Week 1 Basics of Sport Business PDF

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Part V International Sport Business Strategies

Chapter 20 International Sport Marketing Chapter 21 Digital Media in International Sport

Matt King/Gett y Images

Chapter 22 International Sport Tourism

Women’s field hockey match between Scotland and Malaysia in the 2018 Gold Coast Commonwealth Games. Scotland defeated Malaysia 4-2 for the seventh place. New Zealand took the gold by winning 4-1 to Australia. England won the bronze medal after defeating India 6-0. The 2018 Commonwealth Games included the participation of 4,426 athletes, representing 71 countries, which competed in 275 events in 19 sports.

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20 International Sport Marketing Gashaw Abeza, PhD Towson University

Benoit Seguin, PhD University of Ottawa

Chapter Objectives After studying this chapter, you will be able to do the following: • Understand the nature and unique aspects of sport business. • Discuss the basic concepts of sport marketing and apply them to a global setting. • Identify the unique features of sport product and apply them to a global setting. • Understand the nature of sport consumption and sport consumers in a global setting. • Recognize the place of sport sponsorship in a global setting. • Discuss the concept of brand and appreciate the unique features of the Olympics brand.

Key Terms sport-marketing uniqueness sport product STP SWOT analysis PEST analysis

sport consumption branding Olympics brand brand equity sponsorship

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port is a common language that breaks down barriers, unites cultures, and crosses borders in society (Westerbeek & Smith, 2002). Over the past decade, sport has become increasingly internationalized and the business of sport is transcending boundaries (Foster, O’Reilly, & Dávila, 2016). Particularly over the past few years, the management of sport business has become more global, more competitive, more digital, and more data centric (Foster, O’Reilly, & Dávila, 2016). At the same time, sport consumption today with rapid technological change is crossing borders and erasing time barriers. Therefore, as the sport industry becomes more complex, and as sport consumers and organizations increasingly cross national borders, an understanding of the dynamics of the international sport marketing becomes crucial. Consider the following examples, seemingly unrelated to each other, and think about how each addresses themes central to international sport marketing: ◆ Star athletes today are seen as global icons (e.g., professional footballer Cristiano Ronaldo). ◆ Players’ international movement becomes a norm (e.g., 69.2 percent of the players in the English Premier League are foreigners [Sky Sports, 2017]). ◆ Licensing and merchandising is no longer localized (e.g., Manchester United opened a store in China in 2008 (Man United, 2008). ◆ North American professional sport leagues are expanding their offices globally (e.g., the NBA has a major international presence with offices in 13 markets worldwide (NBA, 2017). ◆ Sponsors are crossing borders to partner with sport teams (e.g., the United Arab Emirates’ Etihad Airways sponsors the English Premier League club Manchester City FC). ◆ People are traveling abroad to attend sporting events (e.g., the Olympic Games). ◆ Coaches are increasingly being hired in foreign lands (e.g., Spain’s Real Madrid hired a French coach, Zinedine Zidane). ◆ Traditional sport events are repackaging their products (e.g., the new approach to track and field events with Nitro Australia).

◆ Sport goods manufacturers are diversifying their geographic reach (e.g., Nike). ◆ Multimedia and broadcasting efforts are expanding their geographic market (e.g., Univision in Spanish has rights to UEFA events through 2022). ◆ Professional sport teams have fans across the world (e.g., Manchester United Football Club fans). With these dynamics of sport business, it is clear that the makeup of an international sport market is influenced by the political environment, economy, social issues, cultural composition, and legal restrictions of different domestic and foreign markets (Schwarz, Hunter, & LaFleur, 2012). Also, we can appreciate that international sport marketing does not exclusively center on international organizations such as the International Olympic Committee (IOC) and international sport federations (IF). Overall, the advancement of sport business management at a global level, together with sport’s cross-cultural ability to appeal to different generations of people in multiple geographic locations (Ratten & Ratten, 2011) highlights the importance of international sport marketing. In particular, an understanding of the basics of sport marketing, appreciation of different values and belief systems of different countries and geographic regions, and recognition of the need to adapt to various situations is necessary for anyone studying sport marketing. Furthermore, Crow, Byon, and Tsuji (2011) identified three reasons that show the value of studying sport marketing from an international perspective: 1. First, it provides students increased opportunities for meaningful employment in the sport industry when national borders are crossed. 2. Second, sport consumers and organizations operate differently in countries around the world, so exposure to a global perspective is crucial. 3. Third, a basic understanding of the topic will be important for the evolution of the continued study of sport marketing from a global perspective. The purpose of this chapter, therefore, is to build on the foundational knowledge of sport marketing and apply this knowledge in an interna-

