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MSc in Management
Name: Chrysostomos Kipouros
Supervisor:
Mrs Vasiliki Grougiou
Dissertation Topic:
Sports Marketing: Operational Structure – Foundation and
Operation
January 2011
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Understanding the Role and Complexity of Sports Marketing in the Sports Industry, Slides of Marketing
The significance of sports marketing in the sports industry, its operational structure, and its relationship with event marketing. Sports marketing involves the promotion of sporting events, venues, teams, and individual athletes, as well as the use of sport as a marketing tool. The document also touches upon the importance of sponsorship, public relations, and the marketing mix in sports marketing. Mason's perspective on sports teams and their production of a league product for various consumer groups is also discussed.
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MSc in Management
Name: Chrysostomos Kipouros
Supervisor:
Mrs Vasiliki Grougiou
Dissertation Topic:
Sports Marketing: Operational Structure – Foundation and
Operation
January 2011
Abstract
Sports marketing is the marketing activity relevant to the sport product. The complexity and the special characteristics of the sport product set challenges that the marketing practice has to overcome as well as establishing the theoretical context of sports marketing. The operational structure of sports marketing is set by this theoretical framework and in a great extent it defines sports marketing’s applications. It defines the composition of elements that make sports marketing functional and it establishes the standards for effective marketing practice. The traditional marketing theory has to be revised in order to be successfully applicable for sports marketing practice.
Table of Contents
- Title Page………………………………………………………………………………..
- Abstract……………………………………………………………………………….…
- Acknowledgements…………………………………………………………………….
- Table of Contents……………………………….……………………………………... - 1.1 Introduction................................................................................................ Chapter 1 - Introduction: - 1.2.Study’s aims and objectives ………………………………………………….
- Chapter 2 – Literature Review: ………………………………………………….. - 2.1. What is sports ……………………………..…………………………............
- 2.2. Why are sports popular? ………………………………………………….....
- 2.3. The competitive nature of sports……………………………………………
- 2.4. The sports industry……………………………………………………………
- 2.5. The sport product……………………………………………………………..
- 2.6. Why is there a need for Sports Marketing?.............................................
- 2.7. The two dimensions of Sport Marketing……………………………………
- 2.8. The process of Sports Marketing……………………………………………
- 2.9. The Sport Marketing Mix……………………………………………………..
- 2.10. The Sport Marketing Management Process……………………………...
- 2.11. The role of fans……………………………………………………………...
- 2.12. The role of sponsorship…………………………………………………….
- 3.1. Introduction.……………………………………………………………….… Chapter 3 – Research Methods:
- 3.2. Research Methods.…………………………………………………………
- 3.3. Primary Data…………………………………………………………………
- 3.4. Case Studies………………………………………………………………...
- Chapter 4 – Analysis: …….............................................................................
- 4.1. Beckham vs Manchester United…………………………………………..
- 4.1.1. Why David Beckham is so popular?...................................................
- 4.1.2. Manchester United: A global brand……………………………………...
- 4.1.3. David Beckham: Abrand of his own……………………………………..
- 4.1.4. Beckham’s transfer: The Sports Marketing implications………………
- 4.2. The Borders Rugby Club……………………………………………………
- 4.2.1. Sponsors……………………………………………………………………
- 4.2.2. Marketing Strategy…………………………………………………………
- 4.2.3. Merchandizing………………………………………………………………
- 4.3. Diagoras FC…………………………………………………………………..
- 4.3.1. Marketing Strategy…………………………………………………………
- 4.4. Veria FC……………………………………………………………………….
- 4.4.1. Marketing Strategy…………………………………………………………
- Chapter 5 – Findings and Discussion………………………………………….
- 6.1. Introduction…………………………………………………………………… Chapter 6 – Limitations and Conclusion
- 6.2.1. Limitations on Methods……………………………………………………
- 6.2.2. Limitations on Findings……………………………………………………
- 6.3. Conclusion……………………………………………………………………
- References…………………………………………………………………………...
- Bibliography………………………………………………………………………….
- Appendix ..........................................................................................................
Graham(2001) the sports industry is “defined as all the revenues that are generated by sports”.
