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General theories of marketing should ultimately posses

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Title: General theories of marketing should ultimately posses


1
Sports Marketing A Special Case of Marketing?
  • Chapter 1

2
Theory Application
  • General theories of marketing should ultimately
    possess superior predictive explanatory powers
    of how marketing works.
  • Does the application of sports marketing
    principles better explain and predict optimal
    buyer/seller relationships exchanges better
    than traditional goods/services marketing?
  • In other words, if everyone marketed like sports
    marketers, would they be more successful?

3
How is sports marketing different from
traditional goods/services marketing?
  • By understanding the differences we can
    understand the effectiveness of sports marketing
    principles.

4
Fans vs. Customers
1
  • Customer One that buys goods or services.
  • Fan An ardent devotee an enthusiast
  • Fanatic A person marked or motivated by an
    extreme, unreasoning enthusiasm, as for a cause
  • What are some things you have seen fans do at a
    game that customers at a grocery store never do
    for a favorite cereal or toothpaste?

5
Fans vs. Customers
1
  • If a customer is a loyal Folgers coffee customer,
    we can predict that s/he will likely continue to
    buy Folgers coffee at the grocery store. A loyal
    Folgers customer may, however, switch to similar
    coffee (Maxwell House) or buy Folgers at another
    store if appropriately discounted.
  • You wont see many Folgers customers wearing
    shirts with its brand name emblazoned across the
    chest. Nor are you aware of many people, who of
    their own free will, frequently visit
    www.folgers.com. If so, they must be the same
    people who are visiting www.tide.com,
    www.zest.com, and www.crest.com.
  • Why? Because most people dont identify
    themselves by what detergent or toothpaste they
    use.

6
Fans vs. Customers
1
  • Fans
  • Identify with and follow the behavior of the team
    and individual players on that team, on and off
    the field (via www.espn.com, team websites,
    newspapers, television, radio, wireless emails,
    etc.).
  • Purchase licensed merchandise (jerseys,
    automobile paraphernalia, caps, mugs, etc.)
    promoting the team.
  • Donate or pay extra for permanent seat-licenses
    (PSLs) in order to buy season tickets.
  • Travel to see games of that team outside of his
    local market.
  • Support tax-based initiatives to pay for a new
    arena or stadium for the team.
  • Are a supporter of the conference or league in
    which the team plays.
  • Devote significant social time attending,
    watching and discussing the team with others
    devoted to the same or other teams.

7
Why? Consumer Surplus.
1
How much would you pay to go to the Super Bowl?
Why?
8
Identification vs. Loyalty
2
  • How did you feel when your team won or lost in
    the play-offs recently?
  • What exactly did you do when your favorite player
    succeeded or failed? Why did you do that?
  • Loyalty is the repeat purchasing of a good or
    service by a consumer. A loyal customer is
    sensitive to differences in brands and prefers a
    brand or set of brands over others (see Odin,
    Odin and Valette-Florence 2001).
  • Identification is when an individual reacts to
    events that occur to the team or player as if the
    events happened to him or her (Kagan 1958).

9
Loyalty vs. Identification
2
2
Transaction
Social exchange
10
Who Pays?Advertising Promotion Costs
3
  • The manufacturer and/or retailer of goods and
    services pay for the development and placement of
    brand advertising and promotions.
  • In contrast, sports teams and individuals (e.g.,
    players and drivers) receive indirect and direct
    financial support to advertise and promote
    themselves.
  • Fans indirectly promote the team by buying and
    wearing or displaying licensed team merchandise.
  • Sponsors directly promote the team and pay for
    advertising and media to do so.
  • For instance, ATT pays the Dallas Stars at least
    100,000 to host the team website
    (www.attwireless.dallasstars.com).
  • Radio and TV broadcasts of events are brought to
    you by the sponsors.
  • Can you think of any other goods or services that
    come closesuch that customers promote the
    organization the way sports fans do?
  • Is anyone else marketing as effectively as sports
    teams often do?
  • What brands are people willing to pay extra for
    just so people can see the logo?

11
Who Pays?Advertising Promotion Costs
3
  • Much of the actual product, particularly in terms
    of revenue, is in the broadcast of the games or
    event.
  • The fact that sports are broadcast, in and of
    itself, differentiates sports from other goods
    and services.
  • Typical goods and services find it difficult to
    entertain using its product as the star of a
    broadcastalthough some try.

Ab-dolly Infomercial
12
Who Pays?Media Costs
3
  • Goods and services marketers typically pay for
    media to broadcast or print advertising and
    promotional information.
  • The media pays sports teams for the right to
    broadcast or print team and event information.
  • For example, ABC/ESPN Time-Warner are paying
    4.48 billion for NASCAR (8 years).
  • Relatedly, the distribution for sports is
    increasingly electronic and not limited to static
    locations.

