Chapter 1 – World of Marketing



Chapter 2 – Sports & Entertainment: Connections & Contrasts

Section 2.1: History of Sports and Entertainment

Sports and entertainment are leisure activities for the purpose of enjoyment.

Marketers have always sold participation in sports or entertainment events to consumers. The growth has relied on consumers with free time. In America, organized S & E used to be pastimes just for wealthy consumers.

Workers had little time away from labor and earned lower wages. Labor Unions fought and won higher wages and reasonable working conditions, allowing workers to attend these events, as well.

Creation of public transportation meant working-class families could attend games, plays, etc. across town.

In the late 1890’s Thomas Edison invented the kinetoscope for moving pictures, signaling the birth of the film industry.

The era of “silent movies” came to an end in 1927 with the release of The Jazz Singer the first talking movie.

Bill Veeck was a key figure in the development of sports marketing. He believed that consumers wanted to be involved in more than just the final score. Marketing activities he created include:

a. Fireworks

b. Dazzling Scoreboards

c. Special-event nights

d. Grandstand Managers’ Day

By taking a game and turning it into a concept that appealed to both fans and media he made sporting events more profitable. Bill Veeck created a more interesting show or product and sold more advertising.

Adolph Zukor was the founder of Paramount Pictures and pioneer in creating the Hollywood studio system. He was one of the first film producers to draw big crowds and own a theater chain.

With many new forms of media competing for consumer attention, an organized strategy that targets specific consumers to specific products is essential. This is the foundation of S & E Marketing.

Sports has spawned a huge entertainment-based industry beyond competition. It has produced:

TV Channels, Movies, Books, Video Games, Theme Restaurants, Fashion Trends, and Magazines.

Section 2.2: Similarities in Marketing

Once again, the 4 P’s of Marketing are: Product, Place, Price, and Promotion

Some people consider people to be the 5th P in the marketing mix.

New technologies have broadened the scope and reach of marketing messages, and they can be entertainment products themselves.

Marketing professionals are split over whether S & E belong in same category, as a sports event is a form of entertainment. However, professionals do agree that both S & E products are similar in that they are marketed differently than traditional products.

By nature, S & E products are often not physical goods that can be stacked on a store shelf. Entertainment presentations and athletic competitions are both dynamic and can be used to promote unrelated products

Endorsement is approval or support of a product or idea, usually by a celebrity lending his/her image to a product. It is an important tool in both sports and entertainment marketing.

All celebrities have a public persona or a personality perceived by the public. This may be based on their skills and behavior in public. Fans identify with and admire celebrities and this makes them feel connected to them.

However marketers must match their products with the correct celebrities. To create an effective endorsement the celebrity who endorses a product should be popular with people who would buy it.

An example of a core product is the sports event, movie, stage show, or book, and an ancillary product would be related to it. Some examples would be:

Movie: DVD, amusement park ride, toys, lunchboxes, shirts, etc.

Stage Show: DVD recording, Musical soundtrack

Sports Event: watching on TV, jerseys, bumper stickers, hats, etc.

Book: posters, action figures, etc.

Companies can earn additional revenue by using those core and ancillary products as promotional tools to promote and market even more unrelated products.

The changing nature of the place component in the marketing mix has affected traditional marketing more than S & E marketing. Successful S & E strategies have always appealed to the desire to go out to a special event. The occasion appeal of the event contributes to the entertainment value of the process.

Pricing S & E products is radically different from pricing traditional consumer products. Price is set and adhered to uniformly based on what they can charge and what people will pay. However, customers may believe that they are getting more for their money. This kind of perception is what separates S & E marketing from other consumer products.

Price becomes an issue when highly paid players/celebrities go on strike for salary increases. Fan Loyalty can be damaged. Other pricing issues include ticket scalping and piracy.

Define “Ticket Scalpers”. Unauthorized ticket sellers who stand outside a game or concert and offer tickets at a higher price and keep any profit that they make.

Piracy can occur online when consumers: use file-sharing software to download copyrighted material without permission.

Street vendors also sell copies of copyrighted goods that are pirated or bootlegged which means produced & distributed without authorization. When consumers copy and distribute illegal copies of entertainment material, they cut the property owner out of the profits.

S & E marketing uses two tools to promote goods: Product tie-ins and Cross-promotion

An example of a product tie-in is: Free toy included in McDonalds® Happy Meals®.

