Sports and Entertainment Marketing

Unit Topics

• Just what is sports and entertainment marketing?

• The product is sports and entertainment• Choose the channel• Economic issues• Promoting sports and entertainment• Selling sports and entertainment• Legal issues

So just what is SEM?

• It’s a huge industry offering many products and services.

• Marketing SEM requires careful evaluation of consumer demand, competition and financial valuation of the goods and services offered.

Considerations for SEM

• Target market’s discretionary income (after bills are paid)o Must price product right

• Distribution must be timely.• Promotion must be informative and

creative.o Multiple means must be used

Examples of the 4Ps in SEM

• The Super Bowl (sports event of the year)• PRODUCT: Game• PRICE: $400 – 600 face value per tix• DISTRIBUTION (Place): selecting host city that

has a airport, highways and accommodations. Also involves ticket sales and the TV/radio network

• PROMOTION: commercials, advertisements and more.

Sports Marketing

• It is defined as using sports to market products.• It capitalizes on the popularity of sports by

using spending habits of fans to maximize profits on items fans purchase in association with sporting events.

• Sports marketers must continually search for new ways to appeal to customers.o Extreme sports, arena football, etc.

Sports Marketing

• Gross impression monitoring. Gross impression is the number of times per advertisement, game, or show that a product or service is associated with an athlete, team or entertainer. Can be bold or subtle (logo on shoe or uniform, sign on board, scene in movie, athlete talks)

Sports Marketing

• Timing is everything. Fans want to be associated with a winner so you need to catch the team at the top.

Entertainment marketing

• Influencing how people choose to spend their time and money on entertainment.

• Multi channels are involved in this (TV, radio, web, print, movies, events etc.)

• Has changed immensely over time as technology has improved.

Economic Concerns

• Profit is essential; studios and teams look to cut costs to maximize profit.

• Worldwide distribution is critical for movie profits. Box office revenue increase by up to 100% with international release. o Titanic grossed $600.8 m. in the US and

$1,234.6 m overseas.

Entertainment Utility

• Form: a dvd formatted movie (better than 16 mm today)

• Time: movie theaters show films at several times during the day

• Place: movies available for rent and purchase at various locations

• Possession: making product available at an affordable price with several options (buy vs rent)

SEM and Ethics

• Must seek to present the right image and showing for the community

• Using fines to control athlete behavioro NBA $13.9M, NFL $3.3 m, MLB $170,725,

NASCAR $384,495 (Wall Street Journal)• Industry standards are guidelines used

by various groups• Contracts often define behavior

standards

Special marketing tools

• Using public figures on the motivational circuit, sports camps and moreo Paid personal appearances

Terry Bowden (Former UAuburn FB coach) gets $10 – 20,000 per speech

Pat Summit (Tenn Lady Vols) gets $20 – 30,000 per speech

o Write books on sport or other topico Sports camps and clinics done in conjunction

with major company support

Destination Marketing

• Theme parks• Cities with huge tourism budgets• Ecotourism• Halls of fame• Well coordinated plan results in large

direct and indirect economic impacts

SEM Going Worldwide

• Expanding into India and China – athletes are now coming here to play, events are exported to capture new fans

• New locations for familiar companies and events

• FIFA, Adidas vs Nike, MLB Tokyo Office• NASCAR racing in Japan• Disney Joint Venture in Hong Kong

Marketing Information Management

• Teams and venues must frequently evaluate their customers needs and wants.

• Must use the information regularly• Acquire it from many sources• Change and respond to fans

Game Plan

• Companies must decide which tactic (the way a product or service is differentiated in the minds of customers from competing items) to use

• Once tactics are determined, strategies must be created.

• Research competition – internet, observations, trade shows, customers)

Game Plan

• Fans Rule – must not put too much in any one area. Fans only have so much money to spend and if you saturate a market, your team or event could fail

• Capitalize on controversy – when Sony Pictures decided to make a movie of the DaVinci Code it knew it was a controversy. They deflected religious concerns with a website, took a quiet stand on pre-release promotion and avoided overexposure. This created mystery and $462 m in sales in 14 days.

Game Plan

• Concert Prices – have grown exponentially in recent years (100% from 1995 – 2006). Indoor events are cheaper to produce. 70% of live events are controlled by Clear Channel Communications who has little competition. Causing venues to look at price of convenience fees, processing fees and facility fees on top of tix.

Game Plan

• A little music with your coffee? – Starbucks now sells music, books and films with it’s pricey coffee. In 2005, it sold more than 3.5 million CDs.

The Product is Sports and Entertainment

• Product enhancements are features added to the basic product to improve benefits for the customer.o Stadiums and arenas now often include

backs on seats, individual seats instead of bleachers, sky boxes and more.