Sport as a financial activity is very powerful. There are premier league clubs that are in the London exchange and their economic success is based not only in the performance on the pitch but also in the sports marketing actions that they adopt, in other words their off field activities. For example, Manchester United took a promotional trip in the USA, last summer. Obviously, the officials of the club were trying to develop the Manchester United brand in the virgin North American football market. This summer’s trip was not only for the better preparation of the Manchester United squad for the championship, but also for the development and the welfare of the Manchester United brand. The operational structure of sports marketing is important in determining how marketing can function during a sport event and in an extent to that, how money can be generated through a sport event. That is a reason that many economists consider sports marketing to be in the theoretical context of event marketing.
In this thesis, the operational structure of sports marketing will be examined. In addition, there will be cases studies and examples that they will try to highlight this operational structure.
1.2 Study’s Aims And Objectives The main aim of this thesis, as its title implies, is to identify and study the operational nature of sports marketing. This study will be focused on issues that emerge from the practice of sports marketing and it will attempt to define and analyze them. So, the aims and the objectives of this dissertation are: ∑ To identify and analyze the operational structure of sports marketing. i.e. how does sports marketing function. ∑ To identify and illustrate the role of sports marketing in the sports industry. ∑ To research and analyze the issues that emerge from the function of sports marketing. For instance, ambush marketing as part of sports marketing.
These aims and objectives result from the effort to define the framework in which sports marketing is set. Additionally, this study will try to verify how does sports marketing functions in terms of generating revenues and why it is so significant in being profitable in the sports industry.
Sports marketing is the framework for taking advantage of sports and the revenues that were generated by them. Shank, (2001), mentioned that there is a confusing element in defining sports marketing: ” this element is use of the term sports (plural) marketing rather than sport (singular) marketing. "Sports" marketing connotes an industry of diverse and uncoordinated segments that have little commonality. Certainly each segment of the sport industry does operate independently and with minimal sharing of managerial practice. However, if standardized management and marketing practice is ever to come to the sport industry, then at some point we need to conceptualize industry segments as a homogeneous entity. “
“This was the first Olympics which depended entirely on private money, primarily major sponsorships, and not on public money. Whereas prior Olympic cities had experienced major financial losses, the Los Angeles Olympics actually generated a profit. Many sports purists have been highly critical of this practice of bringing corporate sponsorship to the Olympics, and even the Olympic committee reacted negatively to the level of commercialism.” It seems to be an opinion that is adopted by Schlossberg,(1991), as well: ” The 1984 Los Angeles Olympics provided a big boost for sports marketing and is generally credited with starting the trend of sports marketing on a formal basis - turning athletics into a sponsored business “
The Los Angeles Olympic Games were the starting point of Sports Marketing’s emergence in the corporate world. In a way, it revealed to the financial world the potential that sports can have in terms of financial opportunities and how profitable they can be. It should not be forgotten that the 1984 Olympics games were unique for other reasons too. The whole Eastern Block had boycotted the games so they were broadcasted mostly on the TVs of the Western world. These games produced the need to take the sports industry more seriously, the need to think more cleverly about exploiting the sports industry. Their contribution in manufacturing the current size and structure of the sports marketing was very significant.
Chapter 2: Literature Review
2.1 What is sports?
Without sports, there would not be sports marketing, so in order to examine the nature and the structure of sports marketing, they have to research and define the reasons that make people take up sports and why they are so keen on them. This is essential because it will contribute to understand the ways that sports can impact on people’s lives and the way that sports marketing can exploit this. There is not a clear definition of sports. It seems that sport is one of those things that has “always” been around. It is widely known that sports were part of the lives of all the great ancient civilizations. It is well known that in ancient civilizations, sporting activities were popular and that were also sporting events, like the Olympics. According to Domi encyclopedia, “sports are a group of physical activities that their primary intention is to provide exercise for the humans”, (Domi encyclopedia,1998, Athletism , Volume 2, Athens)
2.2 Why are sports popular?
Sports offer a pattern for doing that, they offer a context where this natural need and property of the human nature can take place. It is healthy for a person to involve himself with self. For example, jogging was huge because of its contribution in burning calories and losing weight. This fact was used by sports manufacturers to create special running/jogging shoes for their consumers. Sports offer the appropriate environment for socializing and in many cases sport activities are a result of the need for socializing or having a hobby. For instance, people from work might go playing 5-a-side football as a form of bonding or socializing with each other
Rangers. It is quite the same in Liverpool with Liverpool F.C. and Everton F.C. For the Evertonians, their nickname is Toffees, something that is referring to their social class and in some cases it distinguishes them from the Liverpool supporters.
