Sports Marketing: A Strategic Perspective, Fourth Edition. Part 2

SECTION 4 CHAPTER MATERIALS CHAPTER 1: EMERGENCE OF SPORTS MARKETING CHAPTER OBJECTIVES • Define sports marketing and discuss how the sports industry is related to the entertainment industry • Describe a marketing orientation and how sports orientation can practice a marketing orientation • Examine the growth of sports industry • Discuss the simplified model of the consumer - supplier relationship in the sports industry • Explain the different types of sports consumers •  Define sports products and discuss the various types of sports products • Understand the different producers/intermediaries in the simplified model of the consumer - supplier relationship in the sports industry • Discuss the elements in the sports marketing mix • Explain the exchange process and why it is important to sports marketers • Outline the elements of the strategic sports marketing process SUMMARY The sports industry is experiencing tremendous growth and sports marketing is playing an important role in this emerging industry. The focus of Chapter 1 is to provide a basic understanding of sports marketing and the sports industry. Sports marketing is the specific application of marketing principles and processes to sport products and to the marketing of non-sports products through association with sport. The study and practice of sports marketing is complex and interesting because of the unique nature of the sports industry. Today, sports organizations define their businesses as entertainment providers. In addition, sports organizations know that in order to be successful in the competitive environment of sports, they must practice a marketing orientation. An organization with a marketing orientation concentrates on understanding consumers and providing sports products that satisfy consumers’ needs. Sports marketing will continue to grow in importance as sports become more and more pervasive in the U.S. culture and around the globe. This phenomenal growth of the sports industry can be seen and measured in a number of ways. We can identify growth by looking at the increasing numbers of sport spectators, the growth of media coverage, the increase in sports participation, rising employment opportunities and the growth in sports internationally. To better understand this growing and complex industry, a simplified model of the consumer-supplier relationship was presented. The simplified model of the consumer supplier relationship in the sports industry consists of three major elements: consumers of sport, sports products, and producers/intermediaries. Three distinct types of sports consumers are identified in the model. These consumers of sports include spectators who observe sporting events, participants who take part in sporting events and sponsors who exchange money or product for the right to be associated with a sporting event. The spectators, participants and sponsors consume sports products. A sports product is a good, service or any combination of the two that is designed to provide benefits to a sports consumer. The primary sports product consumed by sponsors and spectators is the sporting event. Products related to the event are athletes like Tiger Woods and arenas like the Staples Center, which both provide their own unique benefits. Other categories of sports products common to the sports industry include sporting goods (equipment, apparel and shoes, licensed merchandise, and collectibles and memorabilia), personal training services for sports (fitness centers and sports camps) and sports information (news, magazines, etc.). Because there are such a variety of sports products it is useful to categorize these products using the sports product map. Producers and intermediaries represent the third element of the simplified model of the consumer- supplier relationship in the sports industry. Producers include those organizations or individuals that help “manufacture” the sporting event, such as owners, sanctioning bodies, and sports equipment manufacturers. Intermediaries are also critical to the sports industry because they bring the sport to the end-user of the sports product. Sponsors, the media, and agents are the three intermediaries presented in this chapter. While sports marketers must have a thorough understanding of the sports industry to be successful, the tool of their trade is the sports marketing mix. The sports marketing mix is defined as the coordinated set of elements that sports organizations use to meet their marketing mix objectives and satisfy consumers’ needs. The elements of the marketing mix are sports products, distribution or place, pricing, and promotion. In addition to the marketing mix, another central element of marketing is the exchange process. The exchange process is defined as a marketing transaction in which the buyer gives something of value to seller in return for goods and services. One of the things that makes the sports industry so unique is the complex nature of the exchange process and the many exchanges that take place within a single sporting event. To manage the complexities of the sports industry and achieve organizational objectives, sports marketers use the strategic sports marketing process. The strategic sports marketing process consists of three major parts: planning, implementation and control. The planning process begins by understanding consumers’ needs, selecting a group of consumers with similar needs and to position the sports product to this group of consumers. The final step of the planning phase is to develop a marketing mix that will appeal to the targeted group of consumers and carry out the desired positioning. The second major part of the strategic sports marketing process is putting the plans into action or implementation. Finally, the plans are evaluated to determine whether organizational objectives and marketing goals are being met. This third, and final, part of the strategic sports marketing process is called control. CHAPTER OUTLINE 1. WHAT IS SPORTS MARKETING? Sports marketing is the specific application of marketing principles and processes to sport products and to the marketing of non-sports products through association with sport Ask students to develop a definition of sports marketing and then discuss how their definition represents or lacks elements of the text definition. Be sure to discuss the breadth of our definition of sports marketing which includes sports and associations with non-sports products. This definition can also serve as a springboard for discussion/review of the basic marketing principles, as well as describing what we mean by a sports product. 2. UNDERSTANDING THE SPORTS INDUSTRY Sport is defined as “a source of diversion or a physical activity engaged in for pleasure.” Interestingly, “entertainment” is also defined as something diverting or engaging. This is a good way to discuss the relationship between sports and the entertainment industry. Ask students to develop a list of examples that link sport and entertainment. This in-class exercise is usually a good way to begin to explore the sports industry and its similarities and differences to other forms of entertainment. 3. A MARKETING ORIENTATION Most successful organizations concentrate on understanding the consumer 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. Ask students what sports or sports organizations have a marketing orientation and why? How do sports organizations practice a marketing orientation? 4. GROWTH OF THE SPORTS INDUSTRY The growth of sport and sports industry can be measured in terms of attendance, spectators, employment and the global market. A. Growth in Attendance B. Growth in Media Coverage C. Growth in Employment D. Growth in Global Markets 5. the structure of the sports industry A. The Consumers of Sport 1. The Spectator The Participant The Sponsors B. The Sports Product (Goods, Services and Benefits) 1. Sporting Events a. Athletes. b. Arena. 2. Sporting Goods a. Equipment. b. Apparel and Shoes. c. Licensed Merchandise d. Collectibles and Memorabilia 3. Personal Training for Sports a. Fitness Centers and Health Services b. Sports Camps and Instruction 4. Sports Information C. Producers/Intermediaries 1. Ownership 2. Sanctioning Bodies. 3. Sponsors 4. Media 5. Agents 6. Sports Equipment Manufacturers The structure of the sports industry and the model presented in the text is perhaps the most interesting and frustrating aspects of Chapter 1. It is critical to discuss how the sports industry has unique elements. Additionally, it is important to discuss the complex relationship between the elements in the consumer-supplier model. The simplified model is also an excellent tool to generate discussion regarding the consumers, sports products and producers that will be discussed throughout the course. 6. BASIC MARKETING PRINCIPLES AND PRACTICES APPLIED TO SPORT A. The Sports Marketing Mix The coordinated set of elements that sports organizations use to meet their marketing objectives and satisfy consumers’ need 1. Product Strategies 2. Distribution Strategies 3. Pricing Strategies 4. Promotion Strategies B. The Exchange Process A marketing transaction in which the buyer gives something of value to the seller in return for goods and services. This section of the chapter could be either a review for those students who have had previous marketing coursework or perhaps a most important introduction for those students new to marketing. Regardless of the class composition, this is a good time to discuss the academic nature of sports marketing as an emerging discipline based on the principles of marketing. Many of the students who have taken principles seem to take on a new appreciation of the marketing principles in the context of sport. Those students who are just being exposed to marketing for the first time need a much more thorough discussion of the 4Ps. 7. THE STRATEGIC SPORTS MARKETING PROCESS The strategic sports marketing process is the process of planning, implementing and controlling marketing efforts to meet organizational goals and satisfy consumers’ needs. One of the basic tenets of the text is the importance of understanding and applying the strategic sports marketing process. A brief discussion of the structure of the strategic sports marketing process affords a nice transition into Chapter 2, The Contingency Framework for Strategic Sports Marketing. CHAPTER 2: CONTINGENCY FRAMEWORK FOR STRATEGIC SPORTS MARKETING CHAPTER OBJECTIVES • Understand the contingency framework for strategic sports marketing • Describe and apply the strategic sports marketing process • Describe the major internal contingencies and explain their influence on the strategic sports marketing process • Describe the external contingencies and explain how they impact the strategic sports marketing process • Discuss the importance of monitoring the external contingencies and environmental scanning • Explain and conduct a SWOT analysis SUMMARY Chapter 2 provides an overview of the contingency framework for the strategic sports marketing process. Although there are many ways to think about constructing a sports marketing plan, the best method lays a foundation that is prepared for the unexpected. The contingency framework is especially useful for sports marketers because of the complex and uncertain conditions in which the sports organization operates. The unexpected changes that occur over the course of a season or event may be positive or negative. The changes that occur may be either controllable or uncontrollable events that impact the sports organization. Uncontrollable occurrences are typically in the marketing environment and are referred to as external contingencies, while internal contingencies are within the control of the organization (but sometimes beyond the scope of the marketing function). The contingency framework includes three major components: the internal contingencies; the external contingencies and the strategic sports marketing process. The external contingencies, or uncontrollable factors, which influence the strategic marketing process, include: competition, regulatory and political issues, demographic trends, technology, sociocultural issues and the physical environment. The internal contingencies, which also impact strategic marketing decisions, include: vision and mission of the organization, marketing goals and organizational objectives, organizational culture and organizational design issues. Because the marketing environment is so complex and dynamic, sports marketers use a method for monitoring the external contingencies called environmental scanning. Environmental scanning is the sports organization's attempt to continually acquire information on events occurring outside of the organization and to identify and interpret potential trends. Sports marketers must continually monitor the environment to look for opportunities and threats that may impact the organization. The external contingencies that impact the strategic sports marketing process include: competition, technology cultural/social trends, physical environment, political, legal and regulatory environment, demographic trends and the economy. As with any industry, understanding competitive threats that exist is critical to the success of all sports organizations. Competition for sporting events and sports organizations comes in many forms. Typically, we think of competition as being any other sporting event. However, other forms of entertainment are also considered competitive threats for sports organizations. Technological forces represent another external contingency. Advances in technology are changing the way that consumers watch sports, play sports and receive their sports information. Cultural/Social trends must also be carefully monitored. Core values, such as individualism, youthfulness and the need for belonging can have an impact on the target markets chosen and how sports products are positioned to spectators and participants. The physical environment, such as the climate and weather conditions, is another external contingency that can have a tremendous influence on the success or failure of sporting events. Another of the uncontrollable factors is the political, legal and regulatory environment. Proposed legislation, such as the banning of all tobacco advertising and sponsorship at sporting events, could have a tremendous impact on the motosports industry. Demographic trends are another critical external contingency that must be monitored by sports marketers. For instance, the graying of America will bring about changes in the levels of participation in sports and the types of sports in which the “mature market” will participate. Finally, sports marketers should consider the economic conditions. Sports marketers must monitor the macroeconomic elements such as the national economy, as well as microeconomic issues such as the discretionary income of consumers in the target market. In addition to the external contingencies, the internal contingencies also play a significant role in shaping the strategic sports marketing process. The internal