Chapter 2 Sports Entertainment Marketing Connections and Contrasts

Chapter 2: Sports & Entertainment Marketing. Connections and Contrasts

Learning Objectives: ● Discuss the history of sports and entertainment. ● Discuss the impact of sports and entertainment history on today’s market. ● 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.

A Brief History of Leisure ● Consumers: people who use products. ● Growth is based on three things: o consumers with free time o Discretionary Income- money left to spend after necessary expenses are paid. o desire for recreation ● Mid-to-late 1800 s, only the wealthy had the time and discretionary income. ● Working class had little time away due to daily labor and lower wages. o Labor Unions helped get better working hours and wages.

A Brief History of Leisure ● 1890 s Public Transportation allowed both the wealthy and working class to seek out entertainment. ● Late 1890 s o Kinetoscope, also called a vitoscope, (device used to view moving pictures) was invented by Thomas Edison. o Signaled the birth of the film industry. ● Nickelodeon (another invention) helped the entertainment industry grow from silent movie era to full sound films in 1927. o The Jazz Singer premiered as the first talking movie. (1927) o Mary Pickford (Canadian-born) was the world’s first international movie star.

Development of Sports & Entertainment Marketing ● Key figure in the development- William “Bill” Veeck. (1940 s) o owned the Cleveland Indians/Chicago White Sox o drafted the first African-American player to the American League-Larry Dobby o Grand-Started Entertainment (fireworks, dazzling scoreboard, special event nights) o Made sporting events more profitable (presented a more interesting “show” or product, and sold more advertising) ● Adolph Zuker- founder of Paramount Pictures and pioneer of creating Hollywood Studio system. o Marketed movies such as The Prisoner of Zenda

Marketing Today ● Athletes compete for points. ● TV Programs compete for ratings ● Sports & Entertainment Vendors (sellers of products) share of the money people spend on recreation. ● Products are the goods or services that any for-profit industry sells to its customers.

Changes in Marketing ● Some marketers consider “people” as the fifth of the 4 P’s. ● Promotion is any form of communication used to persuade people to buy products through advertising, publicity, personal selling, or sales. ● New technologies have broadened the scope and reach of marketing messages, and they can be entertainment products themselves.

Marketing Similarities ● Marketing of Sports & Entertainment products differs in four areas: o Product o Place o Price o Promotion ● However, they are similar in that they are marketed differently than traditional consumer products.

Marketing Similarities ● Product o Often not physical goods that can be tacked on a store shelf. § entertainment presentations and athletic competitions can be used to promote unrelated products. ● Ex: ESPN-themed restaurants do not sell tickets to games, but sell burgers and drinks by using the appeal of sports. ● Ex: Tiger Woods uses his appeal as a sportsman to promote non -sports related products. o Endorsement- approval or support of a product or idea, usually by a celebrity lending his or her image or name to a product. § Marketers must match their products with the correct celebrities.

Marketing Similarities ● Product o Core Product- the main product (sports event, movie, stage show, book) o Ancillary Product- a product related to or created from the core product. (Animated movie shown in theaters then later released on DVD) o Revenue (gross income) is earned by the core and ancillary products as promotional tools to promote and market even more unrelated products. § Toys, lunch boxes, T-shirts, sheets, and pajamas

Marketing Similarities ● Place o Fans will go see a movie in a theater or will drive to a ballpark to see a game. o The occasion appeal of the vent contributes to the entertainment value of the process. o Purchase items online or look up information on websites. o Catch highlights on TV.

Marketing Similarities ● Price o The price is set and adhered to uniformly, based on what theaters and sports teams can charge--and what people will pay. o Customers may feel they are getting more for their money. § “more” might include stadium seating in cinemas, nachos in addition to popcorn, and stadiums with sushi bars and hotdog stands.

Marketing Similarities ● Price Problems o Price becomes an issue when highly paid players and celebrities go on strike for salary increases. o Scalping- Ticket scalpers are unauthorized ticket sellers who stand outside a game or concert and offer tickets at a higher price, especially when tickets are difficult to obtain. o Piracy- unauthorized use of an owner’s or creator’s music, movies, or other copyrighted material. § A royalty is a payment for material that has been copyrighted, or legally declared as belonging to the creator.

Marketing Similarities ● Promotion (Two tools to promote goods) o Product tie-in- the use of ancillary products such as merchandise as promotion tools. § Ex: Happy Meal at Mc. Donald’s, the free toy included with the meal might be a character from the newest Disney film or popular sports figure modeled as a bobblehead doll. o Cross-Promotion- any form of communication through which one industry relies on another industry to promote its product. § Ex: celebrities appearing on late-night and daytime talk shows. Interviews with magazines or newspapers.

Marketing Similarities ● Convergence--Part of the Marketing Mix o Convergence is the overlapping of product promotion. § Ex: a studio may use TV advertising to promote a movie that may one day be sold to television. Websites. o Synergy- a combined action that occurs when products owned by one source promote the growth of related products. § Oprah Winfrey- TV Show as the core product and uses that visibility and viewership to promote other products such as her magazine, her production company, and products that she endorses.

Risk and Risk Management ● Risks- unforeseen events and obstacles that can negatively affect business. o Ex: highly paid athletes and entertainers are subject to injury and illness. Suspension if caught using any type of illegal substance. ● Risk Management- a strategy to offset business risks. o Risk-management firms are hired to identify potential risks. Write contracts and purchase insurance policies to protect their clients from injury-related risks.

Different Players, Different Games ● The differences between sports and entertainment can be found in three areas: o Consumer Loyalty o Product o Revenue Stream

Differences in Consumer Loyalty ● Consumer Loyalty- occurs when consumers are happy with a company’s product and become a repeat customer. o Ex: Watching one team play on TV because you like that team the best. ● The entertainment consumer is not motivated by brand or team loyalty, but by a desire for satisfying entertainment. o “What’s hot and what’s not. ” o If the product does not deliver the expected level of entertainment, the consumer will quickly turn to the competition.

Differences in Consumer Loyalty ● Because of the differences in consumer loyalty, marketers must identify the different marketing goals for sports consumers and for entertainment consumers: o Job of the Entertainment Marketer: Find a Winning Formula, Try to KNOW what consumers want. CREATE that product. o Job of the Sports Marketer: Find a Winning Team. KNOW what consumers want. Try to DELIVER that product.

Differences in Product ● Consistency, or stability of the sports product. ● Variability, or changeability, of the entertainment product. ● In marketing a traditional product, marketers have plenty of time to conduct research, run tests, and plan launches and promotions. o Sports as a product has this same luxury. o Entertainment as a product, marketers have to predict a trend or fad, and then change the product to satisfy audience demand.

Differences in Revenue Stream ● Entertainment Products o developed through merchandise o create a profit through sales of ancillary products, licensing, and royalties. o very diverse ● Sports o doesn’t usually produce the same amount of revenue from merchandising and royalties. o Ex: a single, regular-season NFL game probably does not have more economic impact than a Rolling Stones concert. o streams of revenue: ticket sales, video games, media advertising

Sponsorship Differences ● Sponsorship- the promotion of a company in association with a property. o Ex: a company sponsors, or gives money to, another person or company to fund a project or production in exchange for something, such as advertising. (NASCAR)

Advertising and Broadcast Rights ● Purchasing advertising banners on scoreboards and seats ● Logo digitally overlaid onto a billboard during a televised game. ● TV networks make million-dollar deals with sports leagues for exclusive rights to broadcast games.