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
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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 behavior
o
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 more
o
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
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Write books on sport or other topic
Sports camps and clinics done in
conjunction with major company support
Destination Marketing
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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.
• Licensing
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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 considerations
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Introduction
Growth
maturity
decline
Introduction
• New items brought to market
Penetration pricing – price it low to get lots of
interest and market share but less profit
o Skimming pricing – introduce at high price to
capture early adopters and higher profits
o
• 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 fun
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Health, leisure time and money all drive recreation
growth.
• Facilities vs. wilderness
Must have facilities available where they are
necessary due to location or climate.
o Hiking trails and more promote tourism.
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• Getting access
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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.
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Leagues control location of teams.
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.
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.
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Entertainment Distribution
• Movies
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Are made with the demographics in mind.
 Release can be targeted to certain areas
 Timing is key (summer and holiday tops)
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Production costs must be monitored.
 Low budget <250K to make.
 Costs up to $3K per reel to distribute
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On-demand TV and web services reduce
distribution costs
Entertainment Distribution
• Music
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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 TV
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Has changed distribution forever
 Hundreds of sub networks available all the time
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HDTV opening new markets
• Podcasting
• Satellite radio and TV
• Mega distribution
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Vertical integration (one company controls several
different areas of the same industry - think Disney)
• Internet music – file sharing
Supply and demand
• Concerts
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Sell out quickly for many popular acts
 Limited venues and limit tickets command high
prices all around
• Pro championships
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Sell out quickly and often before the teams
are even known.
 Commercialization and marketing driving this
Impact of consumer trends
• Retro TV
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Cable channels show old shows often.
• Game shows
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New shows are created and old shows are being
redone.
• Audience ratings speak
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New shows can end quickly.
• Socio-culture issues
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Attitudes and beliefs – eating out often, drive thru
etc.
Promoting Sports and Entertainment
• Promotional Goals
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Gain new fans
 USTA did it successfully in the early 90’s by
setting up learning centers and offering lessons
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Advertising
 Product placement
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Publicity – unpaid attention from the media
Sales promotions – incentives, give aways
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.
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.
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Product Placement
• (Paid) placement of products in shows
and at events.
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Can be direct payment or
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.
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Brittany is getting more publicity than wanted
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 image
o
Spokespeople do the talking
• Athletes
Try to keep clean image, do public good
(charity work or create foundations)
o Become spokespeople for various
organizations (CMN, Spec Oly, etc.)
o
Sponsorships and Endorsements
• Important in college athletics
o
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:
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Truthful opinions and beliefs expressed
Endorser must have experience with prod.
May not be deceptive or misleading.
May not be shown out of context or change the
words.
Endorser must use, continue to use and believe in
the product as long as they are shown in ads.
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.
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.
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Promotional Events
• Awards shows
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The Oscars
Grammy Awards
Emmy Awards
Tony Awards
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.
Baseball teams often offer groups seats to
weekday day games to boost attendance.
o These discounts help expand the customer base.
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• Colleges offer alumni that make big
contributions special perks.
• Luxury boxes and suites
• Club seats
Legal Issues
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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
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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.
Legal representative (think of movie Jerry
Maguire)
o Negotiate and shop them to sponsors
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• 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.