contingencies, thought of as managerial, controllable issues, include: vision and mission of the sports organization, organizational objectives and marketing goals, organizational strategies, and organizational culture. The vision and mission of the sports organization guide the strategic sports marketing process by addressing questions such as: What business are we in? Who are our current customers? What is the scope of our market? How do we currently meet the needs of our customers? The organizational objectives and marketing goals stem from the vision and mission of the sports organization. The objectives of the organization are long term and sometimes cannot be quantified. Alternatively, marketing goals are short term, measurable and time-specific. It is extremely important to remember that the marketing goals are directly linked to decisions made in the strategic sports marketing process. Another internal contingency that influences the strategic sports marketing process is organizational strategy. The organizational strategy is how the sports organization plans on carrying out its vision, mission, objectives and goals. There are four different levels of strategy development with the organization. These include: corporate level strategies, business level strategies, functional level strategies and operational level strategies. Marketing is described as a functional level strategy. The operational level strategies such as pricing and promotion must fit the broader strategic sports marketing process. A final internal contingency is the organizational culture or the shared values and assumptions of organizational members that shape an identity and establish preferred behaviors in an organization. The external and internal contingencies are systematically considered prior to the development of the strategic marketing process. The process that many organizations use to analyze the internal and external contingencies is called a SWOT analysis. SWOT is an acronym for strengths, weaknesses, opportunities and threats. The strengths and weakness are internal, controllable factors within the organization that may influence the direction of the strategic sports marketing process. For example, human resources within the organization may represent a strength or a weakness within any organization. On the other hand, the opportunities and threats are uncontrollable aspects of the marketing environment (e.g., competition, economy). The purpose conducting a SWOT analysis is to help sports marketers recognize how the strengths of their organization can be paired with opportunities that exist in the marketing environment. Conversely, the organization may conduct a SWOT to identify weaknesses in relation to competitors. CHAPTER OUTLINE 1. CONTINGENCY FRAMEWORK FOR STRATEGIC SPORTS MARKETING A. Contingency Approaches Contingency models were originally developed for managers of organizations who wished to be responsive to complexities of their organization and the environments in which they operate. Several elements of the contingency framework make it especially useful for sport marketers. First, sports marketers operate in unpredictable and rapidly changing environments. Second, the contingency approach suggests that there is no one best way to organize. Third, a contingency model uses a systems perspective, one that assumes an organization doesn’t operation in isolation but interacts with other systems. B. Elements of the Contingency Framework Internal Contingencies - Influence the strategic marketing process; are all influences within the organization that can impact the organization’s strategic marketing process. The internal contingencies usually include facets of the organization such as the vision and mission of the organization, organizational goals and strategies for reaching those goals, and the organizational structure and systems. External Contingencies - All influences outside of the organization that can impact the organization’s strategic marketing process. The external contingencies impacting the strategic sports marketing process typical includes factors such as competition, regulatory/political issues, demographic trends, technology, culture and values, and the physical environment. Strategic sports marketing process - The three primary components of this process are planning, implementation and control. The planning phase begins with understanding the consumers of sports. As previously discussed, these consumers may be participants, spectators or perhaps both. Once information regarding the potential consumers is gathered and analyzed, market selection decisions can be made. These decisions are used to segment markets, choose the targeted consumers and position the sports product against competition. The final step of the planning phase is to develop the sports marketing mix that will most efficiently and effective reach the target market. Even as important as it is to present the foundation of the text, the contingencies framework, it is even more critical to discuss why this framework is especially useful to sports marketers. Usually our discussion emphasizes the uncontrollable nature of sport and what contingency planning might be necessary in the sports environment. 2. INTERNAL CONTINGENCIES Internal contingencies are all influences within the organization that can impact the strategic sports marketing process. These include: vision and mission; organizational objectives and marketing goals; organizational strategies; and organizational culture. A. Vision & Mission Vision addresses…… -Where does the organization plan to go from here? -What business do we want to be in? -What customer needs do we want to satisfy? -What capabilities are required for the future? Mission addresses…… -What business are we currently in? -Who are our current customers? -What is the scope of our market? -How do we currently meet the needs of our customers? At this point in class we might examine some existing mission statements of sports organizations and discuss whether or not the statements address questions 10-13. In addition, the class can discuss the perceived marketing orientation of the organizations based on the mission statements. B. Organizational Objectives and Marketing Goals Objectives can be thought of as signposts along the road which help an organization focus on its purpose as stated in the mission statement. More specifically, an objective is a long-range purpose that is not quantified or limited to a time period. Marketing goals guide the strategic marketing process and are based on organizational objectives. A goal is a short-term purpose that is measurable, challenging yet attainable and time specific C. Organizational Strategies Organizational strategies are the means by which the organization achieves its organizational objectives and marketing goals. While the organizational vision, mission, objectives and goals are the “what,” the organizational strategy is the “how" framework. 1. Corporate strategy - Overall “game plan” for organizations that compete in more than one industry 2. Business strategy- How a business unit gains advantage over competitors within the relevant industry 3. Functional strategy - Those developed by each functional areas of the organization (e.g., marketing, personnel, operations) within a business unit 4. Operational strategy - Primary goal is to support the functional level strategies D. Organizational Culture Organizational culture is shared values and assumptions of organizational members that shape an identity and establish preferred behaviors in an organization. Discuss how the organizational culture of professional (or collegiate athletic programs) sports franchises is driven heavily by the leadership of the organization. In other words, how does the ownership group influence the culture? A good example is the recent acquisition of the New Jersey Nets by comedian Bill Cosby in order to promote the team's support of the inner city youth. 3. EXTERNAL CONTINGENCIES External contingencies are all influences outside of the organization that might impact the strategic sports marketing process. The external contingencies include: competition, technology, culture/social trends, physical environment, political/legal/regulatory environment, demographics and the economy. A. Competition 1. Direct 2. Indirect At this point, an in-class exercise is sometimes useful to explore student perceptions of direct vs. indirect competition. We can use the basketball team at the university as our core product and ask students to describe all the forms of competition (both direct and indirect). After the list is developed, we can then construct a perceptual map to look at the relative clusters of competitive activity. This provides a good framework for discussing competition and how sports organizations and other forms of entertainment differentiate themselves. 3. Technology 4. Cultural/Social Trends 5. Physical Environment 6. Political, Legal and Regulatory Environment 7. Demographic Environnent a. Size of population b. Age c. Shift in Ethnic Groups d. Shift in Populations 8. Economic Environment a. Macroeconomic Elements b. Microeconomic Elements Another useful in-class exercise is to have students develop examples of how each one of the external contingencies impacts the sports industry and, more specifically, sports marketing. For example, students might mention how changes in technology of golf clubs impact golfer’s performance and influences how the clubs are advertised. 4. MONITORING THE EXTERNAL CONTINGENCIES The external contingencies are dynamic and sport marketers must keep abreast of these continually changing influences. The method that is used to monitor the external contingencies is known as environmental scanning. Environmental scanning is a firm’s attempt to continually acquire information on events occurring outside their organization to identify and interpret potential trends. Identify who will be responsible for scanning Get information on the three C's: customers, competition, and company Assure integration of scanned information through structured interactions and communication Conduct a thorough analysis of present efforts to improve the effectiveness of environmental scanning Create a culture which values a “spirit of inquiry” 5. ASSESSING the INTERNAL AND EXTERNAL CONTINGENCIES: SWOT analysis SWOT is an acronym for strengths, weaknesses, opportunities and threats. The strengths and weaknesses are controllable factors within the organization. In other words, a firm must evaluate its own strengths and weaknesses based on the internal contingencies. The opportunities and threats are assessed as a result of the external contingencies found in the marketing environment. These elements may be beyond the control of the sports organization. For example, we would examine social and lifestyle trends, demographics, economics; political, legal, and regulatory, competition, technology. I typically conduct a mini-SWOT analysis in-class using an organization that the majority of the students are familiar with. During this discussion, I stress that the SWOT should always provide support for why you think something is a strength, weakness, opportunity or threat. CHAPTER 3: RESEARCH TOOLS FOR UNDERSTANDING SPORTS CONSUMERS CHAPTER OBJECTIVES • Discuss the importance of marketing research to sports marketers • Explain the fundamental process for conducting sports marketing research • Identify the various research design types • Describe the process for questionnaire development • Understand how to prepare an effective research report SUMMARY Chapter 3 focuses on the tools used to gather information to make intelligent decisions throughout the strategic sports marketing process. More specifically, the chapter describes the marketing research process, in detail. Marketing research is defined as the systematic process of collecting, analyzing and reporting information to enhance decision-making throughout the strategic sports marketing process. The marketing research process consists of seven, interrelated steps. These steps include: defining the problem; choosing the research design type; identifying data collection methods; designing data collection forms; designing the sample; collecting, analyzing and interpreting data and preparing the research report. The first step is defining the problem or opportunity in which the researcher seeks to identify the types of information that will be needed to assist in making strategic marketing decisions. The tangible outcome of problem definition is to develop a set of research objective, which will serve as a guide for the rest of the research process. The next step in the marketing research process is to determine the appropriate research design type(s). The research design is the plan for the study, which directs data collection and analysis. The three common research design types are exploratory, descriptive and causal. The choice of one (or more) of these design types for any study is based on the clarity of the problem. Exploratory designs are more appropriate for ill-defined problem, while causal designs are employed for well-defined research problems. After the research design type is chosen, the data collection method(s) is chosen. Once again, decisions regarding data collection are contingent upon the choice of research design. Data collection can be broadly categorized as two types: secondary and primary. Secondary data refers to data that has already been collected, either within or outside the sports organization, but still provides useful information to the researcher. Typically, sources of secondary data include: government reports and documents; trade and industry associations; standardized sports marketing information studies; and books, journals and periodicals. Primary data is information that is collected specifically for the research question at hand. Common types of primary data collection techniques include, but are not limited to: depth interviews, focus groups, surveys, and experiments. The fourth step in the research process is to design the data collection instrument. Regardless of whether you are collecting data by depth interviews, focus groups or surveys, data collection forms are necessary. The most widely used data collection technique in sports marketing research is the questionnaire. As such, it is important that sports marketing researchers understand how to properly construct a questionnaire. The steps for questionnaire design include: specifying information requirements, deciding method of administration (i.e. mail, phone, intercept), determining the content of questions, determining the form of response for questions, deciding on the exact wording of the questions, designing the order of questions, designing the physical characteristics of the questionnaire, pre-testing the questionnaire and modifying according to pretest results. Once the data collection forms are constructed, the next step in the research process is choosing a sampling strategy. Rarely, if ever, can we take a census where we communicate with or observe everyone of interest to us in