What is sports marketing?

    A special case of what?

    Some might argue that sports marketing is a “special case” of marketing, meaning there are theoretical and practical dimensions of marketing peculiar to sports marketing. For instance, courses are offered in services marketing, international marketing, business-to-business marketing and the like because the applications of marketing to these particular contexts require adaptation specific or special to each case. Following this logic, we should accordingly treat sports marketing as a special case to study because its processes do not function or generalize well for other goods and services. That is, some argue these special cases of marketing do not possess theoretically sound (or law-like) principles or axioms that guide practice across a variety of other business contexts.

    If, however, sports marketing better explains and predicts effective marketing when compared to other product and services marketing, then one might argue marketing is actually a special case of sports marketing. General theories of marketing should ultimately possess superior predictive and explanatory powers of marketing effectiveness. As we examine the differences between typical goods/services marketing and sports marketing, consider which characteristics better explain optimal buyer-seller relationships.

    What’s the difference?

    If a customer is a loyal Folgers coffee customer, we predict s/he will likely continue to buy Folgers coffee at the grocery store. A loyal Folger’s customer may, however, switch to similar coffee (Maxwell House) or buy Folgers at another store if appropriately discounted. You won’t see many Folgers’ customers wearing shirts with its brand name emblazoned across the chest.[1] Nor are you aware of many, who of their own free will, frequently visit www.folgers.com. If so, they must be the same people visiting www.tide.com, www.zest.com, or www.crest.com.

    The consumer’s purchase of Folgers is primarily an economic decision based upon the perceived value of what one gets (coffee) for what one pays (e.g., $4.29 for a 13 oz can). Some may also perceive the best part of waking up is Folgers in the cup, but we know of no empirical evidence to support this.

    If an individual is a fan of a professional or major college sports team, even a losing team,[2] we can predict the fan will likely:

    1. Identify with and follow the behavior of the team and individual players on that team, on and off the field (via www.espn.com, team websites, newspapers, television, radio, wireless, etc.).
    2. Purchase licensed merchandise (jerseys, automobile paraphernalia, caps, mugs, etc.) promoting the team.
    3. Donate or pay for permanent seat-licenses (PSLs) in order to buy season tickets.
    4. Travel to see games of that team outside the local market.
    5. Support tax-based initiatives to pay for a new arena or stadium for the team.
    6. Be a supporter of the conference or league in which the team plays.
    7. Devote significant social time attending, watching and discussing the team with others devoted to the same or other teams.

    Hemispheric Lateralization

    Left Brain Right Brain
    Logic Intuition
    Reason Emotions
    Objective Subjective
    Verbal Visual
    Self-oriented Group-oriented
    Categorical Relational
    Detail focused Whole picture
    Mimicry Creativity
    Purposefulness Playfulness
    Economic Exchange Social Exchange

    While consumers of most goods and services see value as primarily an economic evaluation (Which detergent is the best buy?), the value fans derive from attending sporting events is likely to be more of an emotional decision. In fact, when teams make fans focus on the price they are paying, they are focusing on the wrong side of the brain. The whole point is to make them fans—not consumers in the traditional sense. Building a fan base, not a customer base, is the first fundamental difference between sports marketing and marketing of most goods and services. While not ignoring the reasoning function of the left brain, we want to engage fans more in line with the functions of the right brain.

    Compared to typical goods and services marketing, sports marketing differs in at least ten respects (see table below). We begin by discussing the difference between customers and fans.

    1. Fanatics

    A central point of differentiation between sports marketing and traditional goods/services marketing (hereafter, GSM) is how we view individual purchasers. One typically refers to customers when the subject is goods and services. Sports teams and players have fans. Dictionary.com defines a customer as: “One that buys goods or services.” A fan is “An ardent devotee; an enthusiast.” A fanatic is “a person marked or motivated by an extreme, unreasoning enthusiasm, as for a cause.”

    Current GSM focuses primarily upon creating customer satisfaction. Satisfaction occurs when expectations are met or exceeded. Satisfied customers mean three things to the company.[3] First, satisfied customers increase the value of the firm to shareholders. Second, satisfied customers assure the firm of future cash flow. Third, satisfied customers reduce the variability in future cash flow.

    As with GSM, sports teams seek to satisfy customers. We would expect, however, that fanatics of a team or brand are more than satisfied. Fans experience pleasure and satisfaction with successful teams. But, they also experience feelings of delight or excitement deeply resonating within the identity of the individual fan, such that the effects are likely to be long term.[4] Delight is a combination of pleasure and arousal with an element of surprise that is frequently experienced in the sports world. Further, fanatics are resilient in the face of service failure (viz., the team loses), when delight and excitement may turn to distress and gloom. Sports teams develop a faithful fanatical following primarily due to high levels of identification, which is the second point of differentiation between GSM and sports marketing.

