Introduction to Sport Marketing Lecture 5: Sport Marketing Strategy
Lecture 5. Overview Discuss the process of developing a strategic marketing direction. Identify the main considerations when developing strategic marketing objectives. Outline the factors critical to setting performance measures. Describe the importance of determining a core marketing strategy. Define the terms market positioning and market segmentation. Discuss the importance of market segmentation. Identify the main approaches to market segmentation. Describe the process and importance of market positioning. Outline the major elements of the marketing mix.
Stage 2: Develop a Sport Marketing Strategy
Principle 5.1: The second stage of the Sport Marketing Framework is to develop a sport marketing strategy. Developing a sport marketing strategy requires two steps: 1) to develop a strategic marketing direction 2) to develop a sport marketing position
Principle 5.2: Developing a strategic marketing direction involves setting marketing objectives and performance measures.
Marketing Objectives An objective is an aim or goal A marketing objective is a goal that a sport organization may realistically achieve as the result of its marketing strategy Objectives will guide all of the coming stages of the Sport Marketing Framework Case: Guardian Newspaper and Euro 2004
Four Categories of Objectives There are four categories of marketing objectives that sport organizations may pursue: 1) participation 2) performance 3) promotion 4) profit
Examples of the Four Sport Marketing Objectives
Writing Good Marketing Objectives
Tool 5.1: Marketing Objectives. A marketing objective is a goal that a sport organization wants to achieve as the result of its marketing strategy. There are four categories of marketing objectives that sport organizations may pursue: 1) participation 2) performance 3) promotion 4) profit All marketing objectives should be: consistent with organizational objectives realistic action-oriented narrowed down and ranked documented clear and specific measurable time focused
Performance Measures The word measure refers to a way of estimating or calculating whether an objective has been achieved It involves finding a way to quantify or put a number to an objective They make it easy to determine whether an objective has been reached or not
Examples of Performance Measures
Tool 5.2: Performance Measures. Performance measures quantify or put numbers to objectives in terms of magnitude and time so that their specific achievement is transparent. A measure is a way of estimating, calculating or assessing whether an objective has been achieved. It usually involves finding a way to quantify or put a number to an objective.
The second step in developing sport marketing strategy
Developing a Sport Marketing Position Involves four steps
Principle 5.3: The second step in developing sport marketing strategy is to develop a sport marketing strategy. Developing a sport marketing strategy involves four steps: Step 1 and 2: conducting market segmentation Step 3: developing market positioning (to differentiate from competitors) Step 4: devising the marketing mix
Why Do We Need to Segment? Not all sport consumers are the same. Different people are motivated to consume sport for different reasons. Different sports or events will attract different kinds of consumers (e.g. Formula One motor racing versus synchronised swimming). Sport marketers must understand who their current and future potential consumers are By segmenting it is possible to use limited marketing resources more effectively.
What is Market Segmentation? Segmentation is the process of categorising groups of consumers together, based on their similar needs or wants. A market is the total group of potential consumers for a product. A market can include retailers, businesses, government, media and individuals. Market segmentation involves breaking down this total market into smaller groups based on something that the consumers have in common (e.g. age, gender, interests or needs). Once a segment is selected, the organisation can customise its product and marketing strategies to meet their specific needs.
The Process of segmentation Market segmentation involves two parts.
Categories of Segmentation There are six ways of grouping consumers together for segmentation Case: Nike
Demographic Segmentation The most common form of segmentation in sport marketing. Variables include age, gender, ethnic background and what stage of their working life-cycle a consumer occupies. There are also categories such as: married without children, same-sex couples, single parents, blended families, and the separated or divorced. These factors can make a difference to how, when and why consumers spend money on sport products. For example: A single, working adult may have more income to spend on high profile sport events than a young parent. The major national soccer leagues in Australia and the United States possess a strong ethnic fan base.
Socio-Economic Segmentation Refers to social or economic circumstances, such as income, level of education achieved, and occupation. How much money a consumer earns is likely to influence their buying behaviour. A family living on a tight budget is unlikely to buy box seats to a football match. Some sports have been associated with certain social class segments. Football is traditionally seen as a working class game, golf and tennis as middle class activities, and polo and yachting as sports of the rich. A person s education, income and occupation are often strongly related.
Lifestyle (psychographic) Segmentation Refer to consumers day-to-day routines and general way of life. Lifestyle can be influenced by personality, interests, activities and opinions.
Geographic Segmentation Segmenting according to geographical residence. Segments might include local (like a suburb or state/county/province), national, and international regions. The environment, climate and natural resources in a region can also provide the basis for segmentation. The high mountains in Switzerland mean that there is a large variety of snow sports available to residents (and tourists of course), whilst the beaches in Thailand provide plenty of opportunity for warm water sports.
Product Behaviour Segmentation Segmenting on the basis of their buying behaviour, such as: how much/how often consumers buy sport products situations in which they buy them degree of loyalty to sport brands Loyal fans are more likely to repeatedly buy tickets, memberships and memorabilia. Consumers who are interested in sport as a social outlet will buy in situations where their friends are involved. Consumers who sign up for season tickets are buying sport on a heavy usage basis. Those who rarely attend are light users in comparison.
Benefits Segmentation Based on the similar benefits consumers seek from using a sport product. Different sport products offer different advantages (e.g. social, personal, performance or health benefits). Consumers that are interested in one aspect of a brand s features or benefits can be grouped together. e.g. consumers who attend a gym could be grouped according to their needs that are being met, such as fitness, entertainment or belonging.
