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3. SPORTS MARKETING

1. Sport typologies

2. Sport industry

3. Sports marketing

Arne Müsseler

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IntroductionA key fact : growth of sports business

• Growth measured in

– Attendance figures– Media coverage and TV rights– Employment figures – Salaries of professional athletes– Sales of sporting goods – Investments in sponsorship – International markets

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1. Sport typologies

• Objectives :

– to grasp the common points and differences between sport

– To realize that any typology is a tool for a specific purpose (ex: marketing)

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GAME 1

• Compare the pictures above,

• How do they define sport ? Quote words.

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Modern/postmodern sports • Ex : competitive skiing

– Individualism– Universality– Performance– Technology– Specialization– Innovation

Olympic GamesStadium CompetitionsAthletes as heros

• Ex : Street-ball– Community

– Proximity

– Experience

– Fun

– Freedom

– Authenticity

Tribalism OutdoorAthletes as big brothers

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GAME 2

• Make your own typology of sports

• What criteria did you choose? Why ?

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Example of typology of sports

LEISURE SPORTSFreedom, amusement, conviviality

PASSION SPORTPersonal investment

TRAINING SPORT

Health and lookFitness, body-building, aerobics

EXPRESSION SPORTS

Mental, surf, mastering the movementSnowboard, karate, ice-skating, dance

RULED SPORTSSocial competition

Ball sports

MOTOR SPORTSAdrenalin, speed and power

Formula 1, Rallye, Motorcycles, off-shore boat, ..

ELITE SPORTS

Golf, horse-riding, sailing, tennis

RESISTANCE SPORTS

Courage and obstinationAthletics, triathlon, cycling, swimming

OUTDOOR SPORTS

Exotism or rootsExtreme or familyMountain or sea

Based on consumers’perceptions (Hickory 2001)

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2. The « sport product »

• Objectives:

– To understand the common points and differences between sport and non-sport product

– To embrass the complexity of the sport industry

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GAME 3

• List the differences between a– car manufacturing company ( or any « non-

sport » industrial firm)– and a sport team ?

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Specificities of sport• Sport is paradoxical

– Professional/amateur, individual/collective, urban/outdoor, social/economic, competitive/free, …

• Sport is a service– Non tangible (except infrastructures and accessories).– Instantaneous and non-storable (is destroyed as soon as its produced)– Co-created by the client (spectator) and the « front-line employee »

(athlete)– Front-office (the arena) + Back-office (training gymnasium)

• Sport is the only « industrial product » that can be made with :– Often collaborating AND competing firms (teams!)– Often an uncertain result (the result of the match!) – Sometimes a rigid productivity (fixed quantity of matches, of players)

« the cost disease »

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GAME 4

1. What can be a « sport product » ?

2. How can be the clients ?

3. The suppliers ?

4. The intermediaries ?

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The sport product is often a service

Magnesium Food Cloth Ski Racquet Swimming-pool Competitions Training Teaching Counselling

« PURE » GOODS « PURE » SERVICE

SERVICES WITHHIGH AMOUNT

OF PHYSICAL DEVICES

GOODS WITHHIGH AMOUNTOF SERVICES

(advices, maintenance, …)

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Definition of Sports Product

• A good, a service or any combination of the two that is designed to provide benefits to a :– Sports spectator– Participant– Sponsor.

(Sports Marketing, M. Shank)

Source : http://umterps.cstv.com

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

Consumers

Spectators

Participants

Products

Events

Sporting Goods

Personal Training

Sports Information

Producers/Intermediaries

Sports Labor

Sanctioning Bodies

Sponsors

Media

Agents

Equipment Manufacturers

Banking & Insurance

Government

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The sports marketing exchange process

SPONSORS

PROFESSIONALATHLETESSPECTATOR

MEDIA

LEAGUES

sponsoring

purchases

salary

GOVERNMENT taxes

subsidies

Rights &sponsoring

Ticket fees

CLUBS

subsidiesAMATEURATHLETE

membership

TV Rights

NB :Agents &BusinessmenAre often betweenMedia and athletesMedia and Leagues

dream

InsurancePleasureTraining…

dream

fun

image

AGENCIES

rights

Studies & advices

royalties

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Types of sport products• CORE

• Sport Events

• Sporting goods• Hardgoods: equipment, accessories• Softgoods: apparel, clothes & footwear• Collectibles and Memorabilia

• Sports training & services– Fitness and Health Services– Sports Camps and Instruction

• PERIPHERAL

• Athletes• Arenas / stadia

• Sports information– TV, Newspapers, Internet, Magazines,

Radio, etc.– ESPN

• Sport betting ($100 b /year ?)– $12b online sport betting

• Sport video games / online sport– Fantasy leagues

• Towards digital sports ?– Online informations + games +

gambling

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Sporting goods

• USA (SGI, 2005 est.)– Over $100 billion

• Europe (SGR, 2005 est.)

– Over $40 billion

Average : +5% over 7 years.