     

    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 same brand (viz., lack of switching behavior) Psychological identification with individuals and teams that goes 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 good/service Two-part: Fans frequently pay for the right to pay for tickets
    7 Facilities Corporate owner buys/builds own facilities Government (taxpayer) typically pays for facilities
    8 Competition Individual branding in competitive markets Cooperative contractual relationshipsàmonopoly power & anti-trust exemption
    9 Exchange Principally economic exchange Principally social exchange
    10 Employees Contractual power favors owners Contractual power favors employees (players)

    2. Identification

    Consumers are loyal to goods and services while fans identify with teams, organizations, and individuals. Loyalty is the repeat purchasing of a good or service by a consumer. A loyal customer is sensitive to differences in brands and prefers a brand or set of brands over others.  Identification is when an individual reacts to events that occur to the team or player as if the events happened to him or her. A highly identified fan will describe one’s self to others in terms of being a team fan, perhaps to the point that the fan feels like s/he is part of the team. Fans are certainly loyal to the team in terms of repeat purchases, but fan identification is a deeper psychological affiliation that is a basis for a fan determining self-esteem and self-worth. Chapter 1 deals more specifically with how teams and players can build fan identification. Because of high fan identification, fans passionately seek ways to promote the team to others.

    3. Promotion & Media

    Third, the manufacturer and/or retailer of goods and services pays for the development and placement of brand advertising and promotions. In contrast, sports teams, organizations, and individuals (players, drivers, and artists) receive indirect and direct financial support to advertise and promote themselves. Fans indirectly promote by buying and wearing or displaying licensed merchandise. Sponsors directly promote the team and individuals, paying for the advertising and media to do so. For instance, AT&T initially paid the Dallas Stars to host the team website (attwireless.dallasstars.com). Similarly, radio and TV broadcasts of sporting events are “brought to you by” the sponsors.

    Much of the actual product, particularly in terms of revenue, is in the broadcast of the games or event. The fact that sports and entertainment are broadcast, in and of itself, differentiates from other goods and services. Typical goods and services find it difficult to entertain using its product as the star of a broadcast, although more than a few have created infomercials featuring already fit models promoting either the Ab Doer Pro, Ab Dolly, Ab Energizer, Ab Flex, Ab Force, Ab Rocker, Ab Roller, Ab Slide or the Abtronic—guaranteeing you will look just like the model without “any effort from you.” Anyway, the point is sports are different because others pay for the team’s advertising, promotion and broadcast—in a way typical goods and services find difficult to achieve.

    Goods and services marketers typically pay for media to broadcast or to print advertising and promotional information while the media pays sports teams for the right to broadcast or print team and event information. For example, CBS and Turner Broadcasting agreed to pay $10.8 billion over 14 years to broadcast the NCAA “March Madness” basketball tournament. In contrast, no network is bidding hundreds of millions, let alone billions, of dollars to broadcast, “Inside the Making of Tide Detergent.”

    The revenue generated from TV contracts is the principle differentiating factor between the healthiest sports leagues (NFL, NBA, MLB, NASCAR) and the less healthy (NHL, MLS, and WNBA). The proliferation of broadcast and other media outlets for sports also points to the fact that the distribution for sports is increasingly electronic and not limited to static locations.

    4. Distribution Channel: Static vs. Mobile

    Goods and services designate specific geographic outlets. Customers purchasing from Sears buy products at a local Sears store or order products to be shipped from a Sears’ distribution center. The distribution channel for Sears is relatively static, changing only when stores open or close. Sporting events and teams, on the other hand, are basically traveling road shows, moving from location to location, city to city, nationally and globally.

    The experiential and transitory nature of sporting events (as well as other competitive broadcast events such as “Survivor”) lends itself to electronic forms of distribution. That is, sports and entertainment are suitable for mediated distribution through broadcast and online video.  The NFL, for example, is broadcast in 231 countries across 24 time zones for upwards of 200,000 hours of programming in 32 languages.[5] Similarly, cable and internet broadcast systems have developed new distribution channels such as NBA.TV, blurring the lines between traditional broadcasts and online services that make the product available anytime, anywhere.

    5. Product: Adapted vs. Global

    Due to the nature of the events and the distribution channels, sports such as soccer, basketball, baseball, tennis, golf and motor sports are truly global products needing little translation or alteration of the marketing mix to gain acceptance across cultures. The marketing mix (product, place, promotion, pricing) for typical goods and services are typically adapted to local markets.