a research study. As such, a subset of those individuals is chosen to represent the larger group of interest. Sampling strategy identifies how we will choose these individuals and how many people we will choose to participate in our study. Data analysis is the next step in the marketing research process. Before the data can be analyzed, it must be edited and coded. The edit process ensures that the data being used for analysis is of high quality. In other words, there are no problems such as large amounts of missing data or errors in data entry. Next, coding takes place. Coding refers to assigning numerical values to represent a specific response to a specific question. Once the data have been edited and coded, data analysis is conducted. The method of data analysis depends on a variety of factors such as how to address the research objectives. The last step in the marketing research process is to prepare a final report. Oral and written reports typically discuss the objectives of the study, how the study has conducted, the findings and recommendations for decision-makers. CHAPTER OUTLINE DEFINING MARKETING RESEARCH WHAT ARE THE USES OF MARKETING RESEARCH Depending on the students and prerequisites, this may be the students' first exposure to marketing research or it may be a review. This, of course, will dictate how this chapter is treated. Regardless, students generally have a low tolerance for any research discussion, so it is important to spend time discussing the importance of research to sports marketing managers and how it will aid in the design of marketing strategy. THE MARKETING Research PROCESS Defining The Problem Or Opportunity Problem definition requires the researcher to specify what information is needed to either assist in solving problems or identifying opportunities. Determining The Research Design Type The research design is the framework, or plan for a study, that guides the collection and analysis of data. Exploratory Descriptive Causal team C. Data Collection Techniques Secondary Data a. government reports and documents b. trade and industry associations c. standardized sports marketing information studies d. books, journals, and periodicals If possible, develop a list of secondary sources of interest to students or have each student come to class with at least three different secondary sources of interest to sports marketers. The students can then use (and add to) this list for the remainder of the semester (or their careers). It is useful to identify the strengths and weaknesses of secondary data once the list of sources has been finalized. Primary Data a. Depth Interviews b. Focus Groups c. Projective Techniques d. Surveys e. Experiments D. Design Of The Data Collection Instrument 1. Designing a Questionnaire a. Specify Information Requirements b. Decide Method of Administration c. Determine Content of Questions d. Determine Form of Response for Questions e. Decide Determine Exact Wording of Questions f. Design Order of Questions g. Design Physical Characteristics of Questionnaire h. Pretest Questionnaire Since questionnaire design is so critical to sports marketing research, I usually bring at least three different questionnaires to class and have the students critique each in class. Typically, we find problems in wording, the structure of the questionnaire and in other issues that we have just discussed. E. Sampling A sample is a subset of the population of interest from which data is gathered to estimate some characteristic of the population. Non-probability Sampling a. Convenience b. Judgment c. Quota 2. Probability Sampling . f. Data Analysis g. Final Report Preparations CHAPTER 4: UNDERSTANDING PARTICIPANTS AS CONSUMERS CHAPTER OBJECTIVES • Define participant consumption behavior • Explain the simplified model of participant consumption behavior • Describe the psychological factors that impact participant decision-making • Identify the various external factors influencing participant decision-making • Describe the participant decision-making process • Understand the different types of consumer decision-making • Discuss the situational factors that influence participant decision-making SUMMARY The focus of Chapter 4 is on understanding the sports participant as a consumer of sports. Sports marketers are not only concerned with consumers who watch sporting events, but also the millions of consumers who participate in a variety of sports. To successfully market to sports participants, sports marketers must understand everything they can about these consumers and their consumption behaviors. Participant consumption behavior is defined as the actions performed when searching for, participating in, and evaluating the sports activities that consumers feel will satisfy their needs. To simplify the complex nature of participant consumption behavior, a model was developed. The model of participant consumption behavior consisted of four major components: the participant decision-making process; internal or psychological factors; external or sociological factors; and situational variables. The participant decision-making process is the central focus of the model of participant consumption behavior. It explains how consumers make decisions about whether to participate in sports and in which sports to participate. The decision-making process is slightly different for each of us and is influenced by a host of factors. However, the basis of the decision-making process is a five-step procedure that consumers progress through as they make decisions. These five steps include problem recognition, information search, evaluation of alternatives, participation, and post-participation evaluation. The complexity of this process is highly dependent on how important the decision is to participants and how much experience consumers have had making similar decisions. The internal or psychological factors are those things that influence our decision-making process. These psychological factors include personality, motivation, perception, learning and attitudes. Personality is a set of consistent responses we make to our environment. Our personality can play a role in which sports we choose to participate or whether or not we participate in any sports. For example, an aggressive personality type may be most likely to participate in boxing or hockey. Motivation is the reason that we participate in sports. Some of the more common reasons that we participate in sports are for personal improvement, appreciation of sport, and/or social facilitation. The strength of our motives to participate in sports is referred to as sport involvement. Another important psychological factor that influences our participation decisions is perception. Perception influences our image of the various sports and their participants, as well as shapes our attitudes towards sports participation. Learning also impacts our participant behavior. We learn whether or not to participate in sports because we are rewarded or punished by our participation (behavioral theories), because we perceive sports as a way to achieve our goals (cognitive theories) and/or because we watch others participating (social theories). A final internal or psychological factor which directly influences our sport participation decisions is attitudes. Attitudes are defined as learned thoughts, feelings and behaviors towards some given object (in this case, sports participation). Our feelings (affective component of attitude) and beliefs (cognitive component) about sports participation certainly play a major role in determining our participation (behavioral component). The external/sociological factors also influence the participant decision-making process. These factors include: culture, social class, reference groups, and family. Culture is defined as the learned values, beliefs, language, traditions and symbols shared by people and passed down from generation to generation. The values held by people within a society are a most important determinant of culture. Some of the core American values that influence participation in sports include achievement and success, activity, individualism, youthfulness, and fitness and health. Social class is another important determinant of participant decision-making. Most people erroneously associate social class with income only. Occupation, education and affiliations also determine our social class. Another important sociological factor is the influence of reference groups. Reference groups are individuals who influence the information, attitudes and behaviors of other group members. For example, our friends may impact our decision to participate in a variety of recreational sports and activities. One reference group that has a great deal of influence over our attitudes and participation behaviors is our family. The final component of the model of participant behavior is situational factors. Every decision that we make to participate in a given activity has a situational component. In other words, we’re always making a decision in the context of some unique situation. Five major situational influences that impact participant decision-making include physical surroundings (physical environment), social surroundings (interaction with others), time (presence or absence of time), task definition (reason or occasion for participation) and antecedent states (physiological condition or mood prior to participation). CHAPTER OUTLINE GROWTH OF SPORT PARTICIPATION DEFINING PARTICIPANT CONSUMPTION Participant consumption behavior is defined as actions performed when searching for, participating in, and evaluating the sports activities that consumers feel will satisfy their needs. The definition of participant consumption behavior also incorporates the elements of the participant decision-making process. The decision-making process is the foundation of our model of participant consumption. It is a five-step process that consumers use when deciding in which sports or activities to participate. 3. Model of Participant Consumption Behavior Participant Decision-Making Process 1. Problem Recognition 2. Information Search 3. Evaluation of Alternatives 4. Participation 5. Post-Participation Evaluation B. Internal Factors Personality - Set of consistent responses an individual makes to the environment Motivation - An internal force that directs behavior toward the fulfillment of needs Ask the students to complete a sports involvement inventory and discuss how the results can be used to develop a strategic plan to increase participation. Also in this discussion, be sure to incorporate how sports involvement is related to motivation. Perception - Complex process of selecting, organizing and interpreting stimuli such as sports Learning - Relatively permanent changes in response tendencies due to the effects of experience Attitudes - Learned thoughts, feelings and behaviors towards some given object Discuss the three components of attitude (cognitive, affective and behavioral) and how they influence participation in various sports. I also usually discuss how attitudes are measured and used in the development of marketing strategy C. External Factors 1. Culture - Learned values, beliefs, language, traditions and symbols shared by a people and passed down from generation to generation Two important aspects of culture add to any class discussion regarding sports participation. These include the socialization process and the influence of values. Ask students to recall their own sports socialization process and, in particular, discuss the role of media and family on their sports participation. With respect to values, students can develop a list of values and then comment on how these values are reflected in sport and used by sports marketers. 2. Social Class - Homogeneous division of people in a society sharing similar values, lifestyles and behaviors that can be hierarchically categorized 3. Reference Groups - Individuals who influence the information, attitudes and behaviors of other group members 4. Family D. Situational Factors 1. Physical Surroundings - The location, weather, and physical aspects of the participation environment 2. Social Surroundings - The effects of other people on a participant during participation in a sport 3. Time 4. Task Definition - The reasons that occasion the need for consumers to participate in a sport 5. Antecedent States - Temporary physiological and mood states that a consumer brings to the participant situation 4. TYPES OF CONSUMER DECISIONS Habitual Problem Solving Limited Problem Solving Extensive Problem Solving As a final in-class exercise to accompany this chapter, I usually have students trace the entire model of participant consumption behavior for the last sport in which they participated (either organized or unorganized). To do so, the students have to consider each part of the model and briefly describe each element and how it influenced their decision to participate. For example, students would consider their individual motives for participation, where they obtained information (i.e. information search) and how culture influenced their decision. CHAPTER 5: UNDERSTANDING SPECTATORS AS CONSUMERS CHAPTER OBJECTIVES • Understand the similarities and differences between spectator and participant markets • Describe the eight basic fan motivation factors • Explain how game attractiveness, economic factors and competitive factors relate to game attendance • Describe the demographic profile of spectators and explain the changing role of women as spectators • Understand the relationship between stadium factors and game attendance • Discuss the components of the sportscape model • Describe the multiple values of sport to the community • Explain sport involvement from a spectator’s perspective • Discuss the model of fan identification SUMMARY In this chapter, we explore the spectator as a consumer of sport. Although there are many people who both participate in and observe sports, research suggests that there are two distinct segments of consumers. For instance, participants tend to be male, better educated and younger than spectators. There are a variety of factors that influence our decision to attend sporting events. These factors include: fan motivation, game attractiveness, economic factors, competitive factors, demographic factors, stadium factors, value of sport to the community, sports involvement, and fan identification. Fan motivation factors are those underlying reasons or needs that are being met by attending a sporting event. Researchers believe that some of the primary reasons that fans attend sporting events are: enhance self-esteem, diversion from everyday life, entertainment value, eustress (feelings of excitement), economic value (gambling on events), aesthetic value, need for affiliation and to be with family members. Another factor that influences our decision to attend sporting events is game attractiveness. Game attractiveness refers to the perceived value and importance of the individual game based on what teams or athletes are playing (e.g., is it the cross-town rival or is Ken Griffey Jr. in town?), the significance of the event to the league standings, whether the event is post-season versus regular season competition, or whether the event is perceived to be of championship caliber (the four majors in golf, the NCAA Final Four, etc.). In general, the greater the perceived attractiveness of the game, the more likely we will want to attend. Economic factors also play a role in our decision to attend sporting events. As we discussed in Chapter 2, the economic factors that may impact game attendance can be at the microeconomic level (e.g., personal income) or macroeconomic level (e.g., state of the nation’s economy). While these are uncontrollable factors, the sports organization can attempt to control the rising cost of ticket prices to make it easier for fans to attend sporting events. Competition is another important factor that influences our decision to attend sporting events or observe them through another medium. Today, sports marketers must define the competition in broad terms as other entertainment choices such as movies, plays, and theater are competing with sporting events. Interestingly sports organizations sometimes compete with themselves for fans. For example, one study found that televising home basketball games had a negative impact on game attendance. Demographic factors such as age, ethnic background, and income are also related to spectator behavior. There is no such thing as a profile of the typical spectator. However, spectators are more likely to be male, younger, more educated, and have higher incomes than that of the general population. Perhaps the most important factor that influences attendance is the consumer’s perception of the stadium. More specifically, stadium atmosphere appears to be a critical issue in attracting fans. The stadium atmosphere or environment has been referred to as the ‘sportscape.’ Sportscape is the physical surroundings of the stadium that impact spectators desire to stay at the stadium and ultimately return to the stadium. The multiple dimensions of sportscape include: stadium access, facility aesthetics, scoreboard quality, seating comfort, and layout accessibility. Another factor influencing game attendance and the likelihood of attending sporting events in the future is the perceived value of sport to the community. A recent study found that the more value attributed to sport, the more likely people were to attend. The value dimensions of sport to the community include: community solidarity (bringing the community together), public behavior; pastime ecstasy (entertainment), pursuit of excellence, social equity, health awareness, individual quality (builds character), and business opportunities. As discussed in the previous chapter, sport involvement referred to the consumer’s perceived interest in and importance of participating in sport. Sport involvement has a related definition for those observing sporting events. High involvement spectators are more likely to attend sporting events, read sports magazines and plan their entire day around attending a sporting event. A final factor that is related to spectator behavior is fan identification. Fan identification is the personal commitment and emotional involvement customers have with the sport organization. The characteristics of the team, the characteristics of the organization, the affiliation characteristics (sense of community) and the activity characteristics (exposures to the team) all interact to influence the level of fan identification. The higher the level of fan identification, the more likely they are to attend events. CHAPTER OUTLINE 1. EXAMINING THE RELATIONSHIP BETWEEN SPECTATORS AND PARTICIPANTS A. Spectator and participant markets are different from each other with respect to socioeconomic characteristics and media habits. B. Consumers categorized as ‘heavy’ participants were more likely to be male, better educated, work in white collar jobs, be minorities, and be younger than the ‘heavy’ spectator group. C. Consumers categorized as ‘heavy’ participants also differ from ‘heavy’ spectators with respect to media usage. ‘Heavy’ participants are more likely to use business and news-reporting media. In addition, the ‘heavy’ participants are more likely to watch intellectually appealing programming. D. Compared with male participants, male spectators exhibit an interest in a wider variety of media, especially television. E. ‘Heavy’ participants and ‘heavy’ spectators are different with respect to how they can be reached by advertising and how they perceive advertising. The distinction between spectators and participants may be an obvious one, but all too often students may consider these two different markets as, simply, sports fans. To accentuate the differences, have the students try to name sports/activities where these two different target markets overlap (e.g., football, NASCAR, rugby). In addition, those sports that possess overlapping spectator and participant markets should also be considered (e.g., golf, tennis). 2. FACTORS INFLUENCING ATTENDANCE A. Fan Motivation Factors Self-Esteem Enhancement Discussion of BIRGing and CORFing behaviors should be introduced here Diversion from Everyday Life Entertainment Value Ask students how a variety of sports are attempting to enhance the entertainment value of their events through a) altering the rules of the sport or the way the sport is played and b) through marketing efforts that do not change the game 1. Eustress 2. Economic Value Aesthetic Value Need for Affiliation Family Ties B. Game Attractiveness C. Economic Factors D. Competitive Factors E. Demographic Factors At this point, it is extremely important to discuss the impact of women as spectators of sport. In particular describe trends in 'women as spectators of other women's sports' and 'women as spectators of men's sports' F. Stadium Factors Sportscape - Physical surroundings of the stadium that impact spectators' desire to stay at the stadium. I find the sportscape model to be extremely interesting to students, so at this point in the lecture we typically discuss each of the sportscape factors and how they influence spectator behavior. After the model has been fully considered, I ask the students to consider the sportscape factors for a local stadium. During this discussion, we try to identify areas that could be improved in the sportscape and examine the cost/benefits of suggested improvements. G. Value of Sport to the Community Community solidarity - Sport enhances the image of the community, enhances community harmony, generates a sense of belonging, and helps make people feel proud Public behavior - Sport encourages sportsmanship, reinforces positive citizenship, encourages obedience to authority, and nurtures positive morality 3.  Pastime Ecstasy - Sport provides entertainment and brings excitement Excellence Pursuit - Sport encourages achievement and success, encourages hard work and encourages risk-taking 5. Social Equity - Sport increases racial equality, promotes gender equity and increases class equality 6. Health Awareness - Sport eliminates drug abuse, encourages exercise and urges an active lifestyle 7. Individual Quality - Sport promotes character building and encourages competitive trait 8.  Business Opportunity - Sport increases community commercial activities, attracts tourists, and helps community economic development H. Sport Involvement - The perceived interest in and personal importance of sports to an individual attending sporting events or consuming sport through some other medium. Make sure to differentiate between sports involvement from a participant's perspective versus sports involvement form a spectator's perspective I. FAN IDENTIFICATION- The personal commitment and emotional involvement customers have with a sport organization. Make sure to differentiate between fan identification and sports involvement. Low Identification Medium Identification High Identification CHAPTER 6: SEGMENTATION, TARGETING, & POSITIONING CHAPTER OBJECTIVES • Discuss the importance of market selection decisions • Compare the various bases for marketing segmentation • Understand target marketing and the requirements of successful target marketing • Describe positioning and its importance in the market selection decisions • Construct a perceptual map to depict any sport entity’s position in the marketplace SUMMARY Chapter 6 focuses on the critical market selection decisions, also referred to as segmentation, targeting and positioning. Segmentation, the first market selection decision, is identifying consumers with common needs. Typically, the bases for segmentation of consumer markets include: demographics, socioeconomics, psychographics, behavioral and benefits. Marketers using demographic segmentation choose groups of consumers based on common ages, gender, ethnic background and stage of the family life cycle. Geographic segmentation is grouping people who live in similar areas such as cities, states regions of the country, or even countries (e.g., US versus international markets). Socioeconomic segmentation is based on grouping consumers of similar income, education levels and occupation. Psychographic segments are especially useful to sports marketers as they are based on consumers’ lifestyles or activities, interests and opinions. Behavioral segments are groups of consumers that are similar on the basis of consumer actions, such as how often they purchase sports products or how loyal they are when purchasing a sports product. Finally, benefits segmentation uses groups of consumers attempting to satisfy similar needs by consuming the sports product. Sports marketers may choose to segment their markets using one of the previously mentioned segmentation variables (e.g., demographics) or combine several of the bases for segmentation (e.g., geodemographic). Once market segments have been chosen, the next market selection decision is picking a target market. Target marketing is choosing the segment or segments that will allow the organization to most effectively and efficiently achieve its marketing goals. When evaluating potential target markets, care should be taken to ensure that the markets are the right size (neither too large nor too small), reachable (accessible), measurable (i.e. size, purchasing power and characteristics of the segments can be measured), and demonstrate behavioral variation (i.e., consumers share common characteristics within the target market). The final market selection decision is positioning. After the target market has been chosen, sports marketers want to position their products or fix them in the minds of the target markets. Positioning is based on the perception or image that sports marketers want to develop or maintain for the sports product. For example, a minor league baseball team may wish to position itself as an inexpensive, family entertainment alternative. In order to understand how a sports product is positioned relative to its competition, perceptual maps are developed through marketing research techniques. By looking at perceptual maps, sports marketers can identify whether or not they have achieved their desired image or whether they need to reposition their sports product in the minds of the target market. CHAPTER OUTLINE 1. Segmentation Segmentation is identifying groups of consumers based on their common needs. Bases for Segmentation Demographics Age Gender Ethnic Background Family Life Cycle Socioeconomic Psychographic Geographic Behavioral Benefits Students should be asked be develop examples for each type of segmentation in the sports industry. For example, geographic segmentation is used in the marketing of sports teams and merchandising (with the exception of 'America's Teams') or season ticket holders constitute behavioral segmentation. B. Developing Multiple Market Segments Geodemographic Segmentation 2. Target Markets Target markets are choosing the segment(s) that will allow an organization to most efficiently and effectively attain its marketing goals. Requirements of Successful Target Markets Reachable Sizeable Measurable Behavioral Variation How many target markets? 2. Positioning Positioning is fixing your sports entity in the minds of consumers in the target market. Before discussing positioning, three important points should be stressed. A. Perceptual Mapping/Six Dimensions or Attributes of Sports 1. Strength, Speed and Endurance vs. Methodical and Precise Movements 2. Athletes only as Participants vs. Athletes plus Recreational Participants 3. Skill Emphasis on Impact with Object vs. Skill Emphasis on Body Movement 4. Skill Development and Practice Primarily Alone vs. Primarily With Others 5. A Younger Participant in the Sport vs. Participant Ages From Young to Older 6. Less Masculine vs. More Masculine B. Repositioning Typically, after the market selection decisions of segmentation, target marketing and positioning are discussed, we perform an in-class exercise to drive these concepts home. Take any sports product (team, athlete, merchandise) and have the students develop the market selection decision for this product. Then discuss whether the choice of segments, target markets and positioning was appropriate and met the criteria discussed in the chapter. CHAPTER 7: SPORTS PRODUCT CONCEPTS CHAPTER OBJECTIVES Define sports products and differentiate between goods and services Explain how sports products and services are categorized Define branding and discuss the guidelines for choosing an effective brand name Discuss the branding process in detail Examine the advantages and disadvantages of licensing from the perspective of the licensee and licensor Identify the dimensions of service quality and goods quality Define product design and explain how product design is related to product quality SUMMARY Sport products are defined as goods, services or any combination of the two that are designed to provide benefits to a sports spectator, participant or sponsor. Within the field of sports marketing, products are sometimes thought of as bundles of benefits desired by consumers. As discussed in Chapter 1, sports products might include sporting events and their participants, sporting goods, and/or sports information. The definition of sports products also makes an important distinction between goods and services. Goods are defined as tangible, physical products that offer benefits to consumers. Conversely, services are intangible, non-physical products. Most sports products possess the characteristics of both goods and services. For example, a sporting event sells goods (e.g. concessions) and services (e.g. the competition itself). The classification of a sports product as either a good or service is dependent on four product dimensions called tangibility, standardization/consistency, perishability, and separability. Tangibility refers to the ability to see, feel, and touch the product. In other words, tangibility is the physical dimension of the sports product. Standardization refers to the consistency of the product or the ability of the producer to manufacture a product with little variation over time. One of the unique and complex issues for sports marketers is dealing