International Sport Marketing

tional sport context. This background includes the unique nature and aspects of the sport business, the basic concepts of sport marketing, the unique features of sport products, the nature of sport consumption and its consumers, the place of sport sponsorship in a global setting, and the concept of brand applied to the Olympics. The chapter is organized in such a way as to gain a background in these topic areas.

Nature and Unique Aspects of Sport Business Sport takes many forms. ◆ It can be an individual (e.g., golf, running), dual (e.g., boxing, tennis), or team sport (e.g., basketball, soccer). ◆ It can be seen as a spectator sport (e.g., basketball) or a participant sport (e.g., massparticipation road race or marathon). ◆ It can be seen in various contexts such as professional sport, college sport, Olympic sport, or community sport. Sport can also be taken as fun (for most of us), as work (for professional athletes), as a means of employment (for athletic directors), and as a business (for sport marketing agencies). Regardless of the form sport may take, understanding sport-marketing uniqueness (i.e., the features of sport marketing that distinguish it from marketing in other businesses) will be important in the discussion of international sport marketing. Three main unique features make the sport business, specifically the professional sport business, different from mainstream businesses such as airlines, insurance, restaurant, or banking: (1) its product’s unique features, (2) its unconventional sources of revenue, and (3) its distinctiveness as a social institution. These three aspects are briefly discussed next.

Unique Features of the Sport Product As a sport marketer, what do you think makes your product (e.g., a match, competition, or tournament) different from services and products offered by car manufacturers, airline companies, banks, hotels,

grocery stores, and so on? A number of scholars (e.g., Armstrong, 2014; Mullin, Hardy, & Sutton, 2014; Smith & Stewart, 2010) have discussed the unique features of the professional sport product that distinguish it from traditional mainstream products. According to these scholars, a sport product (e.g., a football match) is different from other products for these reasons: ◆ It is simultaneously produced and consumed. ◆ It is perishable (i.e., people watch games as they are being played). ◆ It has a fixed supply (i.e., schedules of games are fixed and number of tickets is fixed by the number of seats). ◆ Production is dependent and interdependent (i.e., teams rely on other teams to produce a game). ◆ Fans and consumers help produce the product (i.e., the presence of cheering spectators when games are being played is vital). ◆ A sport product is of variable quality (e.g., the quality of the game can vary). ◆ A sport product is consumed irrationally (i.e., fans and consumers exhibit irrational passion and a high degree of loyalty). ◆ The outcome is uncertain and unpredictable (e.g., the outcome of any game is uncertain before it is played). ◆ Sport teams continually invest in training, unlike businesses that employ people from professions such as engineering, accountancy, and others.

Unconventional Sources of Revenue Unlike mainstream businesses, a sport performance business (e.g., professional or college sport) generates its revenue not only by selling its main product (i.e., competition) but also by exploiting unconventional sources such as sponsorship sales, merchandise sales, broadcast contracts, namingrights deals, licensing fees, donations (e.g., NCAA), membership fees (e.g., Cycling USA), parking, and venue rental. Rarely do other businesses generate as much income through the abovementioned sources as sport businesses do.

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Learning Activity Think of a recent sporting game that you attended and identify at least five features of the game (see the just discussed unique features of sport products) that make it different from products that are being sold at a grocery store or at a hotel near you.