    Compared to most sports, frequently cited “global” products such as Coke and McDonald’s are not actually standardized global products. Coke alters its packaging, name and syrup content in foreign countries. McDonald’s offers beer in German restaurants and cooks its hamburgers rare in France. In contrast, the content or product of the NFL, Formula1 Racing, Olympics Downhill Racing, or the NHL remains the same throughout the world. In a sense, given its electronic broadcasts, the distribution is standardized around the world. Obviously, the promotion (e.g., language) and pricing (e.g., costs of cable or PPV) aspects of the marketing mix may be adjusted to regional markets.

    6. Two-part Pricing

    Customers typically pay one price for a given product or service. When you go to a grocery store, you select your favorite grocery items[6] and pay the prices marked on the items. You are not required to pay admission to the store so you can shop. However, some exceptions exist resembling fan loyalty—and even fanaticism—in customer products. People pay an annual fee to shop at Sam’s Clubs or Costco. Some people we know actually get very excited about being able to shop at these places. Such organizations are the exception to the rule—and add evidence to the premise that the most successful marketers are those emulating sports marketers.

    Professional sports and major college sports fans frequently pay a two-part tariff (or price). While some services with relatively inelastic demand (electricity, utilities, etc.) use a two-part pricing system (basic fee + additional user fees) due to monopoly power, even sports organizations operating in competitive entertainment markets frequently charge two prices. In sports, an initial payment (e.g., donation to the university, payment for a seat license, membership fee) is frequently necessary to allocate a limited inventory of preferable seats. Fans paying the initial fee are then given the opportunity to purchase tickets.

    Another aspect of two-part pricing in sports is the event itself. Fans pay for a ticket to enter the event (initial payment) and then purchase other products (food, drink, souvenirs) after entering. Thus price-setting in most sports settings must consider various forms of price bundling. Season tickets are offered at a bundled price for the entire season and de-bundled in the form of smaller ticket packages or individual tickets. Offering tickets with a hot dog and soft drink for a single price is another example of price bundling in that it combines the prices of what would normally be two-part pricing. Price bundling is common among services (e.g., vacation package of flight, hotel, and ground transportation; cable TV packages), so this aspect doesn’t by itself differentiate the marketing of goods/services vs. sports. Yet, it is common practice in all sports marketing contexts, but is not common to all goods/services contexts. Interestingly, fans are typically paying for admission to a publicly-owned facility, even though the bulk of the ticket sales proceeds go directly to the team owners.

    7. Facilities: Taxpayers vs. Corporate Support

    Although the subject of much public policy debate, sports team owners often do not pay for their own facilities. A new Nissan automobile plant may be able to acquire favorable tax status and property in Mississippi ($695 million in tax breaks and incentives over 20 years), but will still pay for building their own facilities ($930 million in Canton, MS). In contrast, the majority of NBA owners’ facilities are largely or entirely paid by taxpayers. In addition, naming rights by sponsors add additional revenue to the team. Even when owners invest private dollars into the facility, the reason isn’t necessarily because public monies are unavailable. In these cases, owners invest in order to control revenue available only if they own the facility.

    Why do city, county and state officials want to attract sports organizations? Why are they, and their taxpayers, willing to pass referendums to pay for these facilities? The case can be made for a variety of motives (mainly political and economic) for this support. However, from a broader sociological perspective, sports teams provide a city (or state) with a social identity that can represent who they are to others. The successful state university sports team allows constituents to represent themselves to others as winners. The tough blue-collar character of the Steelers over the years symbolizes who Pittsburgh fans are to the rest of the country. The black uniforms, skull-and-crossbones, and intimidating players for the Oakland Raiders, for better or worse, mostly identify their fans. We are not sure what the men dressed up as hogs in dresses at Washington Redskins games means. In contrast, major cities that have lost or are without major league sports spend considerable resources searching for an identity by way of alluring sports franchises.

    Consider what is sold in gift shops in airports. You will always find jerseys, mugs, and other merchandise that represent the city to others who pass through the area. The merchandise may feature the licensed logos of local golf courses or minor league teams in Charleston (SC), the Cowboys in Dallas (TX), or the Jazz and Olympic logos in Salt Lake City (UT). The point is that communities represent themselves to others through their identification with a sports organization. Interestingly, visitors buy the licensed merchandise from these cities to represent to others that they visited there. The identity of the sports organization offers social meaning and value both to those who live in the city and to those who visit the city. In any case, the social value of the professional sports team often goes beyond simply the directly relevant economic value of the team to the community.