with the inconsistency of the sports product (i.e., the inability to control the performance of the team or athlete). Perishability is the ability to store or inventory product. Pure services are totally perishable (i.e., you cannot sell a seat after the game has been played), while goods are not perishable and can be stored or warehoused. Separability, the final product dimension, refers to the ability to separate the good from the person providing the service. In the case of an athletic event, there is little separation between the provider and consumer. That is, the event is being produced and consumed simultaneously. Along with classifying sports products by the four product dimensions, sports products are also categorized based on groupings within the sports organization. Product lines are groups of products that are closely related because they satisfy a class of needs, are used together, are sold to the same customer groups, are distributed through the same types of outlets or fall within a given price range. The total assortment of product lines is called the product mix. This represents all of the firm's products. Strategic decisions within the sports organization consider both the product lines and the entire product mix. For instance, an organization may wish to add product lines, eliminate product lines or develop new product lines that are unrelated to existing lines. Products can also be described on the basis of three interrelated dimensions or characteristics: branding, quality, and design. Branding refers to the product’s name, design, symbol or any combination that is used by an organization to differentiate its products from the competition. Brand names, or elements of the brand that can be spoken, are important considerations for sports products. When choosing a brand name, sports marketers should consider the following: the name should be positive and generate positive feelings; the name should be translatable into a exciting logo; the name should imply the benefits the sports product delivers; the name should be consistent with the image of the sports product; and the name should be legally and ethically permissible. The broad purpose of branding is to differentiate your product from the competition. Ultimately, the consumer will hopefully establish a pattern of repeat purchases for your brand (i.e. be loyal to your sports product). Before this can happen, sports marketers must guide consumers through a series of steps known as the branding process. The branding process begins by building brand awareness in which consumers recognize and remember the brand name. Next, the brand image, or the consumers’ set of beliefs about a brand, must be established. After the proper brand image is developed, the objective of the branding process is to develop brand equity. Brand equity is the value that the brand contributes to a product in the marketplace. Finally, once the brand exhibits high levels of equity, consumers are prone to become brand loyal or purchase only your brand. Certainly, sports marketers are interested in establishing high levels of awareness, enhancing brand image, building equity and developing loyal fans or customers. One of the important sports product strategies that is contingent upon building a strong brand is licensing. Licensing is defined as a contractual agreement whereby a company may use another company’s trademark in exchange for a royalty or fee. The licensing of sport products is experiencing tremendous growth around the globe. Advantages to the licensee (the organization purchasing the license or use of name/trademark) include positive association with the sports entity, enhancing brand awareness, building brand equity, improving distribution and retail relationships, and having the ability to charge higher prices. Disadvantages to the licensee are the possibility of the sports entity experiencing problems (e.g., athlete arrested or team performing poorly or moving. On the other hand, the licensor (the sports entity granting the permission) benefits by expanding into new markets, creating heightened awareness. However, the licensors may not have tight controls on the quality of the products being licensed under their name. Quality is another of the important brand characteristics. The two different types of quality that impact brand image, brand equity and ultimately loyalty are the quality of services and the quality of goods. The quality of services or service quality is generally described on the basis of its dimensions. Parasuraman, Berry and Zeithaml describe service quality as having five distinct dimensions: reliability; assurance, empathy, responsiveness and tangibles. Reliability refers to the ability to perform promised service dependably and accurately. Assurance is the knowledge and courtesy of employees and their ability to convey trust and confidence. Empathy is defined as the caring, individualized attention the firm provides its customers. Responsiveness refers to the willingness to help customers and provide prompt service. Tangibles are the physical facilities, equipment, and the appearance of the service personnel. Using this framework, sports researchers have designed an instrument called TEAMQUAL to assess the service quality within sporting events. The quality of goods is based on whether the good conforms to specifications determined during the manufacturing process and degree to which the good meets or exceeds the consumer’s needs. Garvin has conceptualized the quality of goods from the consumer’s perspective. He found eight separate dimensions of goods quality including performance, features, conformity to specifications, reliability, durability, serviceability and aesthetic design. Product design is the final characteristic of the “total product.” Product design is defined as the aesthetics, style and function of the product. It is important to sports marketers in that it ultimately impacts consumers’ perceptions of product quality. For a sporting event, the product design might be thought of as the composition of the team. For sporting goods, product design has largely focused on the development of technologically superior products. In fact, the technological environment is thought to directly influence product design. Product design, in turn, enjoys a reciprocal relationship with product quality. In other words, product design impacts perceptions of product quality may influence product design. CHAPTER OUTLINE 1. Defining Sports Products A sports product is a good, a service or any combination of the two that is designed to provide benefits to a sports spectator, participant or sponsor. 2. Goods and services as sports products Goods are defined as tangible, physical products that offer benefits to consumers. By contrast, services are usually described as intangible, non-physical products. In addition to the degree of tangibility, goods and services are differentiated on the basis of perishability, separability, and standardization. A. Tangibility B. Standardization/Consistency C. Perishability Separability After the goods/services distinction is made, I usually move toward a class exercise where students are asked to place all of the sports products associated with attending a college (or professional) basketball game on the goods/services continuum. This usually moves us to the conclusion that the sports experience is driven towards the consumption of services rather than goods. Because of this, we explore the nature of services in greater detail. Students are asked to design strategies that consider the intangible, inconsistent, perishable and inseparable nature of most sports products. 3. CLASSIFYING SPORTS PRODUCTS A. Product line - a group of products that are closely related because they satisfy a class of needs, are used together, are sold to the same customer groups, are distributed through the same type of outlets or fall within a given price range. B. Product Mix - The total assortment of product lines the sports organization sell 4. PRODUCT CHARACTERISTICS A. Branding - A name, design, symbol or any combination that a sports organization uses to help differentiate its products from the competition Brand Name Brand Mark or Logotype In sports marketing, brand name and logo are sometimes synonymous with team name and logo, so the characteristics of the successful brand names are usually discussed at this point. An in-class exercise that can accompany this is to have students provide real world examples of team names that illustrate the fundamentals of good branding. (My favorites are the Louisiana Ice Gators and the Macon Whoopee). 3. The Branding Process a. Brand Awareness b. Brand Image c. Brand Equity d. Brand Loyalty 4. Licensing - A contractual agreement whereby a company may use another company’s trademark in exchange for a royalty or fee Since licensing is extremely important to sports marketers (and usually not considered in the principles of marketing course), we usually spend a good portion of time discussing the growth of licensed merchandise, the advantages and disadvantages of licensing to both parties, and the prevalence of counterfeit merchandise. B. Product Quality 1. Quality of Services – Servqual/Teamqual Dimensions a. Reliability b. Assurance c. Empathy d. Responsiveness e. Tangibles 2. Quality of Goods – Dimensions of Goods a. Performance b. Features c. Conformance to Specifications d. Reliability e. Durability f. Serviceability g. Aesthetic Design C. Product Design - Aesthetics, style and function of the product. Although you may have touched on this earlier in the course, it is easy to generate a rather lively discussion about the design of sports products and how they influence sport or the marketing of sport. Be sure to introduce the relationship between technology, quality and product design. CHAPTER 8: MANAGING SPORTS PRODUCTS CHAPTER OBJECTIVES • Describe the characteristics of new products from an organizational and consumer perspective • Explain the various stages of the new product development process • Discuss the phases of the product life cycle and explain how the product life cycle influences marketing strategy • Determine the factors that will lead to new product success • Discuss the diffusion of innovations and the various types of adopters SUMMARY New sports products are critical to the success of any organization. Newness, however, can be thought of in any number of ways. The organizational perspective on newness depends on whether the firm has marketed the product in the past. From the organizational perspective, new products are categorized as follows: new-to-the-world products, new product category entries, product line extensions, product improvements and repositionings. Conversely, newness from the consumer’s perspective is based on the consumer’s perception of whether the product represents an innovation. From the perspective of consumers, new products are classified as either discontinuous innovations, dynamically continuous innovations, or continuous innovations. Discontinuous innovations represent the most pioneering new products, while continuous innovations are simply improvements or imitation products. Regardless of how new products are classified, organizations are constantly searching for the next innovation that will help the firm achieve its financial objectives. Rather than leaving this to chance, many organizations use a systematic approach called the new product development process. The new product development process consists of the following phases: idea generation; idea screening, analysis of the concept, developing the sports product, test marketing, and commercialization. Idea generation considers any and all ideas for new products from sources such as employees, competitors, and consumers. During the idea screening phase, these new products ideas are screened and the poorer ones are eliminated. To perform this task, organizations sometime use a new product screening checklist. In the third phase, analysis of the sports product concept, marketing research is used to assess consumer recreation to the proposed product. More specifically, concept tests are used to gauge the product’s strengths and weaknesses, as well as the consumer’s intent to use the new product. Next, a prototype of the new product is designed so that consumers can get an even better idea about the product. Additionally, preliminary decisions regarding marketing strategy are established. In the sixth stage, the new product is test marketed. Depending on the product and the market conditions, sports marketers may use standardized, controlled or simulated test markets. The final stage of the new product development process is commercialization, in which the new product is formally introduced in the marketplace. Whether the product succeeds is a function of a number of factors such as the product considerations (e.g. trialability, relative advantage), other marketing mix variables (e.g. pricing) and marketing environment considerations (e.g. competition). As a new product reaches commercialization, it moves through a series of four stages known as the product life cycle or PLC. The PLC is an important marketing concept in that the stage of the life cycle dictates marketing strategy. The four stages of the PLC include introduction, growth, maturity, and decline. At introduction, the marketing goal is to generate awareness of the new sports product. The broad goal of the growth phase is to build consumer preference for the sports product and begin to expand the product line. During maturity, the number of promotions is increased and marketers seek to maintain any competitive advantage they have obtained during growth. Finally, the product goes through decline where decisions must be made regarding whether to delete the product or extend the life cycle. While each product has a life cycle, the length of that life and speed at which a product progresses through the four stages is unique for each product. Some sports products grow and decline at a rapid pace. These are known as fads. Other products that seem to last in maturity forever are called classics. The most common life cycle for sports products is known as seasonal. Other life cycle considerations are the level of product and the type of product. For example, sports marketers might analyze the life cycle of leagues, teams, and individual athletes, as well as other types of sports products. The rate of diffusion is the speed at which new products spread throughout the marketplace. The rate of diffusion or speed of acceptance is based on three broad factors. These include the new product characteristics (e.g., trialability, observability), perceived newness (e.g., discontinuous innovation), and the nature of the communications network. It is critical that sports marketers monitor the rate of diffusion and understand the characteristics of consumers that try new products as they spread throughout the marketplace. Innovators are the first group of consumers who try a new product. They are generally younger, have higher incomes and have a strong tolerance for risk. The next group of consumers to try a sports product is the early adopters. This is a larger group than the innovators and as such they are key consumers to target. After the product has passed through the initial stages of the product life cycle, the early majority adopt the product. This group is above average in income, but more deliberate in trying new things. The late majority adopts the product during the late stages of maturity and finally the laggards may try new products. Strategically, sports marketers must adopt a different marketing mix when marketing to each of these new product adopter groups. CHAPTER OUTLINE 1. NEW SPORTS PRODUCTS A. Types of New Products 1. Newness from the Organization's Perspective a. New-to-the-World Products b. New Product Category Entries c. Product Line Extensions d. Product Improvements e. Repositionings 2. Newness from the Consumer's Perspective. a. Discontinuous Innovation b. Dynamically Continuous Innovation c. Continuous Innovation Introduce several new sports products to the class and have the students classify each product on the basis of its newness a) from an organization's perspective and b) from the consumer's perspective. 