Definitions Of Marketing And Sports Marketing

Published Date: 02 Nov 2017

Introduction

Sport is a universal phenomenon that crosses through social, religious and language barriers. Sport has an extraordinary ability to command attention, interest and loyalty, and has a capacity to build hysteria or even hatred. In the last decade sport participation has grown substantially, according to the Sport England Survey during the period October 2011 to October 2012, 15.51 million people participated in sport at least once a week. This is over 750,000 more people than 2010/11 when 14.76 million adults played sport once a week. The latest result also represents a 1.6 million increase on 2005/06 (Sport England, 2012).

Apart from appealing to the masses and being a common life theme, it is also seen as a major industry in which great deal of economic activities take place. Organisations are striving ever hard to pursue a sustainable competitive advantage in the current turbulent market environment which is not possible without some differentiation over its competitors. This differentiation is commonly sought via core product and this is where the sports industry is trying to capitalize long-term success by offering a diverse range of core-products.

Although sport can be considered a product and there are many similarities in the way sport(s) and other tangible products such as cars, pens, engineering components and financial services are marketed, sport has unique and distinctive features, which means that sports marketing is distinct from other forms of marketing.

The aim of this report is to highlight the characteristics of traditional and football marketing and determine whether both the strategies are similar or distinct. The adopted approach is to distinguish important characteristics of both and analyze these approaches within the context of football marketing. This report will assess the following aspects:

Definitions of Marketing and Sports Marketing

Study of product and its distinguishing factors

Analysis of traditional good & services marketing and sport marketing

Framework of Football Marketing & Branding

Conclusion

Definitions

In the past two decades, many firms have changed their strategic planning efforts and their marketing plans to emphasize the customer more than the product alone (Day, 1998).

The American Marketing Association (AMA) have responded to the paradigm shift from product to customer by redefining marketing as, ‘the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large’ (American Marketing Association, 2007).

The UK Chartered Institute of Marketing defines marketing as, ‘the management process responsible for identifying, anticipating and satisfying customer requirements profitably’ (The Chartered Institute of Marketing, 2009).

The marketing of sport in general, and football in particular, has developed rapidly over the last two or three decades. Much like any other business concept, the vast territory of sport marketing has continued to evolve while encompassing a wide range of business activities.

Beech and Chadwick have defined sport marketing as, ‘ an ongoing process through which contests with an uncertain outcome are staged creating opportunities for the simultaneous fulfilment of direct and indirect objectives amongst sport customers, sport businesses and other related individuals and organisations’ (Beech & Chadwick, 2007).

Mullin, Hardy and Sutton (2000) have taken a similar view in their analysis of sport marketing. Their definition based on dimension or thrust of the product states, ‘sport marketing consists of all activities designed to meet the needs and wants of sports consumers through exchange processes. Sport marketing has developed two major thrusts: the marketing of sport products and services directly to consumers of sport, and the marketing of other consumers and industrial products or services through the use of sports promotions’ (Mullin, et al., 2007).

What is the product and why it is different?

With respect to sport marketing, the basic questions that need to be addressed are: what is the product? Further, who are its customers?

The core products are the sport competitions on the field of play and they can be consumed by spectators in a venue, through a variety of media alternatives and also after it is staged as it has a news value and is discussed in media long after the actual game (Gladden & Funk, 2002).

Smith argues that, ‘the customers of the sports business are the people involved in playing sport, watching or listening to sport programmes, buying merchandise, collecting memorabilia, buying sporting goods like clothing and shoes, and surfing a sport-related website to find out the latest about their favourite team, player or event’ (Smith, 2008).

Why sport is different from traditional products?

Sport is a special form of business that requires an understanding of the special features of the sport market. Listed below are the special features that differentiate sport from traditional products or services.

Emotion and passion: Sport can stimulate an emotional response in its consumers of the kind rarely elicited by other products. For example, a loyal consumer of Colgate toothpaste is unlikely to buy a t-shirt or scarf of that brand to show allegiance whereas fans of football clubs will commonly be seen wearing team scarves or jerseys.

On-field success versus Off-field success: Unlike in traditional products, the higher sales of their product or services are directly linked with increased revenues. In sports and particularly in football, to achieve consistently increasing revenues, the team does not have to win trophies every year an example of which is Arsenal. Despite not winning any trophies for 7 years, Arsenal’s revenue increased to €290.3m (£234.9m) in 2011/12, securing sixth position in this year’s Money League. This represented an £8.1m (4%) rise on the previous year (Sports Business Group; Deloitte, 2013).

