Sports Marketing
Sports Marketing

Sports Marketing

Lead Author(s): Steve Chen

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This text is an introduction to Sports Marketing, covering topics such as marketing research, college athletics, sponsorship and distribution channels.

​THEME 1: INTRODUCTION OF SPORT MARKETING

  

Learning Objectives

*Defining sport marketing

*Understand the score and unique nature of sport marketing

*Learn the revised marketing mix (the 6Ps model)

*Explore the current marketing trends at the professional, intercollegiate, and other levels of sports

Introduction

  

Image yourself as a local basketball fan of a typical regional university in eastern Kentucky: the price of a slice of pizza at a collegiate basketball arena is $2. The parking fee for the same game would cost $5. The season ticket package is worth $200. How about the price of a Sport Management degree from that institution? Priceless!! 

Do these familiar lines remind you about the television (TV) commercial of Visa Credit Card? The author purposefully uses these commercial lines to depict the importance and influence of sports in America. Sports are not just entertainment in our society; they are a vivid iconic culture and a way of life that impact tens of millions of American people. The sports industry is projected to generate around $480-620 billion dollars annually in our economy (Collignon, Sultan, & Santander, 2011; Plunkett, 2010). Since the early 2000s, it has regularly become one of the Top-10 most generated industries in the U.S. (Eschenfelder & Li, 2007). The annual championship events of the National Football League, known as the Super Bowl, has recorded several of the highest TV ratings throughout the history. Corporations and businesses are willing to spend on an advertisement that cost more than $3.5 million dollars per 30 seconds during the Super Bowl (Rao, 2011) A 30-second commercial cost as much as 5 million dollars for Super Bowl LII in 2018 (Michaels, 2018). It was estimated that American consumers spent more than $14 billion dollars on food, drink, and various items during the 2017 Super Bowl weekend while celebrating this mega sporting event. Clearly, corporations and businesses must believe that spending this gigantic amount of money on adverting would help them gain a promotional edge over their competitors, and reach out to their desired target markets. With the huge amount of revenue associated with sporting events (i.e., spending on tickets and merchandise sales), no wonder the public would assume that sports industry is a recession-proof industry that is full of career opportunities. There are estimated more than 4.5 million related sports jobs with more than 60% of employment opportunities covering areas such as advertisements and sponsorship, ticket and merchandise sales, sporting goods sales, spectator spending, and travel and tourism (Himmelberg, 1999). 


For the sake of the enormous amount of sports revenues and employment opportunities garnered by the sports industry, the discipline of sport management has quickly evolved and flourished in the collegiate academic realm. Sport marketing is considered as one of the vital sub-disciplines that is offered by many of the business colleges and departments to educate students (prospects) who are interested in pursuing a career in the sports industry. According to the North American Society for Sport Management (NASSM), there are more than 200 colleges and universities that cater a sport management-related program or offer some type of sport marketing courses to educate students about the operation and sales of the sports business (NASSM, n.d.). This essay is written to introduce the basic elements and concepts related to sport marketing. The authors hope to help the readers gain additional insight and interest in working in the sports industry, with a unique perspective and emphasis focusing on the financial and marketing aspect of intercollegiate athletics. 


Question 1

Approximately, how much is the sports industry’s value worth today?

A

$100 million dollars

B

100 billion dollars

C

More than 480- billion dollars

D

14 billion dollars


Question 2

Most jobs in sports industry are found in which of the following business sectors?

A

Marketing, sales and sponsorship

B

Facility management

C

College athletics

D

Non-profit organizations


Question 3

There are more than 200 colleges and universities that offer a sport management-related program or some types of sport marketing courses.

A

True

B

False

The Nuts and Bolts of Sport Marketing

  The rise of the sports industry during the last three decades clearly helps us understand the importance and influence of sports in the American culture. In 1987, the sports industry was ranked as the 23rd largest national industry. Its rank climbed up to No. 11 in 1995. Since entering the 21st century, the sports industry has consistently ranked among the top-8 national industries right behind gigantic economic sectors such as real estates, retail sales, health care, and banking. The growth of the sports industry can be measured in areas such as total figures of attendance and participation, frequencies and depth of media coverage, and the amount of available sports information. Using the most popular Newspaper in America, USA Today, as an example, about 50% of coverages are devoted to the Sports section. The popularity and impact of sports in our modern culture is inevitably strong and visible. 