+ Collectibles (cards)

ExerciseFirearmsGolfCampingFishing

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Sport Video Games

Video Games = $33 b.Electronics Arts : $1,2 b. (40% in sports)+7% a year since 1995, slowing down(Les Echos, 2005)

Visit : http://www.easports.com/

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Sport events

Visit : http://www.aso.fr

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Athletes as brandsFred Perry clothing brand : http://en.wikipedia.org/wiki/Fred_Perry

René Lacoste brand :

http://www.lacoste.com/intro.html

Michael Jordan brand :

http://www.nike.com/jumpman23/home/

Anna Kournikova

http://www.kournikova.com/

David Beckham

Brand it like Beckham

http://www.forbes.com/2005/04/01/cx_pm_0401beckham.html

http://www.mobiledia.com/news/47595.html

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Stadia & Arena

http://www.allianz-arena.org

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GAME 5

• Make your own typology of sport industries

• What criteria did you choose? Why ?

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Example of typology of sport industry

Sport Business in the Global Marketplace, 2004

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Sport management, P. Masteralexis and al., 2000

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Key facts & figures on sports industry

• 11th largest of all U.S. industry groups

• World’s sports market : $500 b. (all included)

• Relatively weak impact in the world (1-2% world PNB)

• Sports firms are still relatively « small »– Sales :

Nike = $10 b.

(world biggest in sports 2005)

( vs. Exxon = $400 b.

Wal-Mart = $312 b. in 2005)

USA; 350; 70%

Europe; 100; 20%

Asia; 50; 10%

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Lisa Neyrotti

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2004 or 2005

salesSporting goods Sport retailers Media Leagues

Federations, clubs

Over 1 b. $ Nike (11b), Adidas-Reebok (6,6b),

Amer-Salomon (2b),

QuikSilver-Rossignol (2b),

Hilfinger (2b),

Mizuno (J),

Asics (J)

Ferrari (1,2 b.)

Intersport (6,2b), Wal*Mart (5,8b.), FootLocker (4,1b.), Sport 2000 (2b.), Decathlon (3,1b.), Sports Authority

Alpen, JC Penney, LL bean

Fox (12 b.)

Sky (4 b.)

ESPN (2,4 b.)

MLB (3,5 b.)

FIFA (3b.)

NFL (2,2 b.)

NBA, NHL (2 b.)

PGA (1,5 b.)

CIO (1,1b.)

$1 b. <

<500 m.

Shimano (J), New Balance, Fila (I), Callaway, Pentland (GB), Decathlon (F), Skechers, Benetton (I)

Karstadt, JJB Sport

Dick's, Sport Inc.

Bass Pro shops, Just for feet, Cabela's, Canadian Tire, Rallye

500 m. <

< 250 m.

Puma (D), Lacoste (F), Lafuma-Oxbow (F), HTM (D), Cycleurope (S), Columbia, K2

Eurosport International (300 mil.)

Manchester (315m.)

Real (287 m.)

Milan (270 m.)

Chelsea (264 m.)

Juventus (262 m.)

Arsenal (211 m.)

Barcelona (206 m.)

250 m. <

< 100 m.

Converse, TImberland, North Face (GB), Tecnica (I), Scott, LAGear, Lowe, HellyHansen (N), Aigle (F),Patagonia, Nautica,

Bayern Munich (202m.)

(+15 european clubs over 100m.$)

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3. SPORT MARKETING

• Objectives : broad pictures before « entering » the consumer behaviour and the marketing mix

• Definition

• Companies

• Intricacies

• Future trends

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Need for Sports Marketing

• Definition of Sport – “Source of diversion or physical activity engaged in for pleasure”.

(Webster’s)

• Definition of marketing– “The science of the art of selling” (P. Dubois)– “Process by which individuals and groups obtain what they need and

want through creating and exchanging products and value with others. Simply put: Marketing is the delivery of customer satisfaction at a profit.” (Ph. Kotler)

• Definition of Sports marketing– “The specific application of marketing principles and processes

• to sport products • to the marketing of nonsports products through association with sport.”

(W. Shank)

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The companies• IMG World• Sportfive• Octagon (Interpublic Group)• Havas Advertising Sport (Vivendi)

• Amaury Sports, Carat Sport, Darmon Group …

• (Sponsorship Research International, Group ISL Worldwide, brankrupted in 2001)

• Tendency to vertical integration :– Sponsorship Agency + Media Operator + Event organizer + Club owner

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The complexity of the sport marketing mix

Product Price Promotion Public Relation Place

Product

Price Elasticity of demand decreasing with fan

Promotion WNBA promoted by NBA teams by mass media and direct marketing

Public relations Critical role in LT involvment (M. Tyson vs Evander Holyfield

Fan Cost Index (team Marketing report)

Nike and 3rd world manufacturing

Place Facility image influence perceived quality and credibility

Luxury suites and VIP lounges in stadia increase revenue a lot

Success : Cleveland indians (Jacobs Field), Failure: Gund Arena (Cleveland Cavs),

Oriole Park at Camden Yards in Baltimore, Ball Park at Arlington, Retro style

From Sports Marketing (M. Shank)

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Main sports marketing trends

• Fan identification– The personal comitment and emotional involvement customers have with a sport entity.

• Affinity Marketing– Firms use the individual’s level of cohesiveness, social bonding, identification and

conformity towards a particular reference group.

• Fan Relationship Marketing (FRM)– Integrating the spectator into the team (one-to-one mkt, loyalty, …) with the help

database marketing

• Aftermarketing– Customer retention demonstrating the care and concern of the marketer for the customer

after the purchase.

• Hospitality marketing– Segmented service policy of event attendees/spectators to increase their satisfaction and

optimizing allotment of costs depending on the targets.

• Ambush Marketing– Although they are not official sponsors, firms attempt to capitalize on the popularity of an

event by proxys.