Ways of Using Segmentation There are three main approaches: focused segmentation multiple segmentation undifferentiated segmentation Focused segmentation when only one segment is chosen Multiple segmentation the selection of more than one segment Undifferentiated segmentation when no segment is chosen, and the total market is seen as a single consumer group
The Three Approaches to Segmentation
Focused Segmentation Select one of the market segments and develop one marketing mix for it. Sometimes called niche marketing, or concentrated segmentation. Advantages: marketing mix can be highly specialised marketing mix can be tailored to segment s needs all resources can be focused on the single segment more cost effective Disadvantages: risky if the segment turns out to be too small segment could shrink over time vulnerable to competition
Multiple Segmentation Choosing more than one segment, and developing a separate marketing mix for each one. Not all the elements of the marketing mix need to be changed for each market segment. Advantages spreads risk of one segment being too small reduces risk of one segment shrinking in size Limits problem of one segment being a poor choice Disadvantages can be expensive takes money, time and resources to create a new marketing mix for each segment It is wise to limit the number of segments chosen.
Undifferentiated Segmentation The total market is considered the group of potential consumers. One marketing mix is developed for all consumers. Sometimes called mass marketing. Useful if the process of segmentation reveals little difference between segments in the market. Advantages can be resource effective requires the development of only one marketing mix Disadvantages It is harder to stand out from competitors
Considerations When Segmenting The segment(s) must be big enough to justify the effort. The segment(s) must be different enough from one another. Consider how easy it will be to reach the chosen segment: Is there a way to communicate with them? Is there a way of getting the sport product to them? Consider the resources available to develop the marketing mix. Consider how much is known about the consumers: If little is known, multiple segmentation may not be possible. Consider the level of competition in the market: If there is little competition, an undifferentiated approach might be satisfactory and cost less. In a market with fierce competition, multiple segmentation or concentrated segmentation would be helpful.
Tool 5.3: Market Segmentation. Market segmentation describes the process of categorising groups or segments of consumers together, based on similar needs or wants. Three approaches to segmentation are: focused, multiple and undifferentiated Effective segmentation requires: the chosen segment(s) to be big enough the chosen segment(s) to be different enough consideration of how the segment can be reached consideration of how much is known about the consumers awareness of the level of competition Case: Japanese Baseball
Market Positioning and Differentiation After the target market has been identified, a positioning strategy must be devised for use with each segment.
Market Positioning How a sport brand is perceived by consumers relative to its competitors. luxury versus basic high quality versus value-for-money conservative versus exciting Consumers will compare a product with others in the market, and put it into a position in their minds. Case: MLS
Differentiation Successful market positioning results in a differentiated sport brand or product. A differentiated sport brand or product stands out from the rest. Case: Vodafone
Positioning Tactics Different tactics will create different perceptions in the minds of consumers. A positioning tactic is connected with branding, where it is reinforced, amplified and extended. Tactics include: product features product benefits specific product use product user price and quality against competitor product class Hybrid positioning
Examples of Positioning Tactics
Examples of Positioning Tactics (continued)
Tool 5.4: Market Positioning. Market positioning is the process of attributing a sport brand or product a distinctive value or set of features for each target market segment compared to its competitors. The outcome of market positioning should be a differentiated sport brand or product. There are eight tactics of market positioning that a sport marketer might consider: Product features Product benefits Specific product use Product user Price and quality Against competitor Product class Hybrid positioning
Develop a Marketing Mix The final step in developing a marketing strategy is to develop a marketing mix for each segment.
The Marketing Mix A set of strategies and activities that cover product, price, promotion and place. Commonly referred to as The Four Ps. The word mix means they should be coordinated together. Sponsorship and services are also marketing mix strategies.
Examples of the Four P s
Product Can refer to goods physical, manufactured items. Can refer to services activities, entertainment, experiences. Can refer to ideas and benefits offered to consumers lifestyles, social groups, belief system. Includes design, packaging and merchandise The sport product is addressed in lecture 6. Sport services are considered in lecture 11.
Price The cost a consumer must pay to receive a product or service. Usually thought of as the literal cost in monetary terms. A pricing strategy must consider pricing goals and match them to pricing techniques. Devising a pricing approach is considered in lecture seven.
Place (distribution) Where consumers access the sport product or service. The way a product is made available to consumers. Physical goods distribution: retailers, wholesalers, Internet, mail-order, manufacturers, ebay. Services distribution: pay TV, cable TV, free-to-air, media, local competitions, sports health practitioners. Place also includes different ways of getting tickets for a game or event, and decisions about where to locate sport facilities. Place is considered in lecture eight.
Promotion Communicating with consumers. Getting a message across to the marketplace. Promotion includes: Advertising Sponsorship Signage Exhibitions Sales promotions Personal selling Publicity Promotion is examined in lectures 9 & 10.
Principles Summary Principle 5.1: The second stage of the Sport Marketing Framework is to develop a sport marketing strategy. This requires two steps: a) to develop a strategic marketing direction; and b) to develop a sport marketing position. Principle 5.2: Developing a strategic marketing direction involves setting marketing objectives and performance measures. Principle 5.3: Developing a sport marketing position involves four steps: market segmentation (steps 1 and 2), market positioning tactics (step 3), and devising the marketing mix (step 4).
Tools Summary Tool 5.1: Marketing Objectives Tool 5.2: Performance Measures Tool 5.3: Market Segmentation Tool 5.4: Market Positioning