An additional reason for the popularity of sport today is the way that sports can entertain the spectators. The spectators/fans have always been hooked on watching sports; that happened in the ancient Olympics; it happened in the Roman Empire where people were hooked on the Colosseum etc. The question that has to be answered is why people find sports so entertaining. One reason maybe that people, i.e. the fans identify themselves with the sports actions. Sports events offer entertainment because of what is on offer. It is admirable to watch a diver diving from 10m by doing amazing things in pure harmony or a ice skater doing the same during sliding in the ice. So, in the first place sports are entertaining because they are a good thing to see. The primary reason that a spectator watches a sport event is because it is attractive to the eye. Then, they can be entertaining because of this psychological identification and connection that exists with the fans. For instance, it always feels good for a Celtic supporter when their side beats Rangers. These are in general the main context of the reasons that people take on sports.
2.4 The Sport Industry
An attempt to simply define the sports industry is by saying that every business activity that is related to sports is part of the sports industry. According to Shannon, (1999), sports industry represents the eleventh largest industry in USA. This can highlight the size and the complexity of the sports industry as well as its unique nature.
This framework of defining the sports industry can embody its components. ∑ it includes sports-related media which pay in order to broadcast sports events, like TV channels and radio stations. ∑ It includes media that their publication is dependable on sports or a specific sport, like Total Football. ∑ It includes sports organizations from sport clubs to sports committees, like Arsenal F.C. and the IOC(Internal Olympic Committee), sponsorships, athletes and sports events. ∑ It is not only the number of the sports that makes the industry complicated, it is also the nature of each sport and every sports implications.
Just to realise the size of the sports industry, it is worthy to mention some figures. Graham, Neirotti and Goldblatt, (2001), claim that: "Over the past decade the global sport industry has dramatically grown and is estimate in $500 billion world-wide. New York City alone claims that the economic impact of the sport industry is $6.9 billion, which includes sports related media, organisations and events".. This figure represents the sports industry at total. For instance, according to the fourth Deloitte and Touche Sport Report the combined income of the twenty richest clubs in football, broke the billion pound mark in 2001. So, it is easy to understand that this is a huge industry with a lot of competition for getting a chunk of this money.
2.5 The Sport Product
From the above, it is derived that in the sport industry every sport can be considered as a “product”. It is the so-called sport product, which is defined as a fundamental element of the
In other words is the Premier league the sports product or the Leeds United F.C. It is both. For instance, when Leeds United F.C. has a game that is a Premierleague game. Leeds United F.C. generates money by that game; from game receipts; advertisements; sponsors; merchandizing. In this case Leeds United F.C. is a product because it offers to the fan/consumer certain things like entertainment from the teams football games, possible satisfaction when the team performs good etc.
On the other hand this game is televised to fans that are not able to watch the game. The directors of the Premierleague have made deals about the TV rights and the Premierleague games are televised worldwide to a consumers/fans basis that are interested in watching them. By this broadcast huge revenues are generated. So, the Premierleague is itself a product too; that has to make sure that offers something to the consumer that satisfies him; like competition in the league, highlights from the football games and football action.
2.6 Why is there a need for Sports Marketing?
Sports have social and political implications. But their most important side nowadays, is their economic and financial side. The sports world is a world of performance, not only on but also off the pitch. There is a lot of competition in trying to get market share. Sports marketing is the practice that enables clubs, leagues, sport committees etc to achieve higher market share. It follows the basic marketing concept, that the way a product is marketed is essential in the success of the product. This marketing concept regards the consumer as the key element in the success of the product, in other words it tries to keep the customer satisfied. Schlossberg argues that ideally sports marketing: ” consists of activities designed to meet the wants and needs of sport consumers”. (Schossberg H, 1996, Sports Marketing, London, Blackwell)
This is sports marketing’s essence, to meet the demand of the sport’s consumer. From the above, it is easy to comprehend the size of the sports industry and the part that sports play today.
