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 1800s, 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.

● 1890s Public Transportation allowed both the wealthy and working class to seek out entertainment. ● Late 1890s 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 o The Jazz Singer premiered as the first talking movie. (1927) o Mary Pickford (Canadian-born) was the world’s first international movie star. A Brief History of Leisure

● Key figure in the development- William “Bill” Veeck. (1940s) 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 Development of Sports & Entertainment Marketing

● 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. Marketing Today

● 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. Changes in Marketing

● 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 McDonald’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. Marketing Similarities

● 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. Risk and Risk Management

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

● 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 Consumer Loyalty

● 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 Product

● 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 Differences in Revenue Stream

● 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) Sponsorship Differences

● 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. Advertising and Broadcast Rights