    8. Competition: Cooperative (monopoly) vs. Individual (monopolistic)

    Branded goods and services have traditionally not cooperated in their marketing efforts. At the wholesale level and in some highly competitive retail markets, goods and services may engage in co-branding or cooperative strategic alliances in order to offset or balance competitive weaknesses and strengths. As a rule, however, goods and services marketers do not cooperate in cross-promotions and work in-league with each other on a permanent basis as do sports. Admittedly, this is an area in which some sports organizations do better than others. In addition to the major professional leagues, excellent examples are also found in major college sports conferences (SEC, Big 10, etc.) that negotiate and promote for the benefit of the league and its members. Fans of the teams are also ardent supporters of the league and enjoy following other team members or players in addition to their favorites (e.g., NASCAR and NASCAR drivers).

    The nature of sports leagues, particularly at the professional level, has evolved to the point where the leagues operate as monopolies, controlling entry and exit into the industry. For both practical and legal purposes, Major League Baseball is a monopoly. The league continues to be exempt from anti-trust laws. While Microsoft is sued by the U.S. Justice Department for restraining trade and other major industries vital to U.S. markets (telephone, transportation, airlines) have been broken up to allow free entry into markets, Major League Baseball is still allowed to control the granting and retraction of franchises, develop television contracts that preempt feasible entry into the market, and (dependent upon the source you listen to) control the labor market.

    Other pro sports leagues operate in a similar fashion, such that virtually any new league has no opportunity to compete. A clear example of this monopoly control of sports leagues is in the NFL, where the city of Los Angeles has no NFL team, despite the fact it is the second most populated market in the U.S.  The NFL’s revenue sharing plan has contributed to the fact that the barrier to entry in the form of an initial franchise fee into the LA market for a prospective team owner exceeds $700 million (the amount the Houston Texans paid for entry into the Houston market). Obviously, a free market would have a pro football team in Los Angeles. A monopoly, in this case, does not.

    In summation, the point here is that every other goods and services marketer must abide by federal anti-trust laws. Professional sports, in large part, do not. The logic presented is that the leagues must maintain control for the integrity of the sport, as they seek to protect the social welfare of fans.

    9. Exchange: Economic vs. Social

    As inferred earlier, customers pay an economic price for the goods or services that they purchase while fans make a social investment in the transaction. Customers typically give up monetary value in exchange (what one gives up for what one gets) for the good or service, although time and search effort may also be expended. In most cases, however, only limited social exchange occurs. When you go out with friends to eat dinner on Friday night, you may be largely motivated by social reasons to go to a particular restaurant and consume certain food and beverages. In the same venue, however, individual and groups of customers may at the same time purchase a meal where social exchange accounts for little or no part of the encounter. In either case, the exchange with the restaurant is still premised upon the purchase of the meal. Clearly, the more that the restaurant can do to make the purchase based more on the experience (e.g., Rainforest Café, ESPN Zone, etc.), the more they are practicing what is common to sports marketers.

    In sports, attendance is nearly always (98-99% of the time) with at least one other person. The sports fan pays a price for the right to enjoy an emotional experience with others. The fan goes to the game to be with others to share the experience in this social exchange. More broadly speaking, unlike most other retail settings, large crowds have positive psychological effects. No line at the grocery check-out will make most shoppers happy, but no line to see a ballgame or a concert is a definite cue to a fan that either this is a lousy event or the fan has arrived at the stadium on the wrong date. The excitement of the competition and the aura of the star power of the players on the team are such that the experience is best enjoyed in the presence of others.

    10. Contractual Power: Owners vs. Employees

    Finally, the size and power of the manufacturer or retailer of goods and services affords the owner contractual leverage over its employees in most goods/services contexts. Salaries, benefits and tenure are largely controlled by the owners. Employees have mobility, but are rarely able to single-handedly affect the outcome of the firm by making contractual demands.

    Employees (viz., players) of sports teams, however, are more likely to possess contractual power over employers. Contract concessions, renegotiations and arbitrations generally favor players. At the same time that union membership has declined in manufacturing over the past four decades, union membership in professional sports leagues have grown relatively strong due to the leverage held by the players. Consequently, work stoppages in major sports leagues have become commonplace in the past decade. In 2004-05, the NHL shut-down due to the players’ unwillingness to abide by owners demands in its new labor contract. Similarly, MLB players forced the cancellation of most of the season and the World Series in 1994. We await the outcomes of the NFL and NBA negotiations in 2011.