Traditionally, the Big-four major professional sports leagues, National Football Association (NFL), Major League Baseball (MLB), National Basketball Association (NBA), and National Hockey Association (NHL) as well as college sports are considered to be the most popular spectator sports that grasp the most media attention and viewership (ratings). However, the trends and popularity of various sports often shift and change according to different time frames. We have all witnessed that NFL has replaced the American pastime, MLB as the most favorite professional sport in the U. S. In the ESPN Sports Poll from 1996-2002 (see Table 1), we can observe that all the Big-four leagues gradually lost their fan base during that era. Both Golf and Auto Racing witnessed a significant increase of their fan base (with 15% or more). Although the early 2000s was the golden age of NASCAR, its viewership and growth had hit plateau since 2010s. 

​Table 1. Percentage of Change of Fan Base from 1996 to 2002 (Adopted from Shank, 2009)

 Sport

  % of change of fan base 

 Auto Racing

 +28.6%

 Pro Golf

 +15.0%

  College Basketball

 -15.3%

 Pro Football

 -5.1%

 Pro Hockey

 -16.0%

 Pro Baseball

 -6.4%

 Pro Basketball

 -16.4%

​  

The survival and growth of every sporting event or products rely heavily on the marketing effort. For this reason, sport marketing is considered to be the most primary function and element to dictate the success of a sport industry. Often, people would equate sport marketing as selling and advertising specific sporting events or sport-related products. Although, this notion is not incorrect, it leaves out certain aspects, features and processes. Pitts and Stotlar (2013) defines sport marketing as “the process of designing and implementing activities for the production, pricing, promotion and distribution of a sport product to satisfy the needs or desires of consumers and to achieve the company’s objectives.” According to Shank and Lyberger (2015), sport marketing is about “the specific application of marketing principles and processes to sport products and to the marketing of non-sports products through association with sport.” Mullin, Hardy and Sutton (2014) combined the main concepts of the aforementioned definitions to provide a thorough framework for sport marketing. In order to meet the needs and wants of sports consumers, exchange processes are developed involving the elements of production, pricing, promotion and distribution of a sports product (place), also known as the 4Ps of marketing mix. The exchange processes are carried out in two major scopes: (1) marketing the sports products and services directly to consumers, and (2) marketing (other non-sports) industrial products or services to all consumers through the use of sports promotions. 

Traditionally, a sport is simply defined as a source of diversion or physical activity engaged in for pleasure (Shank & Lyberger, 2015). Today sports are not just competitions or games that are engaged by participants and avid sports fans. They are activities in a form of entertainment that are enjoyed by all types of populations. As former Reebok president Robert Meers had stated, the marketing of sports now is really about sports, fashion and music. Companies cannot expect to ignore this reality and survive (Shank, & Lyberger, 2015). This type of entertainment is clearly appealing and popular to many individuals; therefore, the marketers and advertisers believe it is worthy and effective to promote whatever the products or services that are intended to sell during the sport events or programs.

In general, the academia state that the primary goals of marketing center on satisfying consumers’ needs and wants. The orientation and operation of sport marketing is not different from this concept, either. According to the Maslow’s Hierarchy of Needs (Maslow, 1970), there are five basic human needs that account for much of human behavior. All human beings need food and shelter to survive in fulfilling the most basic physiological and safety needs. Psychologically, we all crave a sense of belonging. So, we need friends and family to satisfy our social needs. When all the aforementioned needs are met, we would strive for certain accomplishments to boost our self-esteem and attempt to reach a state of self-actualization. Believe it or not, an individual can possibly satisfy all the five basic needs in a short period while attending a live sport game. The sports franchise will have a beautiful, fancy, and safe stadium (or arena) to host their clients. The franchise also offers delicious food and drink at the concession stands to satiate their clients. Fans are excited and loud while cheering for the home team with their friends and family members. If the home team wins the competition or maybe even captures a championship title, the fans will even show a sense of pride and identify themselves as a part of the team and experience the team’s success vicariously. The actions and achievements of the players can even inspire the fans to attempt challenges and strive for excellence in their own lives.

​  In order to understand the consumers’ needs and wants, sports marketers must conduct research to gather relevant business intelligences to anticipate consumer demand and choices, monitor external environment and condition that impact consumers’ decision, and disseminate shared information and respond to necessary changes. The urgency and importance of conducting sport marketing research have sprung the evolvement and growth of the specialized sector of sport analytics. Sport analytics is a growing area with the significant potential. In 2014, sport analytics had an estimated market size of $125 million, and it was projected to grow to $4.7 billion by 2021 (Sport Techie, 2015). This exponential growth is likely to be an attribute to the functional use of all cloud, tablet, and phone traffic associated with sports. This make us realize that the broader sport technology can do amazing wonders in our lives over the next couple of years.


Question 4

Which of the following sport leagues is not one of the Big Four in North America?

