ daysyear) 14785000

Recreational sports BilliardsPool (25+ daysyear) 9582000 Golf (25+ daysyear) 8301000 Bowling (25+ daysyear) 8246000

Source SGMAAmerican Sports Data Inc Used by permission of SGMA International wwwsgmacom

I

Unorganized sports participation also interests sports marketers


UNORGANIZED SPORT PARTICIPANTSORGANIZED SPORT PARTICIPANTS

Amateur Youth recreational instructional Youth recreational elite Schools In tercollegia te

Professional MinorSecondary Major Unorganized sports are the sporting activities people engage in that are not

sanctioned or controlled by some external authority Kids playing a pick-up game of basshyketball teenagers skateboarding or people playing street roller hockey as well as fitness runners joggers and walkers are only a few of the types of sporting activities that milshylions of people participate in each day The number of people who participate in unorgashynized sports is difficult to estimate We can see how large this market is by looking at the unorganized sport of home fitness In 2002 Americans spent nearly $4 billion on exercise equipment18 We can see that the size of the market for unorganized sports is huge and there are many opportunities for sports marketers to serve the needs of these consumers

Organized sporting events refer to sporting competitions that are sanctioned and controlled by an authority such as a league association or sanctioning body There are two types of participants in organized events amateur and professional

Amateur sporting events refer to sporting competitions for athletes who do not receive compensation for playing the sport Amateur competitions include recreational youth sports at the instructional and elite (also known as select) levels high school sports controlled at the state level through leagues intercollegiate sports (NCAA Division 1-3 NAIA and NJCAA) and adult community-based recreational sports Professional sports are also commonly classified by minor league or major league status

SPONSORS AS CONSUMER Other equally important consumers in sports marketing are the many business

organizations that choose to sponsor sports In sports sponsorship the consumer (in most cases a business) is exchanging money or product for the right to associate its name or product with a sporting event The decision to sponsor a sport is complex The sponsor must not only decide on what sport(s) to sponsor but must also consider what level of competition (recreational through professional) to sponsor They must choose whether to sponsor events teams leagues or individual athletes

bull X Contents

Implementation Phase 48 Organizing 49 Leadership and Interaction 49 Resource Acquisition and AIocation 50 Coordinating and Timing ofActivities 50 Information Management 51

Control Phase 51 Measuring Results 51 Revolving Sponsors a Big Part ofSports 52 Spotlight on Sports Marketing Ethics Move Toward Athletic Reform Long Overdue 56

Summary 57

Key Terms middot58

Review Questions 58

Exercises 58


Endnotes 59 CRA CHAPTER 3 External and Internal Contingencies 60

External Contingencies 60 Competition 61 Technology 62 Cultural and Social Trends 67 Physical Environment 68 Political Legal and Regulatory Environment 69 Demographics 71 The Economy 72 Monitoring the External Contingencies 73

Internal Contingencies 75 Vision and Mission 75 Organizational Objectives and Marketing Goals 76 Organizational Strategies 78 Organizational Culture 82

Assessing the Internal and External Contingencies SWOT Analysis 83 Spotlight on Sports Marketing Ethics Sports Offers a Human Timeout from the Inhumanity 84

Summary 86

Key Terms 87

Review Questions 87

Exercises 87


Endnotes 88

Case Part I 90

C1PART II PLANNING FOR MARKET SELECTION DECISIONS 93

CHAPTER 4 Research Tools for Understanding Sports Consumers 94 Marketing Research in Action The Albany River Rats 95 Research Budgets Increase as Leagues Seek Growth 96

The Marketing Research Process 98 Defining the Problem or Opportunity 98 Understanding the Value ofSponsorship 100


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Documents

CONTENTSecarter2/W10 SPRTS 405/Sports... · NFL pregame shows. For example, Jimmy Kimmell (of the Man Show fame) does seg ments on Fox NFL Sunday and George Lopez appears on HBO's