    Although the first nine differences are positive aspects of sports marketing, the leverage or power of individual players in major college and professional sports has clear negative implications. The average fan has difficulty in identifying with 21-year-old multimillionaires who often appear ungrateful for what they have. Players and coaches willingly trade team allegiances for more money. Teams uproot overnight and move to another city. Motor sports drivers trade sponsors for more money. While most fans may not blame the teams or players for maximizing their financial positions, the ultimate fact is that such fluctuations erode loyalty and identification. Just as brands lose customers when they change advertising agencies and campaigns from year to year, teams lose identified fans as they shift player personnel and team names in search of making more money.

    So, what is sports marketing?

    As with any taxonomy, exceptions exist. Some entertainment services, such as the movie industry, share some characteristics with sports teams and players. In the same way, we can think of some sports marketing contexts in which the owners do not share some of these characteristics. Yet, as can be seen from these 10 dyadic illustrations, the norm in sports marketing is different from the norm in other forms of marketing.

    In summary, then, what is sports marketing? Sports marketing is building a highly identified, passionate 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.

    The following chapters will offer the necessary components for effective sports marketing strategies that result in maximizing fan identification.

    Conclusion

    Do conventional goods and services marketing best explain and predict effective marketing? Or does sports marketing?

    Effective sports marketing is primarily premised upon building fan identification. Customers can identify with a branded good or service, as when customers wear a particular clothing brand prominently displayed on their clothing. As such, it can be argued that identification is merely a deeper level of loyalty. However, the best examples of fanatical followings are within the realm of sports marketing.

    Branded goods and services emulating sports marketing practices build highly identified customers. Services such as eBay can generate fanatical support such that users form and meet in clubs for social benefits associated with being with fellow eBayers. Branded products such as Apple can generate enough unreasoning enthusiasm among its fans that they will pay a premium in order to purchase the new version of the product before others. These examples, however, are the exceptions proving the rule: Sports marketing principles best exemplify effective marketing.

    Nonsports organizations can benefit from understanding and practicing sports marketing principles. Brands that seek to build levels of identification like that found in the wide world of sports can generate fans that are willing to proudly wear their brand names (e.g., Nike) and otherwise display unyielding devotion. So, whether your career is in sports marketing or grocery shopping, this text should provide guidance for excellence in marketing.

    The text is organized around a framework of understanding how buyers respond to the property (i.e., organization, team, athlete, artist) and its sponsors. Sports marketing practices are based on building a highly identified fan base for the property. While we focus primarily upon team sports, the property could just as easily be other entertainment entities which generate highly identified fans, such as musical artists, music concerts & venues, movies and actors, museums, or theatres. As seen in the “Property” box in the framework, highly identified fans develop a passionate connection with the property, leading to the consumption of media, events (meeting with other fans), and merchandise.

    The role of the organization in marketing sports entertainment begins with knowledge of the individual fan, generated and maintained through customer relationship management (CRM) systems and analyzed to gain fan insights. Armed with this knowledge, the organization develops ticket plans to meet the desires of passionate fans. Prices and promotions are designed to add value and generate revenue for the organization. The facility sportscape is designed and maintained to attract fans to the venue and make them want to stay as long as possible. Capitalizing on fan passion, the organization develops licensed merchandise strategies to satisfy fans’ desire to identify with the team and its players. Incorporating all of these components, fans feel like they are part of a fan community intimately connected with the team and other fans.

    Brands seek alignment with properties owning an active, avid fan base. The goal is to activate the sponsoring brand in the minds of fans so the affinity for the property transfers to the brand. When this happens, fans attribute positive associations with the brand, making it more distinct. Based on these positive attributes associated with the brand from the sponsorship activation process, passionate fans respond positively in terms of support behaviors—namely buying more of the brand.

    Sponsorships are largely sold on the basis of relationships between representatives of the property and the sponsor, but also rely heavily on qualitative, strategic, and quantitative evaluations.

    Want to learn more? Subscribe to Team Sports Marketing here.


    [1] Folger’s has, however, sponsored NASCAR drivers with the Folger’s name prominently displayed on caps, shirts and other merchandise fans have worn.

    [2] Fisher, Robert J. and Kirk L. Wakefield (1998), “Factors leading to group identification: A field study of winners and losers,”Psychology & Marketing, 15 (January) 23-40.

    [3] Gruca, Thomas S. and Lopo L. Rego (2005), “Customer satisfaction, cash flow, and shareholder value,” Journal of Marketing, 69 (July), 115-130.

    [4] See Oliver, Richard J., Roland T. Rust and Sajeev Varki (1997), “Customer delight: Foundations, findings, and managerial insight,” Journal of Retailing. 73 (Fall), 311-336.

    [6] Namely Pop-Tarts, Cheese Whiz, Cool Whip and frozen pizza.

     

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