3.06A Employ product-mix strategies to meet customer expectations SEM II

Examples of Merchandising Opportunities for Sports/Events  Merchandising opportunities for sports/events include:  Licensed sale of merchandise such as apparel and other souvenirs  Signage at the sport/event promoting the sponsor  Stationary signage – does not move  Rotating signage – toggles between advertisers  Virtual signage – appears only on television

Risks Associated with Merchandising Opportunities  Risks include:  Logo abuse and counterfeit merchandise  Damage to the event’s reputation, especially if an advertised sponsor goes encountered legal difficulties or declares bankruptcy (e.g., Enron Field—Enron was an oil distribution company whose illegal practices led to its bankruptcy and imprisonment of some top company executives)  Damage to the advertised sponsor’s reputation, especially if the sport/event goes poorly (e.g., XFL professional indoor football league, which ended after only one season)

Advantages and Disadvantages of Using Branded Merchandise  Advantages:  Development of profitable new product lines  Greater exposure to the market  Enhanced sales  Positive attributes associated with the sport/event  Development of universally identifiable brands (e.g., Nike Swoosh)  Positive attributes of the sports entity transferred to the sponsor  Licensee and/or sponsor attains better brand recognition  Less time and money required to build high levels of brand equity  Higher prices for “official” branded merchandise   Disadvantages:  Possible loss of control over the brand (e.g., licensee may produce inferior goods and offer them at a lower price, leading to a lessening of the perceived image of the sport/event)  Expense required to seek out counterfeit merchandise

Sources of Merchandising Ideas  Marketers generate merchandising ideas by:  Identifying the target audience and selecting products based upon its demographics  Knowing what products have sold well in the past  Identifying target audience’s lifestyle models to determine appropriate products:  Needs-driven consumers: Farthest removed from mainstream culture, unaware of events, seeking only the bare necessities  Outer-directed consumers: Affected by others around them  Belongers: Traditional, conservative, conforming, sentimental, and nostalgic  Emulators: Upwardly mobile, status conscious and competitive  Achievers: Materialistic, self-reliant, geared toward success, driven to preserve their status quo and comfortable lifestyle, likely to purchase high-end merchandise as status symbols

Factors Affecting the Choice of Merchandising Options  Factors affecting the choice of merchandising options include:  Planning: Merchandise to be sold in the future must be bought now  Analysis: Customers’ needs must be correctly identified to determine their needs, wants and desires  Acquisition: Who will produce the products  Control: Quality control is necessary as the product will reflect upon the company whose name and logo appear on it