13
Geographic Distribution Static vs. Mobile
4
  • Goods and services are sold in specific
    geographic outlets.
  • Although retail locations may open or close,
    customers typically visit or receive service
    based from specific locations.
  • Sporting events and teams, on the other hand, are
    basically traveling road shows, moving from
    location to location, city to city, nationally
    and globally.
  • The NFL, for example, is broadcast in 205
    countries across 24 time zones for upwards of
    4500 hours of weekly programming.
  • Has anyone ever seen a U.S.-based sporting event
    broadcast in another country? How is the product
    (i.e., the broadcast) similar or different from
    what is seen in the U.S.?
  • Has anyone ever bought a Coke or gone to
    McDonalds in different countries? How is the
    product and marketing different?

14
Truly Global Products
5
  • From an international marketing perspective,
    sports such as soccer, basketball, baseball,
    tennis, golf and motorsports are global products
    that need little translation or alteration to be
    accepted across cultures.
  • Compared to most sports, frequently cited global
    products such as Coke and McDonalds are not
    actually standardized global products.
  • Coke alters its packaging, name and syrup content
    in foreign countries.
  • McDonalds offers beer in German restaurants and
    cooks its hamburgers rare in France.
  • The content or product of the NFL, Formula1
    Racing, Olympics Downhill Racing, or World Cup
    Soccer remains the same throughout the world.
  • In a sense, given its electronic broadcasts, this
    distribution channel is standardized around the
    world.
  • Obviously, the promotion (e.g., language) and
    pricing (e.g., costs of cable or PPV) aspects of
    the marketing mix are adjusted to regional
    markets.

Coke in Japan
15
Two-part pricing
6
  • Can you think of any goods/services that require
    an initial payment before you pay a second price
    for the actual use of the good/service?
  • Customers typically pay one price for a given
    product or service.
  • Professional sports and major college sports fans
    frequently pay a two-part tariff (or price).

16
Two-part pricing
6
  • Demand is frequently sufficient to require an
    initial payment (donation to the university,
    payment for a seat license, membership fees) for
    the right to pay more money as a means to
    allocate a limited inventory of preferable seats.
    Fans who pay the initial fee are then given the
    opportunity to purchase tickets.
  • Another aspect of two-part pricing in sports is
    the event itself. Fans pay for a ticket to enter
    the event (initial payment) and then purchase
    other products (food, drink, souvenirs) after
    entering.
  • Price-setting in most sports settings must
    consider various forms of price bundling.
  • Season tickets are offered at a bundled price for
    the entire season and are de-bundled in the form
    of smaller ticket packages or individual tickets.
  • Offering tickets with a hot dog and soft drink
    for a single price is another example of price
    bundling in that it combines the prices of what
    would normally be two-part pricing.

17
Two-part pricing
6
  • Why do you think fans are willing to pay so much
    money for food drink at a sporting event?
  • Why dont more people bring coolers (when
    allowed) or eat before/after the event?

18
Tax-Payer SupportFacilities
7
  • Although the subject of much public policy
    debate, sports team owners frequently do not pay
    for their own stadiums or arenas. A new Nissan
    automobile plant may be able to acquire favorable
    tax status and property in Mississippi (695
    million in tax breaks and incentives over 20
    years), but will still pay for building their own
    facilities (930 million in Canton, MS).
  • In contrast, the majority (18/29) of NBA owners
    facilities are largely or entirely paid by
    taxpayers (see http//www.marquette.edu/law/sports
    /sfr/nba22.pdf, 2001).
  • In addition, naming rights by sponsors add
    additional revenue to the team. Even when owners
    invest private dollars into the facility it is
    not necessarily because public monies are
    unavailable, but is often due to revenue control
    issues that will favor the team owners if they
    own the facility.

19
Tax-Payer SupportFacilities
7
  • Consider Reliant Stadium in Houston, Texas
  • As first planned, stadium officials had 367
    million with which to work - 317 million from
    bond issues, to be paid off with hotel and rental
    car tax revenue, and 50 million from the sale of
    permanent license seats by the Texans.
  • Officials now concede they knew all along that
    wouldn't cover the costs for the stadium they
    wanted. They added a parking tax of 1 per
    vehicle and a ticket tax capped at 2 a ticket.
  • Fans are helping pay off 82 million worth of
    extras that have increased the cost of the
    Reliant Stadium complex to 449 million.
  • Among the items added to the original stadium
    proposal are extra restrooms, larger concession
    areas, 4,000 more parking spaces and landscaping.