• Licensingo Teams license names and mascots for

products, allows use of images on another product/item

Brand Recognition Levels

• Nonrecognition stage – unidentified brand

• Rejection –not purchased due to brand• Recognition stage – know brand but it

does not influence purchase choices• Preference stage – prefer one brand but

will still buy others if the one is not there• Insistence stage – only buy one brand

Recruiting

• Athletic team at college and pro level must continue to attract blue chip athletes to grow. Winning teams generate profits.o NCAA regulates recruiting process to ensure

integrity.• Must also retain solid coaches and offer high

salaries (many universities pay over $1 m)• Venues must recruit for concerts (top acts

charge up to $100K per performance)

Women’s sports

• Sports marketing has neglected women’s sports until just recently.

• In 1991 when US Women won the world cup, it was not even in the paper; nine years later the championship was on TV.

• Events are becoming popular but women’s salaries are grossly inequitable. WNBA averages $50K

• Venues need to look at women seriously as the female is becoming an active consumer of sports and entertainment).

Entertainment as product

• Local TV – little left; often national networks focusing on big issues and shows

• Children’s TV – used to be just local coverage – now whole networks avail.

• Sports Programming – used to be regional – now with national coverage – viewership is up and costs have soared.

• Public TV/Radio – much is local and tailored to the audience

Product Marketing Strategies

• Lifecycle considerationso Introductiono Growtho maturity o decline

Introduction

• New items brought to marketo Penetration pricing – price it low to get lots of

interest and market share but less profito Skimming pricing – introduce at high price to

capture early adopters and higher profits• Beanie babies were HUGE and used

skimming. Sport venues gave them away to help boost attendance for slow selling games.

Growth

• Second stage. Sales of a product and profits increase. Target market is aware and buying product.

• During growth stage of American Idol, similar shows popped up like America’s Got Talent. Success of one makes others want to do it.

Maturity

• Third stage – sales level off and might slow down. Marketing costs increase as promotions (sales and ads) are now necessary to keep market share.

• Mall of America started running ads that compared its amusement park to traditional parks. It played upon the benefit of also being able to shop and not have to worry about weather.

Decline

• Final stage – sales decrease and my not generate enough revenue to justify marketing it. May need to modify, sell it out, discount the product or drop it.

• Clothing designer Mossimo opted to license his line to Target.

• New stadiums are built to try to recreate interest in the team (product)

• Sports drinks now promoted to the fan.

Choose the channel

• Properly distributing your event or team is critical to success.

• Global differences can present challenges. Laws vary and cultural norms can be barriers.

Channels for SEM

• Live Events• Via Media (radio, tv, net)• DVD/recorded media

Sports

• Fitness and funo Health, leisure time and money all drive recreation

growth.• Facilities vs. wilderness

o Must have facilities available where they are necessary due to location or climate.

o Hiking trails and more promote tourism.• Getting access

o Participation is related to income; Title IX has increase school participation for girls.

Collegiate Sports

• Colleges benefit from successful programs. Must get TV coverage.

• NCAA has created the NCAA Postseason Football Handbook. o It determines how postseason bowl games are played through

the BCS. Big games land schools between $14.8 and 18.3 M. When a team wants to sponsor a game, it agrees to pay both

teams’ travel and participation expenses at a minimum.• NCAA Final Four televised around the world.• Four major levels of colleges DI, II, III and Juco.

Professional Sports

• Seek worldwide coverage.• More US cities want teams than there

are teams available.o Leagues control location of teams.o Each team in independently owned but is

part of a cartel that regulates production, pricing, and marketing. There is a league agreement that includes distribution of games.

Pros

• It takes money and people to get a team. You must have a large audience to pull from and money for the team.o Expansion team fee for Houston to join the

NFL was $700 million.o Reliant Energy paid $300M in 2002 to put its

name on the stadium.o Cable TV has dramatically increased

distribution.

Entertainment Distribution

• Movieso Are made with the demographics in mind.

Release can be targeted to certain areas Timing is key (summer and holiday tops)

o Production costs must be monitored. Low budget <250K to make. Costs up to $3K per reel to distribute

o On-demand TV and web services reduce distribution costs

Entertainment Distribution

• Musico From vinyl to iPod

Initially always live distribution then recorded mediums became available.

Music on demand downloads fast approaching the top channel

50 million iPods sold in the first four years Created a whole stand alone accessory market Online streaming

Entertainment Distribution

• Cable TVo Has changed distribution forever

Hundreds of sub networks available all the timeo HDTV opening new markets

• Podcasting• Satellite radio and TV• Mega distribution

o Vertical integration (one company controls several different areas of the same industry - think Disney)

• Internet music – file sharing

Supply and demand

• Concertso Sell out quickly for many popular acts

Limited venues and limit tickets command high prices all around

• Pro championshipso Sell out quickly and often before the teams

are even known. Commercialization and marketing driving this

Impact of consumer trends

• Retro TVo Cable channels show old shows often.

