History of Sports and Entertainment Marketing. Similarities in Marketing. Differences in Marketing

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2 History of Sports and Entertainment Marketing Similarities in Marketing Differences in Marketing 2

3 Chapter Objectives Discuss the history of sports and entertainment. Discuss the impact of sports and entertainment history on today s markets. Explain how sports and entertainment marketers use tools to sell their products. Explain risks and risk management of sports and entertainment events. Identify differences between marketing sports and entertainment products. 3

4 Sports and Entertainment Connections What do sports and entertainment have in common? They have thrilled and entertained people for centuries since the ancient Olympic games and Greek plays. 4

5 A Brief History of Leisure Marketers sell participation in sports and entertainment events to consumers. The growth of the sports and entertainment industries has relied on consumers with free time, discretionary income, and a desire for recreation. consumers people who use products discretionary income money left to spend after necessary expenses are paid 5

6 A Brief History of Leisure By the late 1880s, both wealthy and working-class families could seek similar forms of entertainment, thanks to public transportation. kinetoscope a device used to view a sequence of moving pictures In the late 1890s, Thomas Edison invented the kinetoscope. 6

7 A Brief History of Leisure Other milestones in the history of leisure include: Mary Pickford becomes the first international movie star in The first talking movie in 1927 (The Jazz Singer) Babe Ruth sets records in baseball that would stand for decades. The development of television 7

8 Development of Sports and Entertainment Marketing William Bill Veeck was a key figure in the development of sports marketing. He conceived of marketing activities and events that surround baseball games. Adolph Zukor, founder of Paramount Pictures, was one of the first film producers to draw big box-office crowds and own a chain of theaters. 8

9 Marketing Today Sports and entertainment vendors compete for a share of the money people spend on recreation. Sports and entertainment marketing directs consumers toward sports and entertainment products. vendors sellers of products product a good or service that any for-profit industry sells to its customers 9

10 Fan Clubs Grow Online Fan clubs for athletes and celebrities Operating an e-tail business make good on marketing an electronic tools. channel the Thanks to Web can be costly, the due Internet, to design, thousands delivery, of returns, official and and operating expenses. unofficial clubs are formed. They are run Though Many larger by dot-com fans, corporations, companies crashed and in the celebrities s, small Some stores fan clubs like Harris charge Cyclery fees, such of West as Tiger Newton, Woods Massachusetts, tigerfans.com actually at $30. increase Other sales Web sites using are a basic free. Web For example, site. Today, fanemporium.com, a third of Harris s which bicycle operates business for a rides group in of on musical the Web celebrities, to get hard-to-find charges no parts dues. and Sites personal offer newsletters, service. merchandise, contests, event updates, and more. Describe an e-business s home page to your class after For viewing more information one through on marketingseries.glencoe.com. sports and entertainment marketing, go to marketingseries.glencoe.com. 10

11 1. Name two inventions that helped to enable more equal access to entertainment for the wealthy and the working classes in the 1890s Who was a key figure in the development of sports marketing? How did Adolph Zukor help the entertainment market grow? 11

12 Changes in Marketing Communicating through promotion is more important than ever. promotion any form of communication used to persuade people to buy products New technologies have broadened the scope and reach of marketing messages, and they can be entertainment products themselves. 12

13 Marketing Similarities The marketing of sports and entertainment products differs from marketing traditional products in the following four areas: Product Endorsement Core product Ancillary product Revenue continued endorsement approval or support of a product or idea, usually by a celebrity core product the main product, such as sports event, movie, stage show, or book ancillary product a product related to or created from the core product revenue gross income 13

14 continued Place Price Piracy Royalty Copyright Marketing Similarities piracy the unauthorized use of another s music, movies, or copyrighted material royalty a payment for material that has been copyrighted, or legally declared as belonging to the creator continued 14

15 continued Marketing Similarities Promotion Product tie-in Cross-promotion product tie-in use of ancillary products such as merchandise as promotional tools cross-promotion any form of communication through which one industry relies on another industry to promote its product 15

16 Marketing Similarities Convergence expands the potential for profit in sports marketing and entertainment marketing. Convergence and crosspromotion help to develop synergy. convergence the overlapping of product promotion synergy a combined action that occurs when products owned by one source promote the growth of related products 16

17 Risks and Risk Management In any industry, including the entertainment industry, there are risks. risks unforeseen events and obstacles that can negatively affect business Successful sports and entertainment marketers develop risk management strategies. risk management a strategy to offset business risks 17

18 1. What is celebrity endorsement? 2. What is the difference between core and ancillary products? 3. Give an example of synergy. 18

19 Different Players, Different Games The differences between sports and entertainment can be found in three areas: Consumer loyalty Product Revenue stream 19

20 If sports fans feel their team is trying to win, the team can retain its consumer loyalty. The entertainment consumer is not motivated by brand or team loyalty, but by a desire for satisfying entertainment. Differences in Consumer Loyalty consumer loyalty consumers attitude that occurs when they are happy with a company and become repeat customers 20

21 Differences in Product The sports product is consistent, or stable. The entertainment product is variable, or changeable. 21

22 Differences in Revenue Stream The streams of revenue created by marketing products in entertainment are very diverse. Sporting events do not usually produce the same amount of revenue from merchandising and royalties as entertainment events. 22

23 Sports franchises earn revenue from sponsorship. Sports franchises also earn revenue from advertising and broadcast rights. Differences in Revenue Stream sponsorship the promotion of a company in association with a property 23

24 Similarities and Differences in Marketing Sports Marketing Entertainment Marketing Consumer Loyalty Consistent Product Few Ancillary Products Product Place Price Promotion Lack of Consumer Loyalty Variable Product Many Ancillary Products Convergence 24

25 List two differences in consumer loyalty between sports and entertainment. What are differences between marketing sports product and entertainment product? In what one way does the stream of revenue in sports differ from the stream of revenue in entertainment? 25

26 Checking Concepts Identify three people in sports and entertainment history. Discuss one way that sports and entertainment history has affected marketing today. Name three different marketing tools. continued William As endorsements, new Bill inventions Veeck and conceived technology of marketing ancillary products, made activities entertainment and events more that surround convergence, baseball and available to the working games. classes, synergy Adolph marketing Zukor was was affected; one of it the is currently first to market being affected dramatic by stories and computer popular technology stars in movies. Charles and the Internet. Howard marketed Seabiscuit well enough that some say he invented sports marketing. Other answers are possible. 26

27 Checking Concepts Define royalty. Give an example of a royalty. Give an example of cross-promotion for a film. Describe one risk involved in a sports event Answers Many royalty answers is will a vary are because but possible, payment may include anything for including the that star damaged material can of a be that new property, has movie copyrighted cancellation, been appear copyrighted, on can injury a earn talk to or audience, legally show. a royalty declared if it is used damage as belonging by a to person to the equipment. creator. entity other than the creator. Some examples might be books, songs, scripts, etc. continued 27

28 Checking Concepts Critical Thinking 8. Explain one method of risk management for one risk. 8. Answers will vary. One possibility is purchasing insurance policies to protect clients from industry-related risks. 28

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