Intro to Sport Marketing Agenda Current Events Ice to the Eskimos (Chapters 1 & 2) Size of the Sport Industry Differentiate between Sport Product & Traditional Goods & Services Differentiate between Fans & Customers Differentiate between Marketing & Sport Marketing 2 Thrusts of Sport Marketing Break Sport Sponsorship Proposal Assignment Marketing Plan Assignment U.S. GDP by Industry (Milano & Chelladurai, 2011) Rank Industry Value ($B) 1 Real Estate 1461 2 Retail Trade 812 3 Wholesale Trade 723 4 Construction 608 5 Professional, Scientific, & Technical Services 542 6 Federal Reserve banks, Credit Intermediation & Related Activities 506 7 Ambulatory Health Care Services 433 8 Hospital & Nursing & Residential Care Facilities 3340 [sic] 9 Administrative Support Services 344 10 Broadcasting & Telecommunications 324 11 Other Services, Except Government 288 12 Insurance Carriers & Related Activities 264 13 Utilities 249 14 Management of Companies & Enterprises 234 15 Food Services & Drinking Places 225 SPORT (Liberal Estimate) 207 16 Manufacturing – Chemical Products 199 SPORT (Moderate Estimate) 189 17 Securities, Commodity Contracts, & Investments 184 18 Legal Services 176 SPORT (Conservative Estimate) 168 19 Manufacturing – Food & Beverage & Tobacco Products 164 20 Oil & Gas Extraction 150 21 Publishing Industries 142 22 Computer Systems Design & Related Services 133 23 Manufacturing – Computer Electronic Products 132 24 Manufacturing – Fabricated Metal Products 123 25 Truck Transportation 119 Why are these the wealthiest franchises? How many of the top 20 are in the NFL? FORBES FRANCHISE VALUES Team League Owner Value Washington Redskins NFL Daniel Snyder $1.1 billion Dallas Cowboys NFL Jerry Jones $923 million Houston Texans NFL Robert McNair $905 million New England Patriots NFL Robert Kraft $861 million Philadelphia Eagles NFL Jeffrey Lurie $833 million Denver Broncos NFL Pat Bowlen $815 million Cleveland Browns NFL Randy Lerner $798 million Chicago Bears NFL McCaskey Family $785 million Tampa Bay Buccaneers NFL Malcolm Glazer $779 million Baltimore Ravens NFL Steve Bisciotti $776 million Miami Dolphins NFL Wayne Huizenga $765 million Carolina Panthers NFL Jerry Richardson $760 million Green Bay Packers NFL Public $756 million Detroit Lions NFL William Ford $747 million Tennessee Titans NFL Bud Adams $736 million New York Yankees MLB George Steinbrenner $730 million Pittsburgh Steelers NFL Dan Rooney $717 million Seattle Seahawks NFL Paul Allen $712 million 10 Differences Between Traditional Goods/Services and the Sport Product 1. Often sport organizations simultaneously compete and cooperate 2. The sport product is publicly consumed 3. Sport consumers often consider themselves experts 4. Sport consumer demand fluctuates widely 5. Fans have an emotional tie to their favorite team/sport 10 Differences Between Traditional Goods/Services and the Sport Product 6.The sport product is perishable 7. The Sport product is intangible and subjective 8. The sport product is unpredictable and inconsistent 9. The sport marketer has little or no control over the core product and must concentrate on product EXTENSIONS. 10. Sport is universal and pervades all elements of life Wait, You Pay Your Competitor? 2013 Week 1 payouts: Ohio St paying Buffalo $1M, Miami paying FAU $500K, Oregon paying Nicholls St $450K, Kansas St paying NDSU $350K To Beat You??? Wins by FCS schools with paychecks: E. Washington ($450K)over Oregon St. McNeese St ($400K) over USF NDSU ($350K) over Kansas St. Towson ($275K) over U Conn @darrenrovell How are sports FANS different from customers? If you get a good set of tires for your car, you are satisfied. Things you will never say: “Let me show you my new tires.” “This last month I had the best electricity I’ve ever had.” “Hey, let’s all go grocery shopping. I’ll set up the tailgating in the parking lot.” How are sports FANS different from customers? . This morning I used Crest. Do you like Crest? . When are you going to use Crest again? . Do you think it will perform well again? . Would you like to use Crest together? . Did you hear them talking about Crest on Toothpaste Talk Radio this morning? . Where did you get that throwback Crest jersey? .You repeatedly pay for cable. .You are loyal to your anti-perspirant. .You identify with your team. Top 10 Differences Between Goods/Services Marketing and Sports Marketing Dimension Goods/services Sports & Entertainment 1 Purchasers Customers Fanatics 2 Adoption Loyalty—repeat purchasers of the Psychological identification with same brand (viz., lack of switching individuals and teams that goes behavior) beyond mere loyalty 3 Promotion & Media Owner pays media for promotion Fans, sponsors, and media pay to promote team/event 4 Distribution Channel Static; More site-limited Mobile; more flexible 5 Product Adapted Global 6 Price Customer pays a given price for Two-part: Fans frequently pay for good/service the right to pay for tickets 7 Facilities Corporate owner buys/builds own Government (taxpayer) typically facilities pays for facilities 8 Competition Individual branding in competitive Cooperative contractual markets relationshipsàmonopoly power & anti-trust exemption 9 Exchange Principally economic exchange Principally social exchange 10 Employees Contractual power favors owners Contractual power favors employees (players) So, is sports marketing different? 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. Marketing Orientation Concentrating on understanding the consumer and providing a sports product that meets consumer needs while achieving organizational objectives. For Example: The Boston Red Sox, despite a tremendous ticket-demand every year, still work hard on fan relations and marketing initiatives. They know that they can’t take the fans for granted. They worked with a graphic designer to make their tickets look sharper. A team vice president taste-tests the park’s concession food They’ve extended the box office hours so fans can buy tickets on the way out of a game (Boston Globe, 7/02) Marketing Myopia Marketing myopia is the practice of defining a business in terms of goods and services rather than benefits sought by customers. Myopic sport organizations… Focus on producing and selling rather than meeting needs of customers Rely on winning Confuse marketing with promotions Ignore competition Focus on the short term rather than the long term Marketing Myopia . Does winning guarantee increased attendance? The Edmonton Oilers won five Stanley Cups in seven years – season ticket sales went down after each year. Said one Oiler executive: "The Oilers went through a period where all they did was open the doors and waited for people to show up. That's not how you do business." (Edmonton Sun, 9/02) 2 Major Thrusts of Sport Marketing A. Marketing OF Sports B. Marketing THROUGH Sports SPORT SPONSORSHIP PROPOSAL ASSIGNMENT Select a Partner for the Sponsorship Proposal Assignment Now that we have our groups established: From the next slide your group must pick your top 3 (in order, 1=most desired – 3= third most desired) sport properties you want to represent in a sponsorship negotiation. You also have to pick your top 3 corporations you want to represent in a sponsorship negotiation GO! SPORT SPONSORSHIP PROPOSAL ASSIGNMENT Sport Properties: Sponsors: Richmond Flying Squirrels Jersey Mike’s Richmond Raiders Haley Automotive Group Lobs & Lessons American Family Fitness Richmond Kickers Lexus of Richmond Arena Racing First Capital Bank University of Richmond Car Pool Athletics Martin’s VCU Athletics Virginia 529 Special Olympics Virginia Bon Secours Sports SCOR Medicine Tuckahoe Little League VCU Medical Center SPORT SPONSORSHIP PROPOSAL ASSIGNMENT Each group will be emailed to inform them which sport property and which sponsor they will represent. Each student team will research their assigned company (―the business‖) and develop a profile of that organization. Each business will develop and rank three objectives they would like to achieve through a sport sponsorship. Businesses should also consider a dollar amount they think the company might be willing to invest in an annual sport sponsorship. In order to objectively evaluate all sponsorship proposals, each business must create an evaluation matrix they will use. SPORT SPONSORSHIP PROPOSAL ASSIGNMENT Playing the role of the sport organization, three sport properties will meet with each potential sponsorship client (business) to discuss their business and objectives. After conducting a needs analysis for each business through the meetings on October 22, sport organizations will develop a sponsorship proposal to meet the needs of each potential sponsor. Sport organizations can utilize whatever inventory they wish for their proposals with the following exceptions: sport organizations may not sell any naming rights to facilities or teams they may not sell any television spots (for this exercise, we will assume that all sport organizations control their own radio broadcasts and web streaming if they possess such inventory). For this exercise, sport organizations must also pay a rental fee for any use of the sport facility outside of game day and must pay a wholesale price to the concessionaire for any catering or food offers. All sponsorship proposals must be