Examples of cross-promotion include: Star of a new movie appears on various talk shows to promote their new movie and give interviews to magazines and newspapers

Web sites are another important cross-promotional tool. They provide both information and highlights of a product, while hosting links to other products. They also market by word-of-mouth which can increase ticket sales.

Examples of word-of-mouth include: Chat rooms, user ratings, online voting surveys

An example of convergence is: Using TV advertising to promote a movie that will one day be shown on TV.

One of the biggest similarities between S & E Mkt. is the potential for convergence and cross-promotion, which help to develop product synergy.

Example: Oprah created her image as a “lifestyle guru” and used the TV to promote her other businesses, such as her magazine, TV network, and products she endorses.

Synergy is not easy to achieve due to risks. Example of a risk that sports teams face is:

Unforeseen events and obstacles, such as injury, illness, suspension due to illegal substances, etc., like a musician cancelling a show due to a sore throat.

Successful S & E mkt. realize these risks and purchase contracts and insurance policies. These policies will reimburse business owners for both direct and indirect losses.

Example:

Stadium fire causes cancellation of event, insurance will pay for cost to repair/reopen stadium, but it will also pay for the loss of profit from event cancellation.

Section 2.3: Differences in Marketing

Entertainment is based on creative ideas that can be fashioned to fit the tastes of a target audience, but sport is based upon athletic ability and competition.

You probably would not go see a terrible movie twice, but you might keep going to a sports game, even if your team was experiencing a losing streak. Sports fans enjoy the drama of real competition & unpredictability of each game.

If sports fans feel their team is trying to win, the team can retain its consumer loyalty, like watching one team play continually because it’s your favorite.

Fans usually support one or two teams. Sports marketers target a core group of fans and work on maintaining their team loyalty. Most sports marketers spend more effort marketing a winning season to their target markets than trying to appeal to new and different consumer groups.

Entertainment consumers are not motivated by brand or team loyalty, but by a desire for satisfying entertainment. The entertainment industry is subject to trends that dictate “what’s hot and what’s not“. If a company’s book, movie, sitcom, etc. does not deliver the expected level of entertainment, the consumer will quickly turn to the competition.

Entertainment marketers target each product to a well-defined consumer group. Unlike fans that follow only one sports team, film and music fans will usually see films made by more than one production company or will buy CD’s produced by many different record labels.

JOB OF ENTERTAINMENT MARKETER: Find a Winning Formula. Try to KNOW what consumers want. CREATE that product.

JOB OF SPORTS MARKETER: Find a Winning Team. KNOW what consumers want. Try to DELIVER that product.

Another big difference between sports and entertainment products is the consistency or stability of the sports product and the variability of the entertainment product. Sports marketers have plenty of time to conduct research, run tests, and plan launches and promotions, because its core product remains the same. Entertainment marketers have to predict a trend or fad then change the product to satisfy audience demand.

EXAMPLE: Movie released is postponed due to subject is too sensitive for current events, like Phone Booth’s release in 2003 being delayed due to real-life shootings in D.C.

Entertainment products can be developed into merchandise, used for promotion, and create profit through sales of ancillary products, licensing, and royalties. Because there are so many different types of ent. products, the streams of revenue created by marketing products are very diverse.

EXAMPLE: A single film can be sold to cable and Pay-Per-View TV, rented as DVD/Blu Ray, and be the basis for a game, TV series, book, or clothing line.

One sporting event doesn’t usually produce the same amount of revenue from merchandising and royalties as an entertainment event. Sports events do have their own revenue streams from tickets sales, media advertising, video games, etc.

With sponsorship, a company gives money to another in exchange for something, like advertising. Watch a NASCAR race to see this illustrated greatly! Sponsorship is different from endorsement. Another example is corporate boxes, used by corporations as a marketing tool to entertain and network with their own clients (Pursuit of Happyness movie). A final source of sponsorship revenue comes from selling stadium naming rights. (Quicken Loans Arena, First Energy Stadium, and Progressive Field)

Virtual advertising is a new phenomenon where companies pay to have their logos digitally overlaid onto a billboard during a TV game. Fans at the game do not see it, but viewers at home see it.

Sports teams also earn revenue by landing local broadcast deals with local TV companies. TV networks make million/billion dollar deals with sports leagues for exclusive rights to broadcast games. EXAMPLE: NBC is the only network to show home Notre Dame Football games and the Olympics.

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