A

NFL

B

MLS

C

NBA

D

NHL


Question 5

According to the ESPN poll, which sport experienced the largest percentage of decrease in fan base from 1996 to 2002?

A

Basketball

B

Golf

C

NASCAR

D

Baseball


Question 6

Which business sector is projected to grow to $4.7 billion by 2021?

A

High school athletics

B

Licensed merchandise sales

C

Television broadcasting rights

D

Sport Analytics

Marketing Mix

 Most marketing scholars addressed four primary elements involved in sports marketing, which are known as the “the 4Ps of the marketing mix.” Mullin et al. (2014) specifically recognized the excessive emphasis on the use and application of “Public relations” (PRs) in sports, so they extract the PRs concept from the traditional “Promotion” element and make it as the fifth P of the sports marketing mix. The authors would like to remind the readers that regardless of how all these elements function, these tools are available and utilized to serve the needs and goals of people. So, we would propose it is vital to understand the functional aspect of the sixth P, the element of “People.” In the following section, the authors will briefly introduce each element of the 6Ps sports marketing mix, so readers can gain a better understanding of their important role in the scope and operation of the sports industry. There will be additional essays in the later chapters that address each of the marketing mix components in detail.   

(a)People

  The sports industry involves various groups of people consuming and producing products or services. These groups may include spectators at all levels of competitions, participants of physical competitions or activities, and personnel in organizing and producing events, games, and services, etc. Figure 1 is simplified model that illustrates how all groups of people support each other in producing and consuming sports products and services (adopted from Shank & Lyberger, 2014). The study of sports marketing is about learning how to execute the marketing process to satisfy the needs and wants of all these people.

​Figure 1. Simplified Model of the Consumer-Supplier Relationship in the Sports Industry (Adpoted from Shank & Lyberger, 2015)


Image courtesy by Steve Chen use by personal permission

​(b) Product

 A sports product is either a good or service that provides benefits to a consumer of sports (Sawyer & Hypes, 2012, p. 397). Sports products come in various forms with countless examples. Some of the primary products and services we often consume may include sporting events (games), concession service in arenas/stadia, athletes, items that are sold in sporting goods stores (apparels, footwear, and equipment), transportation services for travel, collectibles and memorabilia, sports training and medical products, fitness and health services and membership, sports camps, sports information in forms of books, magazines, and online platforms, and radio and TV broadcasting programs. All these different types of sports products are often categorized as either tangible or intangible items in terms of the ways for experiencing or consuming the products. Shank and Lyberger’s special sports product perceptual map (2015) helps us understand the tangibility of the products by dividing all the products into four quadrants based on two pairs of conceptual characteristics, mind/body and goods/services. Readers can refer to Figure 2 to learn how each product fits into a specific quadrant according to the product’s nature and delivery.  

Figure 2. Sport product perceptual map (Copied from Shank & Lyberber, 2015, p. 31)


Image courtesy by Steve Chen use by personal permission

​(c)Price

 Price is defined as a statement of value for sports product. In the sports industry, tickets, memberships, signage, apparels, equipment, and parking services, everything comes with a price. The determination of ideal and sensible price value can be subjective and challenging, because it is often up to the consumers to judge whether the benefits and satisfaction of the product outweigh the cost (price) that they have paid for the item. In general, price could be the most important element to be judged, when an individual decides to purchase or consume a sports product. In the sports industry, the perception of an ideal price is often associated with the current economy and the income level of the consumers. Price is also time-sensitive and demand-driven. It is almost guaranteed that the ticket price of a highly popular event will escalate as the game time approaches.

(d) Place

 The concept of place can be referred to as the location where the exchange process takes place between consumers and product or service suppliers. This concept may also encompass both the tangible and the intangible aspect. Like many other retail stores and fast food businesses, stadia and sporting goods stores are physical locations that sell products and provide satisfactory experiences for the consumers. In terms of intangible aspect, there are sports games broadcasted by the radio or video-streamed via internets. In this case, delivery of the service is carried out through the invisible electronic waves. Interestingly, the consumers may still need tangible items such as radio, television, or smartphone to enjoy the services offered by the invisible channels 

(e) Promotion

 Simply put, promotion is all forms of communication and activities that are given to the consumers to be aware of, learn about, and consume the product or service. Within the process of promotion, it has its unique elements, known as the promotion mix, designed to foster the communication between the consumers and suppliers. In addition to advertising, the sports industry further focuses on two specific elements, the use of sponsorship and public relations.