Distinctiveness as a Social Institution Sport is part of the culture of many societies of today’s world, from hockey in Canada to baseball in Japan to rugby in New Zealand to football in Brazil. Sport management reinforces social and cultural values (Smith & Stewart, 2010) such as striving for success, willingness to work hard, and valuing victory, teamwork, brotherhood, unity, and friendship. Sport has occupied and will continue to occupy spectator interest across the globe (Stavros & Westberg, 2009). It is an expression of self and social identity, serving as an attraction point for families, neighbors, office colleagues, citizens, and nations (Shank & Lyberger, 2014). Sport fans’ loyalty to a sport team is unique and far stronger than any other customer exhibits to other brands; think of the fans of FC Barcelona or Real Madrid (Waters, Burke, Jackson, & Buning, 2011). Besides, sport attracts media attention and is almost always in the public spotlight where, for example, the media cover athletes’ actions both on and off the field on a daily basis (Lee, Bang, & Lee, 2013). The social and cultural values of sport in our society, together with media interest, show the uniqueness of the operation of sport business as a social institution unlike other mainstream businesses. These unique features of sport business make sport marketing both challenging and rewarding, often even more so in a global setting. So what is sport marketing? The next section discusses the definition and components of sport marketing.

Sport Marketing Basics Sport marketing involves aspects ranging from ticket prices to fans’ experience to sponsorship to media rights. Consider the following questions:

◆ How can Dallas Cowboys enhance their fans’ experience? ◆ How can La Liga (Spanish football) teams develop, maintain, and enhance their fan base? ◆ What is the appropriate ticket price for IAAF Diamond League meets? ◆ What teams and athletes should Nike sponsor? ◆ How can Nippon Professional Baseball (NPB) in Japan increases its TV ratings? ◆ How much should the U.S. Open charge its official sponsors? ◆ How can teams in the Bundesliga (German Premier League) sell more tickets? Can teams in Serie A (Italian Premier League) and Ligue 1 (French Premier League) employ the same sales strategy? ◆ Why are the All Blacks (the New Zealand national rugby union team) well know n around the world, and what is the implication of that in terms of the team’s global brand? These and other similar questions fall under the purview of sport marketing. So what is sport marketing? Sport marketing can be defined as the specific application of marketing principles and processes to sport products and to the marketing of nonsport products through an association with sport (Gray & McEvoy, 2005). Pitts and Stotlar (2007) define sport marketing as the process of designing and implementing activities for the production, pricing, promotion, and distribution of a sport product to satisfy the needs or desires of consumers and to achieve the company’s objectives. The two definitions encompass the marketing of sport as well as marketing through sport. As Shank and Lyberger (2014) discuss, marketing through sport is the use of sport as a promotional vehicle for companies to reach out to consumers through endorsement (e.g., Roger Federer’s endorsement of Rolex watches), naming rights (e.g., AT&T’s naming rights fee for the Dallas Cowboys’ stadium), or sponsorship (e.g., VISA’s sponsoring of the Olympics). On the other hand, the marketing of sport refers to the application of marketing principles and processes to market sporting goods and services to sport participants

International Sport Marketing

and spectators (e.g., Swimming Canada’s recruiting of kids to join swim clubs). In contemplating the definition of sport marketing, keep in mind that a sport marketer’s job ultimately comes down to one action: creating demand (Shank & Lyberger, 2014). Marketing is about identifying customers’ wants and needs, and satisfying them while achieving the company’s objectives. The process of designing and implementing marketing activities demands a clear understanding of what are referred to as the 4Cs (consumers, company, competitors, and climate) and the 4Ps (product, price, promotion, and place) of marketing (Shank & Lyberger, 2014). Each of these components of the sport marketing is discussed next.

Four Cs of Marketing In this context, consumer refers to a marketer’s knowledge and understanding of existing and new consumers. A marketer should have a database that allows segmenting, targeting, and positioning its products in the consumers’ minds. This process is commonly referred to as STP, the foundation of a marketing strategy. To run an STP, a marketer need to gather data on factors such as demographics (e.g., age, sex), psychographics (e.g. attitude, opinion), geography (e.g., area, region, country), and behavior (e.g., purchasing behavior, brand usage rate, brand loyalty). An understanding of market segmentation increases effective market selection. Here it will be worth defining the three key elements of STP. According to Shank and Lyberger (2014), segmentation is the identification of groups of consumers based on their common needs, targeting is choosing the segment or segments that will allow an organization to attain its marketing goals efficiently and

Learning Activity Conduct an online search to find demographic data on NBA, NHL, MLB, and NFL sport fans in the United States. Find gender, age (e.g., 55), race and ethnicity (e.g., White, Black, Hispanic, others), and income (e.g., >US$100,000, 75,000-100,000, 40,00075,000, 20,000-40,000,...