2. THE NEW PRODUCT DEVELOPMENT PROCESS A. Idea Generation B. Idea Screening 1. New Product Screening Checklist C. Analysis of the Sports Product Concept or Potential 1. Concept Testing D. Developing the Sports Product E. Test Marketing F. Commercialization 3. NEW PRODUCTS SUCCESS FACTORS A. Product Considerations 1. Trialability 2. Observability 3. Perceived 4. Relative Advantage 5. Compatibility OTHER MARKETING MIX CONSIDERATIONS 1. Pricing 2. Promotion 3. Distribution C. MARKETING ENVIRONMENT CONSIDERATIONS 1. Competition Consumer Tastes Demographics Using the new products that were discussed earlier, have the students comment on the potential success of each product based on the product consideration, marketing mix considerations and marketing environment considerations. 4. PRODUCT LIFE CYCLE A. Phases of the PLC 1. Introduction 2. Growth 3. Maturity 4. Decline B. Extending the Product Life Cycle C. Other Life Cycle Considerations 1. Length and Shape of the PLC fad seasonal classic 2. The Level of Product 3. Type of Product Most of the students have been at least exposed to the PLC prior to this class, so much of the time is spent on developing the strategic implications at each stage of the life cycle and examining other life cycle considerations for sports marketers (e.g. player life cycle). 5. DIFFUSION OF INNOVATIONS The rate at which new sports products spread throughout the marketplace is referred to as the diffusion of innovation. A. New Product Characteristics which Influence the Diffusion of Innovation 1. Trialability 2. Observability 3. Perceived Risk 4. Relative advantage 5. Compatability B. Types of Adopters 1. Innovators Early adopters Early majority 4. Late majority Laggards CHAPTER 9: PROMOTION CONCEPTS CHAPTER OBJECTIVES • Identify the promotion mix tools • Describe the elements of the communication process • Understand the promotion planning model • Compare the advantages and disadvantages of the various promotional mix tools • Understand the importance of integrated marketing communication to sports marketers SUMMARY Promotion planning is one of the most important elements of the sports marketing mix. Promotion involves communicating to all types of sports consumers via one or more of the promotion mix elements. The promotion mix elements include advertising, personal selling, sales promotions, public relations, and sponsorship. Within each of these promotion mix elements are more specialized tools to communicate with consumers of sport. For example, advertising may be developed for print media (e.g. newspapers, magazines) or broadcast (e.g., radio and television). However, regardless of the promotion mix element that is used by sports marketers, the fundamental process at work is communication. Communication is an interactive process that is established between the sender and the receiver of the marketing message via some medium. The process of communication begins with the source, or sender of the message. In sports marketing, the source of the message might be an athlete endorser, team members, a sports organization or even a coach. Sometimes the source of a marketing message can be friends or family. The effectiveness of the source in influencing consumers is based largely on the concept of source credibility. Credibility is typically defined as the expertise and trustworthiness of the source. Other characteristics of the source, such as gender, attractiveness, familiarity, and likeability may also play important roles in determining the source effectiveness. After the source of the message is chosen, message encoding occurs. Encoding is defined as translating the sender’s thoughts or ideas into a message. The most effective encoding uses multiple ways of getting the message across and always keeps the receiver of the message in mind. Once encoding takes place, the message is more completely developed. Although there are any number of ways of constructing a message, sports marketers commonly choose between emotion (e.g., humor, sex or fear) and rational (information based) appeals. The message, once constructed, must be transmitted to the target audience through any number of media. The traditional media include: television, radio, newspapers, magazines and outdoor (billboards, stadium signage). Nontraditional media, such as the Internet, are also emerging as powerful tools for sports marketers. When making decisions about what medium to use, marketers must consider the promotional objectives, cost, ability to reach the targeted audience, and the nature of the message being communicated. The medium relays the message to the target audience where decoding occurs. Decoding is the interpretation of the message sent by the source through the medium. It is important to understand the characteristics of the target audience to ensure that successful translation of the message will occur. The presence of noise makes perfect decoding nearly impossible. The final elements in the communications model are the receiver and feedback. The message is directed to the receiver or target audience. Again, depending on the purpose of the communication, the target audience may be spectators, participants or corporate sponsors. Regardless of the nature of the audience, the sports marketer must understand as much as possible about the characteristics of the group to ensure an effective message is produced. Sports marketers determine the effectiveness of the message through feedback from the target audience. Understanding the communications process provides us with the basis for developing a sound promotional plan. The promotional planning process includes: target market considerations, setting promotional objectives, determining the promotional budget, and developing the promotional mix. The first step in the promotional planning process is to consider the target market identified in the previous planning phase of the strategic sports marketing process. The two broad target market considerations are the final consumers of the sports product (either spectator or participants) or intermediaries, such as sponsors or distributors of sports products. When communicating to final consumers, a pull strategy is used. Conversely, push strategies are used to promote through intermediaries. After target markets are considered, promotional objectives are defined. Broadly, objectives may include: informing, persuading or reminding the target market. One model that provides a basis for establishing promotional objectives is known as the hierarchy of effects which states that consumers must pass through a series of stages before ultimately taking action (usually defined as making a purchase decision). The steps of the hierarchy of effects include: unawareness, awareness, knowledge, liking, preference, conviction and action. Once objectives have been formulated budgets are considered. In the ideal scenario, budgets are linked with the objectives that have been set in the previous phase of the promotion planning process. However, other common approaches to promotional budgeting include arbitrary allocation, competitive parity, and percentage of sales. Most sports organizations use some combination of these methods to arrive at budgets. The final phase in the promotion planning process is to arrive at the optimal promotion mix. The promotion mix includes advertising, personal selling, public relations, sales promotion and sponsorship. Decisions about the most effective promotion mix must carefully consider the current marketing environment, the sports product being promoted, and the characteristics of the target audience. Ideally, the sports marketer designs an integrated promotion mix that delivers a consistent message about the organization and its products. CHAPTER OUTLINE 1. PROMOTION MIX ELEMENTS A. Advertising -- A form of one-way mass communication about a product, service or idea paid for by an identified sponsor. B. Personal selling -- An interactive form of interpersonal communication designed to build customer relationships and produce sales or sports products, services or ideas. C. Sales promotion -- Short term incentives usually designed to stimulate immediate demand for sports products or services. D. Public or Community Relations -- Evaluation of public attitudes, identification of areas within the organization that the sports publics may be interested in and building of a good “image” in the community. E. Sponsorship -- Investing in a sports entity (athlete, league, team, event, etc.) to support overall organizational objectives, marketing goals, and/or more specific promotional objectives. The first thing to stress is that promotion is NOT just advertising, but involves all the elements in the promotion mix. Even if the students have been exposed to these elements, it is a good idea to briefly review each in the context of sports marketing. In addition, I typically ask students to develop examples of how the promotion mix elements are integrated within a single campaign (e.g., Westpac as the Official Bank of the 2000 Summer Olympics has sponsorship, community relations, sales promotion and advertising components). 2. COMMUNICATIONS PROCESS Communications process is defined as the process of establishing a commonness of thought between the sender and the receiver. The interactive nature of the communications process allows messages to be transmitted from sports marketer (source) to consumer (receiver) and from consumer (source) to sports marketer (receiver). Traditionally, sports marketers’ primary means of communication to consumers has been through the various promotion mix elements (e.g., ads, sponsorships, sales promotions, salespeople). Source or Sender Encoding Message Medium Decoding Receiver Noise Feedback 3. AMBUSH MARKETING AS PART OF THE COMMUNICATIONS PROCESS 4. Promotion Planning A. Target Market Considerations 1. Push Strategy - Emphasis on having channel intermediaries "push" the sports product through the channel of distribution to the final consumer 2. Pull Strategy - The broad objective of this type of promotional strategy is to stimulate demand for the sports product B. Promotional Objectives 1. Inform, Persuade, Remind 2. Hierarchy of Effects a. Unawareness b. Awareness c. Knowledge d. Liking e. Preference f. Conviction g. Action C.. Establishing Promotional Budgets 1. Arbitrary Allocation 2. Competitive Parity 3. Percentage of Sales 4. Objective and Task 5. CHOOSING AN INTEGRATED PROMOTIONAL MIX The concept under which a sports organization carefully integrates and coordinates its many promotional mix elements to deliver a unified message about the organization and its products is known as integrated marketing communications. CHAPTER 10: PROMOTION MIX ELEMENTS CHAPTER OBJECTIVES • Describe each element of the promotion mix, in detail • Understand the basic process for designing a successful advertising campaign • Discuss emerging forms of promotion • Outline the strategic selling process and explain why sports marketing should use this process • Identify the various forms of promotion • Specify the importance of public/community relations to sports marketers SUMMARY Chapter 10 focuses on gaining a better understanding of the various promotion mix elements. Advertising is one of the most visible and critical promotion mix elements. Although most of us associate advertising with developing creative slogans and jingles, there is a systematic process for designing effective ads. Developing an ad campaign consists of a series of five interrelated steps, which include: formulating ad objectives, designing an ad budget, making creative decisions, choosing a media strategy and evaluating the ad. Ad objectives and budgeting techniques are similar to those discussed in Chapter 10 for the broader promotion planning process. Ad objectives are sometimes categorized as either direct or indirect. Direct ad objectives, such as advertising by sports organizations to end user and sales promotion advertising, are designed to stimulate action among consumers of sport. Alternatively, the goal of indirect objectives is to make consumers aware, enhance the image of the sports or provide information to consumers. After objectives have been determined, budgets for the ad campaign are considered. Advertisers commonly use budget techniques such as competitive parity, objective and task, arbitrary allocation, and percentage of sales. Once the objectives and budget have been established, the creative process is considered. The creative process identifies the ideas and the concept of the advertisement. In order to develop the concept for the ad, benefits of the sports product must be identified, ad appeals (e.g., health, emotional, fear, sex, pleasure) are designed, and ad execution decisions (e.g. comparative ads, slice of life, scientific) are made. After creative decisions are crafted, the next phase of the ad campaign is to design media strategy. Media strategy includes decisions about which medium (e.g., radio, television, Internet) will be most effective and how to best schedule the chosen media. Another communications tool that is part of the promotion mix is personal selling. Personal selling is unique in that person-to-person communication is required rather than mass communication. In other words, a salesperson must deliver the message face-to-face to the intended target audience rather than through some non-personal medium (e.g. a magazine). Although there are many advantages to personal selling, perhaps none is greater than the ability to use personal selling to develop long-term relationships with customers. In today’s competitive sports marketing environment, a number of strategies have been developed to maximize personal selling effectiveness. One process, designed by Miller and Heiman, is called the strategic selling process and consists of six elements. The elements which must be considered for successful selling include: buying influences, red flags, response modes, win-results, the sales funnel and the ideal customer profile. Sales promotions are another element in the promotion mix which are designed primarily to stimulate consumer demand for products. One of the most widely used forms of sales promotion in sports marketing includes premiums or items that are given away with the core product being purchased. In addition, contests and sweepstakes, free samples, point-of-purchase displays, and coupons are forms of sales promotion that often are integrated into the broader promotion mix. A final promotion mix element considered in Chapter 10 is public or community relations. Public relations is the element of the promotion mix that identifies, establishes and maintains mutually beneficial relationships between the sports organization and the various publics which its success or failure depends. These publics include the community, sanctioning bodies, intermediary publics and competition. Other publics include volunteers, employees, suppliers, participants and spectators. The tools with which messages are communicated to the various publics include generating publicity, participating in community events, producing written materials such as annual reports and press releases, and lobbying. CHAPTER OUTLINE 1. ADVERTISING PROCESS Ad Objectives Indirect Objectives Direct Objectives B. Advertising Budgeting C. Creative Decisions The creative process has been defined as generating the ideas and the concept of the advertisement. 