(f)Public relations

 Public relations are identified as one of the elements of the promotion mix. Its primary purpose is to develop a mutual beneficial relationship between the various public sectors and sports organizations on all types of collaborative projects and activities. Professional sports organizations constantly engage in grass-root community activities to reach youth sports participants and cultivate their interest in playing and watching sports. Due to the emphasis of public relations, the role of media (TV, radio, online platforms, and social media) also become extremely important because these communication platforms are the quickest and most effective means to exchange information, develop awareness and shape the image for both the public sectors and sports organizations.


Question 7

Which of the following groups is not considered as part of the sport consumers?

A

Participants

B

Corporations

C

Spectators

D

(a) All of the above are a part of the sport consumers


Question 8

Please identify the two pairs of conceptual terms that divide the product conceptual map.

A

Tangible and Intangible; Goods and Services

B

Tangible and Intangible; Participants and Consumers

C

Mind and Body; Goods and Services

D

Mind and Body; Participants and Consumers

The Unique Aspects of Sport Marketing

  

Mullin et al. (2014) point out many sports marketers exhibit a certain type of myopia while carrying out their marketing responsibilities and strategies. They may simply execute the routine tasks without further identifying the actual needs and wants of their consumers (through research). Therefore, they would overlook or neglect the important details and information on how to satisfy the consumers. They would merely assume that marketing is equated to promotion and not seriously examine the effectiveness of their promotional schemes and practices. In order to overcome some of the aforementioned sports marketing myopia, sports marketers need to understand and view sports as special experiences and operate this business differently from other whole sales, retail sales, and many other businesses. The authors would highlight six unique aspects of sports marketing that are different from traditional marketing principles in executing the function of the marketing mix. 

(a) Simultaneous production and consumption of sport events

While spectators and fans are experiencing an exciting thriller (competition or game), they realize the game is simultaneously produced (played) and consumed (watched). Spectators’ emotion is rising and falling along with the progress of the game. Fans hate to miss any part of the game’s action by going to the restroom or lining up at the concession stand. Bad weather, absence of star players and personal time conflict can all impact one’s chance for enjoying the moment. Although the modern technology such as DVR, TiVO, and the production of instant classics programs can help expand the product life and help the consumers relive the game experience, the delayed gratification often cannot really compare to the live experience.

(b) Consumers’ exceptional knowledge on the product

Many sports consumers (either participants or spectators) consider themselves savvier and more knowledgeable than the average user about understanding the product qualities. They also will show a greater sense of expertise and loyalty to their preferred products or sports teams by engaging in fantasy sports competition, sports betting, playing trivia challenges, and composing all types of commentaries and opinion messages via social media all day long. Due to these practices, we witness the incredible popularity and growth of programs such as pre-game, post-game and all different types of talk shows or commentary programs.


A newstand in Boston. [1]


Specific Fitness Needs for Certain Types of Consumers 


[2]​

(c) Difficulties in pricing sports events and products

“Beauty is in the eye of the beholder.” Should each of the games be treated and charged equally despite the potential outcomes and results almost certainly being different? Sports marketers often charge ticket prices according to the sense of consumer demand, but not based on the fixed and operating costs of the games. It is difficult to include and quantify all the variables while estimating operating costs for professional sports games. Obviously, most of the sports have underestimated the operating costs of the games, so teams would need all kinds of other revenue sources (TV deals and sponsorships) to cover the income-expense gap (imagining the expensive facility costs and player salaries for producing the games).

(d) Inconsistent product standards, especially in games

In most retail businesses, consumers can usually return the purchased items for a refund, if they are not satisfied with the quality of the product. In professional sports competitions, marketers do not treat every game the same. In their eyes, certain marquee match ups and weekend games are more valuable than the others, so prices are also charged differently. Since there is a high level of unpredictability in the outcomes of the games, the satisfaction for the fans cannot always be guaranteed. Fans are probably not so happy when the star players are not playing, or their teams end up losing. Unfortunately, there is no refund mechanism for these undesirable outcomes. People can actually end up paying a high price for an unpleasant memory or experience.

(e) Ancillary products can possibly outweigh core products

It is obvious that the core products of spectator sports are events themselves. However, the spectators don’t just watch the competition alone, while attending a game. They are likely to experience and enjoy other ancillary products associated with the game, such as half-time entertainment, game-day promotion activities, concerts, food, drink, and other merchandise. As few presidents of the minor league baseball franchises have mentioned, their fans don’t usually remember the outcome of the game, they are just there to enjoy the good experience, music, and great food. Young adults are drawn to the ball park simply due to the $1 beer promotion (i.e. the Thirsty Thursday campaign). Some of the young mothers who attend the basketball games of the authors’ institution, they care about having their children participating in the “Chicken Dance” more than anything else. Because of the various interests of all different groups, the events can attract all types of people and not just the avid sport fans.