20
Why are communities willing to pay whatever it
takes to attract pro sports?
7
  • From a broader sociological perspective, sports
    teams provide a city (or state) a social identity
    that can represent who they are to others.
  • How do people in your city or state represent
    themselves to others by the success of their
    sports teams?
  • The successful state university sports team
    allows constituents to represent themselves to
    others as winners.
  • The tough blue-collar character of the Steelers
    over the years symbolizes who Pittsburgh fans are
    to the rest of the country.
  • The black uniforms, skull-and-crossbones, and
    intimidating players for the Oakland Raiders, for
    better or worse, mostly identify their fans.
  • The Hogs at Redskins games representok, we dont
    know what they represent.

21
CompetitionCooperation Monopoly Power
8
  • Branded goods and services have traditionally not
    cooperated in their marketing efforts.
  • At the wholesale level and in some highly
    competitive retail markets, goods and services
    may engage in co-branding or cooperative
    strategic alliances.
  • As a rule, however, goods and services marketers
    do not cooperate in cross-promotions and work
    in-league with each other on a permanent basis.
  • Professional sports leagues have unique
    anti-trust exemption monopoly powers
  • limiting production (expansion and contraction of
    its members)
  • providing revenue sharing (national TV contracts,
    etc.), and
  • Allowing profit maximization

22
ExchangeEconomic vs. Social
9
  • Customers pay an economic price for the goods or
    services they purchase while fans make a social
    investment in the transaction.
  • Customers typically give up monetary value in
    exchange (what one gives up for what one gets)
    for the good or service, although time and search
    effort may also be expended.
  • In most cases only limited social exchange
    occurs.
  • Consumers may join together to go out to a
    restaurant for primarily social reasons. However,
    the exchange with the restaurant is still
    premised upon the purchase of the meal.
  • Individual and groups of customers may at the
    same time purchase a meal in the same venue where
    social exchange accounts for little or no part of
    the encounter. This rarely happens in sports
    settings.
  • Crowds are generally a bad thing, with negative
    psychological effects.
  • In sports, attendance is nearly always (98-99 of
    the time) with at least one other person.
  • The sports fan pays a price for the right to
    enjoy an emotional experience with others.
  • The fan goes to the game to be with others to
    share the experience in this social exchange.
  • What is the difference between a good crowd at
    the mall and at the game?
  • How does it make people feel?
  • Will they approach or avoid the place?
  • If it is not very crowded at the mall or the
    game, how will people respond?

23
Contractual Power
10
  • Goods Services
  • The size and power of the manufacturer or
    retailer of goods and services affords the owner
    contractual leverage over its employees.
  • Salaries, benefits and tenure are largely
    controlled by the owners.
  • Employees have mobility, but are rarely able to
    single-handedly affect the outcome of the firm by
    making contractual demands.
  • Sports
  • How can star players command such high salaries?
    Why are teams sponsors willing to pay? How can
    they be worth what they earn?
  • Tiger Woods 81m
  • Michael Schumacher 80m
  • Peyton Manning 42m
  • Michael Jordan 35m
  • Shaquille ONeal 32m
  • (2004 Salaries Earnings, Forbes)

24
Contractual Power
10
  • Goods Services
  • The size and power of the manufacturer or
    retailer of goods and services affords the owner
    contractual leverage over its employees.
  • Salaries, benefits and tenure are largely
    controlled by the owners.
  • Employees have mobility, but are rarely able to
    single-handedly affect the outcome of the firm by
    making contractual demands.
  • Sports
  • Employees (viz., players) of sports teams are
    more likely to possess contractual power over
    employers.
  • Contract concessions, renegotiations and
    arbitrations generally favor players.
  • The scarcity of superstar talent has shifted the
    power to players over owners.
  • Union membership has declined in manufacturing
    over the past four decades. At the same time,
    union membership in professional sports leagues
    have grown relatively strong due to the leverage
    held by the players. Consequently, work stoppages
    in major sports leagues have become nearly
    commonplace in the past decade.

25
So,is marketing a special case of sports
marketing?
26
(No Transcript)
27
Goods/Services that approach the level of
effectiveness exemplified in sports marketing
  • Harley Davidson
  • Polo
  • eBay
  • Borat, Austin Powers
  • Friends

28
Definition of Sports Marketing
  • Sports marketing is building a highly identified
    fan base such that fans, sponsors, media and
    government pay to promote and support the
    organization for the benefits of social exchange
    and personal, group and community identity within
    a cooperative competitive environment.

29
One of the advantages of being disorderly is that
one is constantly making exciting discoveries.
A.A. Milne
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