1. Identifying Benefits 2. Advertising Appeals a. Health b. Emotion c. Fear d. Sex e. Pleasure or Fun 3. Advertising Execution it’s not what to say, but how to say it a. Message sidedness b. Comparative ads c. Slice of life d. Scientific e. Testimonials Examining athlete endorsers is typically one of the favorite topics of students interested in sports marketing. To get the discussion started, I first ask students to develop a list of ten of their favorite athlete endorsers (half of the ten must be women). Then, we discuss why these endorsers are favored. What makes these athletes credible sources? I also have the students develop a list of athlete endorsers that are risky from the perspective of the sponsoring organization. D. Media Strategies A medium or channel is the element in the communications process by which the message is transmitted. Traditional mass media such as newspapers, television, radio or magazines are usually thought of as effective ways of carrying advertising messages to the target audience. 1. Media Decisions or Media Selection 2. Alternative Forms of Advertising If you have a classroom that supports Internet access, it is useful to find several sites that contain (in your estimation) effective Internet advertisements. Students can then analyze these ads and comment on what is effective and ineffective. In addition, the students can comment on the probable target market and whether or not they feel the ad is effective in meeting the needs of this market. 3. Choosing a Specific Medium a. Reach b. Frequency c. Continuity E. Personal Selling - Form of person-to-person communication in which a salesperson works with prospective buyers and attempts to influence their purchase needs in the direction of his or her company’s products or services. Personal Selling is not an obvious component of sports marketing, so it is important to lay the foundation for this section of the course. It is best to illustrate many of the different personal selling situations for sports marketers. For example, describe how selling is used in sponsorship situations, group ticket sales, personal seat licenses, etc. After students understand the importance of personal selling, you can then move the discussion to the various strategies for personal selling. 1. Benefits of Personal Selling 2. Personal Selling & Building Relationships 3. The Strategic Selling Process a. Buying Influences i. Economic Buyers ii. User Buyers iii. Technical Buyers iv. Coach b. Red Flag c. Response Modes i. Growth Mode ii. Trouble Mode iii. Even Keel Mode iv. Overconfident Mode d. Win-Results e. Sales Funnel f. Ideal Customers F. Sales Promotions - A variety of short term, promotional activities that are designed to stimulate immediate product demand. 1. Premiums 2. Contests and Sweepstakes 3. Sampling 4. P-O-P Displays 5. Coupons G. Public Relations - Identifies, establishes and maintains mutually beneficial relationships between the sports organizations and the various publics on which its success or failure depends. To discuss community relations/involvement efforts, I usually contact a local (or the nearest) professional sports organization’s PR department and have them send materials regarding their latest community relations program. Then we use these materials in class to discuss a) how these programs are planned b) how community relations programs are integrated into the larger promotional plans and c) whether sports organizations have a social responsibility to serve the community. CHAPTER 11: SPONSORSHIP PROGRAMS CHAPTER OBJECTIVES Comment on the growing importance of sports sponsorships as a promotion mix element Design a sponsorship program Understand the major sponsorship objectives Provide examples of the various costs of sponsorship Identify the levels of the sports event pyramid Evaluate the effectiveness of sponsorship programs SUMMARY The element of the promotion mix that is linked with sports marketing unlike any other is sponsorship. A sponsorship is an investment in a sports entity (athlete, league, team, event etc.) to support overall organizational goals, marketing objectives, and/or promotional objectives. Sports sponsorships are growing in popularity as a promotional tool for sports and non-sports products (and organizations). Because so much emphasis is placed on sponsorship, organization must understand how to develop the most effective sponsorship program. The systematic process for designing a sponsorship program consists of four sequential steps, which include: setting sponsorship objectives, determining the sponsorship budgeting, acquiring a sponsorship, and implementing and evaluating the sponsorship. Because sponsorship is one of the promotion mix elements it is important to remember the relationship it has with the broader promotional strategy. As suggested in Chapters 10 and 11, all of the elements of the promotion mix must be integrated to achieve maximum effectiveness. The sponsorship process begins with setting objectives. These objectives, not unlike advertising objectives, can be categorized as either direct or indirect. Direct sponsorship objectives focus on stimulating consumer demand for the sponsoring organization and its products. The sponsoring company benefits by attaching their product to the sports entity and the sports entity also benefits by increased exposure given by the sponsor. As such, both parties in the sponsorship agreement benefit through the association. Indirect objectives may also be set for the sponsorship program. These objectives include generating awareness, meeting and beating the competition, reaching new target markets (e.g., disabled) or specialized target markets (e.g., mature market), building relationships with customers and image enhancement. After objectives have been formulated, the sponsorship budget is considered. The techniques for setting sponsorship budgets are also in accord with the promotional budgeting methods discussed in previous chapter. Generally, sponsorship of sporting events is not an inexpensive proposition, especially given the threat of ambush marketing. Ambush marketing is the planned effort by an organization to associate them indirectly with an event in order to gain at least some of the recognition and benefits that are associated with being an official sponsor. In past years, the Olympics have been a playground for ambush marketing techniques. For example, Nike, not an official sponsor of the 1996 Summer Olympics, constructed a building overlooking the Olympic Park to associate themselves with the festivities of the Olympic Games. Today, more stringent policing and regulation of ambush marketing is occurring by the sporting event organizers to protect the heavy financial outlay of official sponsors. The third step of the sponsorship process is to choose the sponsorship opportunity or acquire the sponsorship. This means making decisions about the scope of the sponsorship, choosing the general athletic platform and then choosing the specific athletic platform. The scope of the sponsorship refers to the geographic reach of the sports entity, as well as the interest in the entity. Shani and Sandler describe the scope of athletic events using a tool called the Sports Event Pyramid. The Sports Event Pyramid is a hierarchy of events based on geographic scope and level of interest among spectators. The five-tiered hierarchy ranges from international events such as the Olympic Games to local events such as a little league tournament in your community. Once the scope of the sponsorship has been chosen, the athletic platform must be determined. The athletic platform for a sponsorship is generally a team, sport, event or athlete. Additionally, the athletic platform could be further categorized on the basis of level of competition (i.e., professional, collegiate, recreational). Decisions regarding the choice of athletic platform should be linked to the objectives set in the previous stages of sponsorship planning. After choosing the general athletic platform, the potential sponsor must select the specific platform. For example, if a collegiate sporting event is to be the general platform, then the specific athletic platform may be the Rose Bowl, the Championship Game of the Final Four or a regular season baseball game against an in-state rival. The final phase of the sponsorship process is to implement and evaluate the sponsorship plans. Organizing a sponsorship and integrating a sponsorship program with the other promotion mix elements requires careful coordination. Once the sponsorship plan is put into action, the most critical question for decision-makers is “Did the program deliver or have we met our sponsorship objectives?’’ CHAPTER OUTLINE GROWTH OF SPONSORSHIP It is useful to spend some time discussing the tremendous increase in sponsorship spending in the past few years. I usually pull the data from the IEG Sponsorship information found on their web page. In addition to showing the sheer size of sponsorship, it is also helpful to compare sponsorship spending to other forms of promotion. 2. DESIGNING A SPORTS SPONSORSHIP PROGRAM A. Sponsorship Objectives Awareness Competition Reaching Target Markets Relationship Marketing Image Building Sales There are typically a number of case studies that add to the discussion and illustrate the various objectives of sponsorship. It is important to discuss how sponsorship objectives compare with ad objectives (or other promotional objectives). You may want to bring in examples of sponsorship at various levels and ask the students to describe the objectives that they think are being considered. B. Sponsorship Budgeting C. Choosing The Sponsorship Opportunity Determining the Scope of the Sponsorship a. Sports Event Pyramid 2. Determining the Athletic Platform Athletes Teams c. Sport/League d. Events 3. Choosing the Specific Athletic Platform As an in-class exercise, ask students to provide you with several examples of sponsorship of individual athletes, teams, sports/leagues and events. Discuss the choice of athletic platform and how this choice was linked back to the sponsorship objectives. D. Sponsorship Implementation & Evaluation One of the most critical issues facing sponsors is the determination of sponsorship effectiveness. Ask the students for suggestions about sponsorship evaluation. After you have considered the various research options, discuss how the evaluation is linked back to the initial objectives set by the sponsor. CHAPTER 14: PRICING CONCEPTS AND STRATEGIES CHAPTER OBJECTIVES • Explain the relationship among price, value and benefits • Understand the relationship between price and the other marketing mix elements • Describe how costs and organizational objectives impact pricing decisions • Explain how the competitive environment influences pricing decisions • Describe how and when price adjustments should be made in the final stage of pricing SUMMARY The pricing of sports products is becoming an increasingly important element of the sports marketing mix. Price is a statement of value for a sports product and understanding consumers’ perceptions of value is a critical determinant of pricing. Value is defined as the sum of the perceived benefits of the sports product minus the sum of the perceived costs. The perceived benefits of the sports product, or what the product does for the user, are based on its tangible and intangible features. Each consumer’s perception of value is based on his or her own unique set of experiences with the sports product. A variety of factors influence the pricing decisions for any sports product. Similar to the internal and external contingencies that impact the strategic sports marketing process, pricing influences can be categorized as internal or external factors. Internal factors are those under the control of the sports organization such as the other marketing mix elements, cost, and organizational objectives. Marketing mix elements other than price must be carefully considered when determining the price of the sports product. Promotion mix elements (e.g., advertising, sales promotions) often communicate the price of the sports product to consumers or communicate price reductions. The channel of distribution that is selected influences the price of sports products. For instance, consumers expect to pay higher prices (and are charged higher prices) when purchasing tennis equipment from a pro shop versus directly from the manufacturer. Product decisions are also highly related to pricing. Simply, price is used to signal product quality. Generally, the higher the price charged, the greater the perceived quality of the product. Two distinct pricing strategies that emerge based on the emphasis of marketing mix elements are price and nonprice competition. As the name suggests, nonprice competition tries to establish demand for the sports product using the marketing mix elements other than price. Price competition, on the other hand, attempts to stimulate demand by charging lower prices. In addition to other marketing mix variables, costs play a major role in pricing decisions. Costs are those factors that are associated with producing, promoting and distributing the sports product. The total cost of producing and marketing a sports product is equal to the sum of the total fixed costs and the total variable costs. The fixed costs, such as players' salaries, don’t change with the quantity of the product consumed whereas variable costs change as a result of the quantity of the product being consumed. Today, the costs of running a professional sports franchise are skyrocketing because of players’ salaries. A final internal factor that influences pricing is