• Game showso New shows are created and old shows are being

redone.• Audience ratings speak

o New shows can end quickly.• Socio-culture issues

o Attitudes and beliefs – eating out often, drive thru etc.

Promoting Sports and Entertainment

• Promotional Goalso Gain new fans

USTA did it successfully in the early 90’s by setting up learning centers and offering lessons

o Advertising Product placement

o Publicity – unpaid attention from the mediao Sales promotions – incentives, give awayso Personal selling- face to face, vendors,

booths

Advertising

• Coordinated with sponsors before a game or event.

• Must be within budget and be cost effective.• Must be creative and avoid wear out.• Critical to success.

o New shows are pitched to advertisers in the spring. Firms buy slots based upon their target markets.

o Super Bowl advertising is some of the most expensive ever.

Product Placement

• (Paid) placement of products in shows and at events.o Can be direct payment oro An agreement to promote the event in

exchange for the placement of product• E.T and Reese’s Pieces (paid for

advertising of the movie)• You’ve Got Mail• NASCAR, Hockey, other sporting events

Publicity

• Is free but can be both positive or negative.o Brittany is getting more publicity than wantedo Crunch having Ludden and WG on the ice

• Can create goodwill (businesses make donations to events like walks and HS teams)

• Damage control may be needed for negative items when athletes and celebrities are involved.

• New area is viral marketing (You Tube, Google)

Public Relations

• An offshoot of publicity that tries to create favorable public opinions.

• Creates the right imageo Spokespeople do the talking

• Athletes o Try to keep clean image, do public good

(charity work or create foundations)o Become spokespeople for various

organizations (CMN, Spec Oly, etc.)

Sponsorships and Endorsements

• Important in college athleticso TV revenue due to advertising, naming rights

to stadiums, programs and more• Key for athlete income in the pros

o Tiger Woods - Nike

College Sponsorships

• Sponsorship of college athletics is mostly about revenue for college programs. Help to keep costs lower for consumers.

• Most are long-term – ABC/ESPN ahs 10 years to broadcast Big 10 Football and other events. HOST Communications signed a contract for $83.4M in cash and improvements to the Univ. of Tenn for multimedia rights to their athletics.

Pro Endorsements

• FTC does oversee advertising.• Celebrity endorsements must be within certain

guidelines:o Truthful opinions and beliefs expressedo Endorser must have experience with prod.o May not be deceptive or misleading.o May not be shown out of context or change the

words.o Endorser must use, continue to use and believe in

the product as long as they are shown in ads.o Company must notify endorser of any changes.

Celebrity Endorsements

• US companies pay more than $1Billion to athletes for endorsements.

• Celebrities get another large chunk.• Consumers will buy products endorsed by

celebs more than those that are not.• Endorsements are expensive to the company.

o LeBron James has endorsed Powerade, NIKE, UpperDeck and Bubblicious. Could be viewed negatively – too many products – may not be sincere.

o Negative actions can hurt sales.

Promotional Events

• Awards showso The Oscarso Grammy Awardso Emmy Awardso Tony Awardso CMA, VMA, etc.

• All star events

SEM Sales Process

• PreApproach – salespeople learn about the product and service.

• The Approach – first contact• Demonstration – presents the product• Answering questions – objections overcome• Closing the sale – get agreement and do

suggestion selling.• Follow up.

SEM Ticket Sales

• Ticket Brokers – operate legal ticket business that have contracts with promoters and vendors to get the “best seats”.

• Ticket Scalpers – sell tickets to events at inflated prices.

• Ticket Frenzy – those once in a lifetime events that just keep coming.

Ticket System

• Most transactions now occur online.• Ticketmaster suggests registering for an

account and storing a credit card for faster transactions.

• Some events use lottery system for some seats. Others give each team so many seats to sell (often to season ticket holders).

Group Sales

• Give promotional discounts to businesses and groups to help sell out the stadium or event.o Baseball teams often offer groups seats to

weekday day games to boost attendance.o These discounts help expand the customer base.

• Colleges offer alumni that make big contributions special perks.

• Luxury boxes and suites • Club seats

Legal Issues

• Broadcast issues covered by FCC• Sherman Antitrust Act – price fixing• Clayton Act – right to sue monopolies• National Labor Relations Board –

collective bargaining• Copyright laws – not always enforceable

outside the US (RIAA sues under this)• Royalty fees

Labor Unions

• Collective bargaining agreements• Salary caps• Player issues• Revenue splits• Writers Guild, Screen Actors Guild

Agents and more

• Athletes and celebs retain agents to negotiate and act on their behalf.o Legal representative (think of movie Jerry

Maguire)o Negotiate and shop them to sponsors

• Handlers could be hired to work with the athlete (celeb) to ensure they behave

• Advisors are financial and business counselors who give help when needed.