2.7 The two dimensions of Sports Marketing
As it was mentioned above there are two dimensions in sports marketing:
- The marketing of sports
- Using sport as a vehicle to market other products
These two dimensions of sports marketing do not conflict, and are in a way dependent upon one and other. However the latter is a continuation of the first one. The first dimension sets the foundations for marketing exploitation and the second one fulfils the marketing opportunities. So, there is case that both of these dimensions can take place in the same time and normally this is what happens in the reality. For instance, the UEFA Champions League. This is a football tournament that is being held by UEFA( that is the European Football Federation) and in which the best teams of each country participate. It is a glamorous competition and it generates a lot of money, both to the participants and the organizers. UEFA markets Champions League as the ultimate competition, where the best teams of Europe participate and there are high TV ratings. Sponsors regard Champions League as a marketing opportunity to promote their products throughout Europe and this is a huge client basis. This is reflected in the calibre of the companies that act as sponsors of Champions League. According to the UEFA official website, the official sponsors are Amstel, Playstation 2, Ford and Mastercard.(www.uefa.com)
Sports Press claimed that his transfer from Manchester United to Real Madrid for £ million was not for his football abilities but for his marketing ones. Real Madrid as well as being a successful football club is, is also a very successful brand, with its own TV channel, huge merchandizing revenues and gate receipts. The problem was that although the club was very popular and marketable in Europe and Latin America, it was relevantly unmarketable in Asia. On the other hand, David Beckham has huge appeal in the Asian market where he has a very strong fan base. Indeed, David Beckham is a well known as much as a footballer as for his off field activities. In an article in Times in June 2003, Peter Gantolfi, the head of sports marketing at Nationwide, said: ” this is a not a straightforward agreement between two football clubs. We are talking about the move of a commercial colossus”. According to the newspaper, the credit for his transformation in marketing phenomenon goes not only to his media-savvy wife Victoria Beckham but to his advisers at SFX, the sports marketing agency that was responsible for his transformation from a promising young footballer to a worldwide icon, which’s estimated value is approximate £55 million pounds. There will be more mentioned about this case later in this dissertation.
2.9 The Sport Marketing Mix
In the context of the traditional marketing theory, marketing mix is also very essential in sports marketing. Marketing mix or as it is else known as 4Ps (price, place, product, promotion) was firstly defined by Borden (1964) and it is the combinations of four major tools of marketing. Brassington and Pettit argue that it is about is:
“Developing and implementing marketing activities that actually deliver something of the value to the consumer. The means by which these ideas are turned to reality is the marketing mix.” Shank (2001) believes that there are 5Ps in the sports marketing. The four traditional ones(price, place, product, promotion) but also he believes that because sport enjoys so much media attention. Public Relation should be treated as a separate P. Normally PR is considered to be part of the promotion. His argument seems to be based on the importance of the media. PR is a special part of promotions in sport, has an obvious effect on product image and position. According to Shank: ”but to a much greater extent than promotional efforts such as advertising, which the marketer controls, public relations efforts rely on the goodwill of the media.”
Westebekk(2003) mentions a very useful example of the way that public relations work in sports marketing. “Nike earned a good reputation in the late 1980s and early 1990s for its innovative advertisements and promotions. As Nike became the 500-pound gorilla of sport, the media focused on troubling aspects of Nike's labor practices in the Asian factories where its products were made. No matter what data Nike offered about the relative value of its wage scale, no matter how many celebrities returned satisfied from inspection tours, Nike could not seem to win on its own turf of media images. To make matters worse, in 1997, Nike was further burned by distribution of a new "Nike Air" model that outraged Muslims, who saw a resemblance between the flame shaped image on the shoe and the Arabic word for Allah”. This example shows how sensitive the industry can be and how important is the use of public relations in the sports marketing mix. There was a similar case in NBA. Kobe Bryant is one of the most prolific players in the NBA and member of the USA national team. He has lots advertising contracts and endorsements with companies like Adidas. He was thought to be an