Level playing field: In most business settings it is desirable to have fewer competitors; this will ensure a more available customer’s pool. However, this is not always the case in sport. In fact, football teams and sport organisations that compete in leagues actually rely on the viability of their competitors for their own revenue increase. For example, fans are often more attracted to a game where the outcome is unpredictable.

Variable Quality: Unlike traditional goods and services, controlling the core product (such as, the game itself) is difficult. For example, if you choose to buy McVitie’s Digestive biscuits, you will see all the biscuits are of same shape and size and taste, if you check in at Premier Inn hotels, the service you get is standard and the same at all their hotels, but if you buy a season ticket at a football club, the experience from each game will be different even if the players remain the same.

Product and Brand Loyalty: A loyal customer is sensitive to differences in brands and prefers a brand or set of brands over others. In case of repeated brand dissatisfaction, they may consider switching to another brand. Fans are loyal to the team in terms of repeat purchases of tickets or merchandise, but fan identification is a deeper psychological affiliation which is the basis for a fan determining their self-esteem and self-worth. Despite a series of bad performances from the team they support, fans will not start supporting another team.

Optimism: In the case of traditional goods or services changing their style or any core ingredient; customers have a choice of switching the product rather than keep using the product and hoping that it will change. But in case of sport, the fans will not stop following their team even in case of any personnel changes.

Fixed Supply Schedules: Manufacturers or retailers of traditional goods can increase the production / storage to meet increasing demand in the market. In terms of the core product offering, sporting clubs however have inelastic production capacity i.e. a fixed supply schedule. Despite the increased popularity of the sport; clubs and teams can only play a certain number of games during their season. To meet the increased demand, sport businesses / clubs can explore alternative distribution channels such as, increased merchandise and advertising. (Smith, 2008)

Traditional (Goods and Services) Marketing and Sport Marketing

Smith as well as Fullerton and Merz highlight the key features of sport marketing. Firstly, it is the application of general marketing practices to sport-related products and services. Secondly, it is the marketing of other consumer and industrial products or services through sport. Sport marketing concept run parallel with traditional goods & services marketing as both seek to fulfil the needs and wants of consumers (Smith, 2008)(Fullerton & Merz, 2008).

Many of the global economic pressures faces by industries in the twenty-first century has seen Traditional manufacturers / retailers are increasingly becoming market-driven, they have modified the product-driven marketing mix. As an emphasis is being given on the customer and the value being derived out of the association, the sport businesses has felt the need to increase profits through strengthening their relationships with their fans. From offering a core product that is unpredictable and beyond managerial control, sport business firms are trying to offer a tangible element to its consumers namely an experience. Thus the additional services that lead to offering experience to the fans play a crucial role in the outcome and perception that they will take away from each event.

Sport marketing closely follows the basic framework of traditional marketing. Integrated Marketing mix principles can be applied to sport marketing by using 4-P model (Kotler & Armstrong, 2012).

Product – Apart from game of football which is a core product, football clubs offer a service, such as an entertainment or an experience. Often there is no physical product to take away such as merchandise, but a sport organisation try offer some intangible benefits such as a lifestyle, a social group or even a belief system.

Price – The price refers to the cost that a spectator must pay to watch game or experience. Beech and Chadwick further illustrate that from the fan’s perspective, this is not simply a cost to attend the sporting event, but a cost to reach the venue and cost to purchase augmented products such as food and beverages, program or merchandise. Clubs need to take opportunity cost of attending the event that is what else could the person do instead of watching the game?

Place – The place is not only a stadium but where and how consumers access the sport product or service. Apart from the sporting venue where the core product and augmented products can be consumed, the Internet has provided a new way of distributing products.

Sport may also be delivered to fans via television or other media. Place also includes different ways of getting tickets for a game.

Promotion – This process involves communicating with the fans, informing them about the upcoming events, products and important news and ultimately persuading them to be associated with the club. Promotion therefore includes advertising, sponsorship, sales promotions, direct marketing and publicity.

The UK Chartered Institute of marketing contributes that when marketing mix is concerned, there is a need of three additional ‘Ps’. These are included as it is impossible to ignore the influence of administration and human resources staff that can play a vital role in services marketing (The Chartered Institute of Marketing, 2009).

The three additional P’s in context of sport industry are discussed below.

Figure1: 7-P’s of Sports Marketing

People – Because a sport service is consumed at the same time as it is produced, players, staff and spectators involved are believed to make an impact on the services consumption, for example poor behaviour of any of the people involved towards the other can leave a deep impression on the mind.

Physical Evidence – With respect to sport service physical evidence mean the environment in which the sport is delivered, and any other visual or tangible elements. For example, the physical environment of a football game includes the stadium facilities, the seating arrangement, cleanliness of toilets as well as the food and beverage facilities. Other tangible elements could include the design and content inside the match programmes and goods available for sale even design of the tickets play a crucial role in perception about service quality.