organizational objectives. The four types of pricing objectives include: income objectives, sales objectives, competitive objectives and social objectives. Typically, a combination of these four objectives is used to guide pricing decisions. External factors, which are beyond the control of the organization, include consumer demand, competition, legal issues, the economy and technology. Demand is the quantity of a sports product that consumers are willing to purchase at a given price. Price elasticity measures the extent to which consumer purchasing patterns are sensitive to fluctuations in price. For some sports products, such as a ticket to the Super Bowl, demand is relatively inelastic which means that changes in price have little impact on game attendance. However, when demand is elastic small change in price may produce large changes in quantity demanded. Sports marketers try to estimate the demand for products by examining consumer trends and tastes, determining the number of substitute products and looking at the income of the target market. One of the most critical factors in determining pricing for sports products is to examine the prices charged for similar products by competing firms. Most professional sports franchises operate in a monopolistic environment in which no direct competitors exist. Because of this market condition, the price of attending professional sporting events is continually increasing. In fact, many “average” fans believe that they are being priced out-of-the-market and can no longer afford the cost of admission. In addition to competition, laws influence the pricing structure for sports products. For example, the Sherman Act was designed to protect freedom of competition, thereby freeing prices to fluctuation subject to market forces. The phase of the economic cycle is another important consideration in pricing. During periods of inflation, prices may rise to cover the higher costs and during periods of recession prices may be lowered. Finally, advances in technology are related to pricing decisions. Typically, consumers are willing to and expect to pay more for “high tech” sports products. However, this is not always the case as sometimes technological change can reduce pricing by facilitating marketing of the sports product. Once the price of the sports product has been determined, adjustments are constantly necessary as market conditions, such as consumer demand, change. Price reductions or increases are used to reach pricing objectives that have been determined. Generally, price reductions are used to help achieve sales and market share objectives, whereas increases are used to keep up with rising costs. Regardless of whether adjustments are made to raise prices or lower prices, an important consideration in pricing is the concept known as the JND or just noticeable difference. The JND is the point at which consumers can detect a “noticeable” difference between two stimuli -- the initial price and the adjusted price. Depending on the rationale for price adjustments, sports marketers sometimes want the change to be above the difference threshold (i.e., consumers will notice the difference) and sometimes it will be below the difference threshold (i.e., consumers will not notice the difference). CHAPTER OUTLINE 1. What is Price? Price is a statement of value for a sports product or simply a way to quantify the value of the objects being exchanged. A. Understanding Value and Its Relationship to Price Pricing and value are highly related, if not synonymous concepts. It is important for students to understand the role of value in pricing, so I usually revert to the most basic model of the exchange process to illustrate that 'something of value' is being exchanged for 'something of value.' This something of value is equated with price that we attach to it. Ask two or three students how much value they attach to a courtside ticket to a Chicago Bulls game and you will probably get rather disparate answer depending on the student interest in basketball and/or the Bulls. This should illustrate the variant nature of pricing and how it relates to value. 2. THE DETERMINANTS OF PRICING Prices are determined by looking at both the internal and external factors that influence a sports organization. Internal factors, controlled by the organization, include the other marketing mix elements, costs, and organizational objectives. External (or environmental) factors that influence pricing are beyond the control of the organization. These include consumer demand, competition, legal issues, economy, and technology. Tell students to break up in small groups and their task is to develop a price for two sports products: a) season tickets to your university's women's basketball games and b) a catcher's mitt. Then will then have to justify their price to upper management and describe all the factors that they considered when making their pricing decisions. This should lead into a nice discussion of the various internal and external factors that influence pricing. Internal Factors Product Promotion Distribution Cost Fan Cost Index Athlete Salaries Organizational Objectives Income Sales Competition Social Concern External Factors Consumer Demand Price Elasticity Estimating Demand Competition a. Substitute Products Legal Issues Economy Technology 3. PRICE ADJUSTMENTS As with most things in sports marketing, prices are dynamic. Initial prices are determined by a variety of internal and external issues that are continually changing with new market conditions. For instance, more or less competition may provide the impetus for price changes. Also, prices may be adjusted to stimulate demand for sporting products when sales expectations are not currently being met. Finally, prices might be adjusted to help meet the objectives that have been developed. Price Reductions Price Increases Price Discounts Quantity Discounts Seasonal Discounts Price adjustments in the form of reductions or increases are relatively rare phenomena in sports organizations across a season. Ask students to comment on any examples of price reductions offered by a professional sports franchise. On the other hand, quantity discounts or group discounting is quite prevalent. Seasonal discounting is also common for sporting goods, as well as for participating in certain sporting events (e.g., golf) CHAPTER 13: IMPLEMENTING AND CONTROLLING THE STRATEGIC SPORTS MARKETING PROCESS CHAPTER OBJECTIVES • Describe how the implementation phase of the strategic sports marketing process ‘fits’ with the planning phase • Explain the organizational design elements that impact the implementation phase • Identify the general competencies and the most important skills that effective sports marketing managers possess • Describe the basic characteristics of TQM programs and how TQM might be implemented in sports organizations • Identify some of the guidelines for designing reward systems • Define strategic control and how the control phase of the strategic sports marketing process ‘fits’ with the implementation phase • Explain the differences between planning assumption control, process control and contingency control SUMMARY Implementing and controlling the strategic sports marketing process is the emphasis of Chapter 13. After the planning phase of the strategic marketing process is completed, the implementation and control phases are considered. Implementation is described as an action step where strategic marketing plans are executed. Without the proper execution, the best plans in the world will be useless. To facilitate the implementation process, seven organizational design elements must be addressed. The organizational design elements include: communication, staffing and skills, coordination, rewards, information, creativity, and budgeting. To begin, the organization must effectively communicate the plan and its rationale to all of the members of the sports marketing team who will play a role in executing the plan. In terms of staffing and skills, there must be enough people and they must have the necessary skills and expertise to successfully implement the strategic marketing plan. Research has shown that the skills deemed most important for sports marketing managers include: establishing a positive image for your sports organization, achieving sponsors promotional goals, stimulating ticket sales, maximizing media exposure for events, athletes and sponsors, and acquiring sponsors through personal contacts. Coordination is another of the organizational design elements that influences implementation. Coordination involves determining the best structure for the organization to achieve the desired strategy. Research has shown the importance of good fit between structure and successful implementation. One way of coordinating people and tasks that has received considerable attention over the last decade is through Total Quality Management or TQM. TQM philosophies are based on aligning the organizational structure to best meet the needs of the customers. Another important organizational design element that impacts implementation is the rewards structure of the sports organization. With proper pay and incentives, employees may be motivated to carry out the strategic plan. Some guidelines for designing effective rewards systems include: linking rewards to the strategic plan, using a variety of incentives, linking performance with rewards; give everyone the opportunity to be rewarded; and be willing to adapt the rewards system. Information is one of the most essential elements of effective implementation. To aid in the gathering and dissemination of information for strategic decision making, organizations must design information systems. Before gathering information, consideration must be given to who is going to need this information, for what purpose the information is needed, and when it is needed. Fostering creativity, another organizational design element, is yet another important aspect of implementation. Creativity and innovation within the organization is called intrapreneurship or corporate entrepreneurship and is developed through education and training. In order to enhance employee creativity the creative process, consisting of four steps, is used by organizations. These steps include: knowledge accumulation, idea generation, evaluation, and implementation. Efforts to encourage intrapreneurship are also enhanced by creating an organizational environment that cultivates such thinking. The final organizational design element that has a direct impact on implementation is budgeting. Without proper monies, the strategic sports marketing plan cannot be properly implemented or carried out. Budgets must be secured for all marketing efforts within the larger organization. Once these monies are obtained, they must then be allocated within marketing to achieve specific marketing goals that have been prioritized. After plans have been implemented, the control phase of the strategic sports marketing process is considered. Strategic control is defined as the critical evaluation of plans, activities, and results, thereby providing information for future action. In other words, the control phase of the implementation explores how well the plan is meeting objectives and makes suggestions for adapting the plan to achieve the desired results. Three types of strategic control considered by sports marketers include: planning assumptions control, process control, and contingency control. Planning assumptions control asks whether the premises or assumptions used to develop the marketing plan are still valid. Two categories of assumptions that should receive special consideration from sports marketers are those concerned with the external contingencies and the sports industry. Since plans are typically developed by carefully considering the external environment and the sports industry, assumption with respect to these two issues are critical. Process control considers whether the plan and processes used to carry out the plan are being executed as desired. The key issue addressed by process control is whether the planning or implementation processes should be altered in light of events and actions that have occurred during the implementation of the plan. In order to make decisions about whether plans or the implementation process should be changed, sports organizations review milestones that have been set and/or monitor strategic thrusts. Milestones are more specific objectives that can be examined such as financial performance, while strategic thrust evaluates whether the organization is moving towards its intended goals. CHAPTER OUTLINE 1. IMPLEMENTATION Putting strategy into action or executing the plan. A. Communication B. Staffing & Skills 1. Establish a positive image for your sporting organization 2. Achieve Sponsors Promotional Goals 3. Stimulate Ticket Sales 4. Maximize Media Exposure for Events, Athletes, Sponsors 5. Acquire Sponsors through personal contacts 6. Maintain good relations with community, authorities, partners 7. Acquire sponsors by formal presentations 8. Develop special promotions 9. Improve budget construction 10. Negotiate promotion contracts 11. Evaluate sport marketing opportunities and performance 12. Design and coordinate content of events 13. Coordinate press coverage of events 14. Create contracts 15. Provide corporate hospitality of events 16. Build public image and awareness of athletes 17. Schedule events and facilitates 18. Establish event safety factors 19. Build rapport with editors, reporters and other media reps 20. Buy and resell media rights If you haven't already included one in the course, a discussion of staffing and skills as part of the implementation process is an excellent way to introduce the requirements for careers in sports marketing. Many students dream of a career in sports marketing, but have a limited understanding of the skill necessary to land a successful job. Additionally, they may not understand the various career options, so this is good time for a career-related discussion. C. Coordination 1. TQM Philosophy D. Rewards E. Information This is a good time to discuss the information needs of a sports organization and how this information can be most effectively and efficiently shared among members of a sports organization. Describe some of the necessary sports information systems that will help achieve marketing goals and organizational objectives. F. Creativity 1. The Creative Process 2. Encouraging Intrapreneurship G. Budgeting 2. CONTROL PROCESSES Critical evaluation of plans, activities, and results, thereby providing information for future action. A. Planning-Assumptions Control B. Process Control 1. Monitoring Strategic Thrusts 2. Milestone Review 3. Financial Analysis C. Contingency Control Crisis management is a skill necessary for all sports marketing managers. After you have discussed potential crises that may occur within a sports organization, provide students with an overview of contingency planning for crisis management. Then ask the students to design a mini-plan for crisis management addressing the steroid scandal facing MLB. 82