(f) Excessive use of PRs in sports

There is a symbiotic relationship between sports and the mass media. In reality, the survival of sports leagues, such as the NFL and the NBA are heavily depending on the broadcasting rights. More than eighty percent of revenues of the NCAA come from its March Madness broadcasting fees with the Columbia Broadcasting Company (CBS). The public relations have become the most important marketing feature that dictates the success of the sports. The sports leagues and franchises need to expand the fan base, create awareness, and promote their sponsors and themselves to rake in all the available revenue streams. The speedy development of social media and other communication technology further rectify the important role of public relations and its impact on spectator sports. 

Question 9

Which of the following is not considered as a symptom of marketers’ myopia?

A

Marketers may simply execute the routine tasks without further identify the actual needs and wants of their consumers.

B

Marketers never assume that marketing is solely equated to promotion.

C

Marketers often overlook or neglect the important details and information on how to satisfy the consumers.

D

Marketers usually don’t seriously examine the effectiveness of their promotional schemes and practices.


Question 10

Please identify at least three examples of unique aspects of sport marketing that are suggested in the reading.

Brainstorming Activities

  

Imagine yourself as a prospect of the marketing and sales division of a sports franchise. Could you think of some popular current sports marketing topics, practices, or research areas that you and your fellow marketers should examine closely?? (Would studying these topics and issues lead to certain job opportunities with the growth of sports analytics??)

Here are some of the trendy examples:

● Activation plans, activities and strategies

● Super Bowl commercials and ticket sales

● Giveaways (souvenirs and gifts) and sponsorships for various College Bowl Games

● NCAA bracket town, fan jam session….

● MLBAM and electronic media delivery 

● Athletes’ endorsement deals

● PRs activities for teams/leagues/organizations

● Advertising technology and promotion

● Sales information, attendance and pricing

● Interviewing sports marketers for best practices and innovative ideas

● Operation of agencies and marketing firms 




​References

[1] Image courtesy of Wikimedia Commons, under license CC BY 2.0

[2] Image courtesy of Pixabay, under license CC01.0

Collignon, H., Sultan, N., & Santander, C. (2011). The sports market: Major trends and challenges in an industry full of passion. Retrieved from http://www.atkearney.com/documents/10192/6f46b880f8d1-4909-9960-cc605bb1ff34

Eschenfelder, M. J., & Li, M. (2007). Economics of sport (2nd ed.).  Morgantown, WV: Fitness Information Technology.

Himmelberg, M. (1999). The sporting life: long hours, low pay, starting at the bottom. What fun!

            Orange County Register. Retrieved from

Maslow, A. H. (1970). Motivation and personality (2nd ed.). New York: Harper and Row.

Michaels, M. (2018). The price of a 30-second Super Bowl ad has exploded — but it may be worth it for companies. Retrieved from http://www.businessinsider.com/super-bowl-commercials-cost-more-than-eagles-quarterback-earns-2018-1

Mullins, B. Hardy, R., & Sutton, W. (2014). Sport marketing (4TH ed.). Champaign, IL: Human Kinetics.

NASSM (n.d.). Sport management programs: United States. Retrieved from https://www.nassm.org/Programs/AcademicPrograms/United_States

Pitts, B., & Stotlar, D. K. (2013). Fundamentals of sport marketing (4th ed.). Morgantown, WV: Fitness Information Technology.

Plunkett, J. W. (2010). Plunkett’s sports industry almanac 2011. Houston, TX: Plunkett Research.

Rao, J. (2011). The Super Bowl as economic game changer. CNBC News. Retrieved from http://cnbc.com/id/41044141/The_Super_Bowl as Economic Game Changer

Sawyer, T. H., & Hypes, J. A. (2012). Marketing principles. In T. Sawyer & L. Judge (Eds.). The management of fitness, physical activity, recreation, and sport (pp. 397-409). Campaign, IL: Sagamore Publishing.

Schwarz, E. C., & Hunter, J. D. (2008). Advanced theory and practice in sport marketing. Burlington, MA: Butterworth-Heinemann.

Shank, M. D., & Lyberger, M. R. (2015).  Sports marketing: A strategic perspective (5th      ed.). New         York, NY: Routledge.

Sport Techie. (2015, August 8). Universities need to focus on training students in sports     analytics. Retrieved from www­.sp­ort­tec­hie­.co­m/2­015­/08­/09­/un­ive­rsi­tie­s-n­eed­-to­-fo­cus­- on­-tr­ain­ing­-st­ude­nts­-in­-sp­orts-a­nalytic­s/#comment-­27413­7