Process – It is important that the spectator goes through well the steps that are well defined and easy to use in order to consume the sport. These steps also refer to those in which a service provider has to perform to deliver the sport service. If a fan can travel to the venue, attend the game and leave by following easy directions, the perception of service delivery is enhanced (Smith, 2008).

Although football marketing can be seen similar to traditional goods and services marketing, each have their own distinctive features. In order to get clear understanding of football marketing, it is necessary to observe main distinctive aspects. Table 1 highlights the important features.

Table1: Distinguishing factors in traditional and sports marketing

Some of the important factors are discussed below.

End Users

A consumer is defined as, ‘one that purchases a commodity or service’; whereas a fan is defined as, ‘an enthusiastic devotee (as of a sport or a performing art) usually as a spectator’ (Merriam-Webster, Incorporated, 2013).

The basic difference between traditional marketing and sport marketing lies between the behaviour of the end user. If a customer is a beer consumer, they are likely to buy the ‘best’ perceived beer at the discounted price from the local store. However, they will switch to another brand should they get a cheaper deal at another store. But it is unlikely that they will wear t-shirts of their favourite beer brand in order to show their affiliation.

The consumer’s purchase of beer is primarily an economic decision based upon the perceived value of what one gets (Brand) for what one pays (e.g., £5.00 for 3 cans).

But, if an individual is a fan of a sports team, they will:

Identify with and follow the behaviour of the team and individual players on that team, on and off the field, through the internet, newspapers, television and radio etc.

Purchase licensed merchandise, for example, jerseys, scarves and caps, promoting their affiliation to the team.

Be willing to buy expensive match-day tickets or season tickets.

Travel to a different city to see games of that team.

Devote significant social time to attending, watching and discussing the team with others fans.

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. The intangible, inconsistent, perishable and experiential nature of the sport which is its core product makes it necessary for the participants to build differentiating brand equity by offering its customers a unique experience. Building a fan base, not a customer base, is the first fundamental difference between sport marketing and marketing of most goods and services.

Sport marketing converts people to participate in social exchanges and make emotional decisions rather than engaging them in economic exchanges and enabling them to make rational purchase decisions.

Adoption

Another distinguishing factor is the way both sets of consumers pursue their satisfaction. Customers represent their satisfaction by being loyal to goods and services while fans identify themselves with teams, organizations, and individuals. Loyalty is reflected by the repeat purchasing of a goods or services by a consumer. 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 themselves to others in terms of being a team fan, and as if they were part of the team.

Promotion

In traditional marketing the manufacturer and/or retailer of goods and services pays for the development and placement of brand advertising and promotions. In contrast, sport marketing is marketed by fans that buy and wear merchandise; team and event sponsors that directly promote the team and by paying for the advertising and media promotes the events by television sponsorships and so on.

Product Customization

Because of the diverse nature of the markets, organizations often need to provide customized products tailored to the market dynamics. For example Coca Cola alters its packaging, name and syrup content in foreign countries and McDonalds do not offer Beef burgers in India.

Delivery of football or any other sport to its fans across the globe is exactly the same. Despite various distributing channels are being used to deliver the product such as at the venue, on television and internet or any other media the way the it will appear or result into is exactly going to be the same for everyone involved. For example, just because Brazil likes attacking football, the TV coverage of Italian game will not be delivered differently. Across the globe it will remain consistent.

Pricing

In the case of traditional goods, the customer pays the same price for any quantity of same good he purchases for example if you go to any store and select more than one quantity of the same item, not only the price paid for each unit of the item will be same but each unit will have same characteristics. However because of unpredictable nature of sport, the fan is not guaranteed a same result and experience every time they pay a price to watch their team. Also, the price they pay to watch their team against different opposition varies.

Exchange

A traditional goods and services consumer typically pays an economic price or monetary value for the tangible goods or services that s/he purchases while sports fans seek emotional involvement when they invest in following the team. Every consumer of goods or services will have their unique expectations from the product; consumers will buy Coca Cola for their taste or bottle shape or to quench their thirst in exchange of money. But the fans will engage with many other likeminded fans seeking the same objectives from the event, they will buy the tickets and spend money with having only same ultimate objective from the match is to see their team win.

Employees

Finally, the size and power of the manufacturer or retailer of goods and services enables the owner to have contractual leverage over its employees as salaries, benefits and tenure are largely controlled by the owners. Traditional business generally follows industry benchmarking for wages for its employees.

