Sports Marketing: A Strategic Perspective

Matthew D. ShankProfessor of Marketing and ChairDepartment of Management and

Marketing Northern Kentucky University

Understanding the Sports Industry

• Sport - Source of diversion or physical activity engaged in for pleasure

• Sports as Entertainment - Reebok president Robert Meers, “We’ve recognized for several years that sport is part of entertainment. The market now is really sports, fashion and music. We can’t expect to ignore reality and survive.”

Growth of the Sports Industry

• 11th largest of all U.S. industry groups• Nation’s output for sports goods and

services estimated at $213-350 billion annually

• How do we measure growth in the sports industry?

• Growth measured in…..– Attendance Figures– Media Coverage– Employment Figures (4.5 million jobs)– International Markets

Growth of Sports Industry

• The sports industry generates estimates of 213 to 350 billion dollars per year in revenues. As ESPN founder Bill Rasmussen points out, “The games are better, and well the athletes are just amazing and it all happens 24 hours a day. America’s sports fans are insatiable.”

• Attendance is increasing:– The NFL experienced a record number of fans in the 1999 season (15,710,970)– The NBA 1999-2000 season also produced a small increase (1%) for the NBA– MLB reached 20 million fans faster than any other year in history and attendance

increased again (3%) – NHL continues to grow in attendance and popularity. Tracing average attendance

over the past few years, regular season numbers have increased from 14, 749 (‘93-’94) to 16,359 (‘99-’00)

– NASCAR had 11 million people attend its events in 1999

• Sports Sponsorship Spending Exceeds $1 Billion Dollar Mark• New Leagues (AF2, XFL, WPFL, WSA, WNHL)

Growth of Sports Industry

• Media Coverage is Increasing– 200 million people watched NBC coverage of the Summer Olympic

Games and 3.7 billion people who watched worldwide– ESPN, the original sports-only network launched in 1979, reaches

some 76 million homes with its 4900 hours of sports programming

and remarkably ESPN2 reaches 65 million viewers.– $2.3 billion to secure the broadcast and cable rights for the Olympic

Games in 2004, 2006, and 2008– $2.64 billion paid by NBC and Turner Sports to televise NBA

contests, $18 billion paid by the networks for the NFL, $2.5 billion for post season MLB

– New sports networks, such as the Golf Channel, SpeedVision, and the Women’s Sports Network

– Internet, satellite stations and pay-per-view cable television are growing in popularity

Opportunities in the Sports Industry: Academics

• Over 200 Academic Programs in Sports Administration

• NKU Marketing Track and proposed program

Opportunities in the Sports Industry: Careers

• Upwards of 4.5 million Sports Related Jobs in Sports Administration

• 13 career areas in sport. These include: event suppliers, event management and marketing, sports media, sports sponsorship, athlete services, sports commissions, sports lawyers, manufacturers and distribution, facilities and facility suppliers, teams, leagues, college athletics, and finance

• Marketing & Public RelationsProfessional Sports Intercollegiate Sports

Youth Sports Olympic Sports OrganizationsRegional and National Sport Commissions

Amateur Sports Corporate Sports Marketing Sports Marketing Firms Licensing Firms

What is Sports Marketing?

• Sports Marketing - The specific application of marketing principles and processes to sports products and to the marketing of non-sports products through association with sport

Simplified Model of the Consumer-Supplier Relationship in the Sports Industry

Consumers

Spectators

Participants

Corporations

Products

Events

Sporting Goods

Personal Training

Sports Information

Producers/Intermediaries

Sports Labor

Sanctioning Bodies

Sponsors

Media

Agents

Equipment Manufacturers

Classification of Sports Spectators

Individuals

Corporate

In-Person Mediated

Classification of Sports Participants• Unorganized Sports Participants• Organized Sports Participants

Amateur

Youth Recreational Instructional

Youth Recreational Elite

Schools

Intercollegiate

Professional Minor/Secondary

Major

The Sports Product

• Sports Product - A good, a service or any combination of the two that is designed to provide benefits to a sports spectator, participant or sponsor.

Types of Sports Products• Sporting Events

– Athletes– Arenas/Stadia

• Sporting Goods– $60.2 billion industry comprised of four segments (equipment,

transportation, apparel, and footwear)– Collectibles and Memorabilia

• Sports Training– Fitness and Health Services– Sports Camps and Instruction

• Sports Information– Newspapers, Internet, Magazines, Radio, etc.

The Sports Marketing Exchange Process

Something of Value

Something of Value

Exchange Players

Exchange Players

Overview of the Contingency Framework for

Strategic Sports Marketing • Foundation of any sports organization is to

design and maintain a sound, yet flexible strategic framework

• Strategic framework that is suited to the sports industry is the contingency framework. Why?

• Flexible and adaptable to changes in the marketing environment

Contingency Framework for Strategic Sports Marketing fitfit

EXTERNALCONTINGENCIES

Competition

Legal/Political

Demographics

Technology

Culture

Physical Environment

Economy

INTERNAL

CONTINGENCIES Organizational Vision

Organizational Mission

Organizational Objectives & Mktg Goals

Org Strategy

Org Culture

Planning1. Understanding Consumers Needs

a. Mktg Research b. Consumers as Participants c. Consumers as Spectators

2. Market Selection Decisions a. Market Segmentation b. Target Markets c. Positioning

3. Marketing Mix Decisions a. Sports Products b. Pricing c. Promotion d. Place

Implementation

Control

THE STRATEGIC MARKETING PROCESSTHE PLANNING PHASE

STEP 1.Understanding Consumers Needs 1. Mktg Research 2. Consumers as Participants

3. Consumers as Spectators

STEP 2: MARKET SELECTION DECISIONS1. Segmentation Alternative

2. Target Markets

3. Positioning

STEP 3: MARKETING MIX

THE IMPLEMENTATION PHASE

THE CONTROL PHASE

Activities Associated with Implementation

• Organizing

• Leadership and Interaction

• Resource Acquisition and Allocation

• Coordination and Timing of Activities

• Information Management

Control Phase• Sales Analysis

• Profitability Analysis

• Customer Satisfaction

• Marketing Audit

Environmental Contingencies• Competition• Technology• Culture/Social Trends • Physical Environment • Regulatory/Legal/Political• Demographic Trends• Economy

Internal Contingencies• Organizational Vision

• Organizational Mission

• Organizational Objectives & Mktg Goals

• Organizational Strategy

• Organizational Culture

Organizational Mission• Written statement about the organization’s present

situation and the direction of the organization. (what business we are in and who we serve)

• The Green Bay Packers mission is to be a dominating force in professional football’s competitive arena– On the field, the Packers will continually strive to present their fans

with the highest level of performance quality available

– In their operating activities and relations with the NFL, the Packers will also continually strive for excellence in the quality of work performed

– Overall, the Packers will commit themselves to doing their part in representing the State of Wisconsin with competitiveness, respect and dignity

ORGANIZATIONAL OBJECTIVES vs MARKETING GOALS

• Organizational Objectives - Signposts along the road which help an organization focus on its long-range purpose stated in the mission statements.

• Typically include both financial and strategic dimensions

• Examples of financial include: growth in revenues; growth in profits

• Examples of strategic include: enhance corporate image; increase customer satisfaction

SWOT Analysis

• Internal Strengths and Weaknesses

a. Resource capabilities

b. Marketing Mix Considerations

• External Opportunities and Threats