Employees of sports teams i.e. Players, however, are more likely to possess contractual power over employers. They are able to negotiate their contracts, dictate their contract terms over the employers. Top players and coaches sometimes earn considerably more money than their counterparts in the industry.

An intelligent employee alone does not guarantee increased marketability of the product, but a world class player alone increases appeal of the team and attracts more fans. In 2007, L.A. Galaxy football team sold 250,000 No 23 shirts in the US even before David Beckham was officially presented to the media as their player (Daily Mail, Associated Newspapers Ltd, 2007).

These primary factors distinguish sports marketing from traditional good and services marketing.

Football Marketing

The football industry is a complicated system of business and sport interest, which collaborates various stand-alone organizations that have a specific goal. Like other traditional businesses, for the football business systems to coherently function with other businesses from diverse fields, it is necessary to ensure a favourable environment for football business and football, its core product.

Tomas Karpavičius (2007) suggests that in the context of marketing decisions the football system maybe divided in three segments by the type of interests of participators in football business:

Figure2: Football Business segmentation based on marketing decisions

business segmentation.jpg

Sport Presentation Segment – The final product of football game or group of games is presented for customers.

Sport Manufacture Segment – Decisions to improve manufacturing of the game by promoting high quality players. This segment is important for improving the quality of produced football.

Sport Promotion Segment – Various operations for football promotion for potential football game spectators are made. These operations consist of both on casual promotion tools (advertising, sales, public relations and etc.) and specific sport game’s promotion tools (souvenirs, fans’ clubs, etc.). (Karpavičius, 2007)

These marketing decisions segments are based on the type of marketing operations that are carried out in the football business sector. In football business there is no single entity that is carrying out standalone operations. Football business is carried out by a group of football business participators that have their own marketing strategy. These groups of participators often share the pool of market segments at each corporation level.

Figure3: Hierarchy of marketing decisions and target market in football systems

Karpavičius further illustrates the decisions made by the football business participators at each level. At the bottom level there are individual clubs, which are interested in increasing their fan base. This may be achieved by attracting other clubs’ fans and also by targeting sport-apathetic person. This can be achieved by identifying correct target fan segments (domestic or abroad) and by developing partnerships with other business entities. As the club also operates within its own league structure, therefore must simultaneously compete and co-operate with other clubs in the same league.

At the upper level football clubs work closely with regional and national football association and collectively benefit from the marketing decisions targeted at the regional level. As the participator’s level increases, the decisions and span to promote the sport gets increased.

Analysis of micro-environment marketing elements of traditional goods and services marketing and football marketing business will shed light on further distinguishing factors between these two approaches. Marketing micro-environment is described as forces beyond company’s influence boundary, which may impact company’s performance and, mainly, its marketing decisions.

Football Branding

Erdem illustrates the role played by brands, he argues, ‘brands play many roles in consumer decision making that can materialize through multiple mechanisms, such as psychological, sociological and economic process’ (Erdem, et al., 2006).

Bridgewater emphasizes that the growing commercial importance of sport particularly football, has made the football business participators concerned with raising revenue in order to successfully meet their sporting aims. For a football club this may be how it might attract greater numbers of fans in attendance at matches or events. For a football governing body this might be to provide a better service to members of the association (Bridgewater, 2010).

The identification of fans with their cherished club is more emotional than rational. For many brands, customers may be attracted by a mix of rational and emotional criteria. Emotional branding is based on developing emotional attachments that relate to the commitment of the customer to the brand. Thomason, MacInnis and Park define the commitment, ‘as the degree to which an individual views the relationship from a long-term perspective and has a willingness to stay with the relationship even when the things are difficult’ (Thomson, et al., 2005).

As with any other brands, football clubs pursue the aim to build strong brand by designing a credible and consistent marketing mix (product, pricing, channel and communication) strategies that are aimed towards recruiting and retaining their fans. Smith argues that people believe that when sport becomes a business it loses its most important qualities like passion, history and the centrality of the fan (Smith, 2008). By labelling ‘McDonaldisation’ of the sport experience (Beech & Chadwick, 2007) it is observed that supporters may have difficulty in accepting that the club’s logo appearing on non-sporting products for example, Manchester United signing Mamee Noodles as the official noodles partner of Manchester United for Asia, Oceania and Middle East (Manchester United Limited, 2013) and Liverpool selling body mops and FC Barcelona selling dog collars (Guardian News and Media Limited, 2012). However, such reactions may be restricted to a certain segment of the fans or could be partially dependant on particular culture.

Brand equity enables organisations to boost their brands in the eyes of consumers by: enhancing perceived quality; raising brand awareness; creating positive associations in the minds of consumers; and promoting loyalty amongst customers.