SPM 4304 ex 2

Separability
of product and consumption
Heterogeneity
Products are mass produced and events always different
Intangibility
you can touch products cannot touch events
Perishability
products can be kept events can not
– All sports depend on human performance
by the players, fans, and marketers
– The sport product is inconsistent from consumption to consumption
o Uncertainty- the consumer is in control of the final experience
– The sport experience includes:
o Venue/atmosphere
o Equipment/Apparel
o Music/Entertainment
o Concessions/Food
o Pre-/Post-game activities
– The marketer typically has little control over the core product and consequently must focus efforts on product extensions
o In sport marketing, winning can never be the only thing
Key issues in Sport Product Strategy
– Differentiation
– Product development
– Product position
– Brands
– Product and brand cycles
Differentiation
– Marketers must consider their consumers and their competitors simultaneously
o Product must be distinct and attractive
– How can we make our product distinct from competitors?
o What do we offer that they do not?
o Consider the core and extended elements of the sport product
Product Development
– Marketing is a process
o Marketers must continuously develop the product- they may need to delete, revise, or add elements that make up the product benefits
• Generate ideas
• Screen/implement ideas (analyze, develop, market test, etc.)
– 5 Perceptual issues in Product development
o Relative advantage of the new product over old preferences
o Complexity or difficulty in adoption and use
o Compatibility With consumer values
o Divisibility into smaller trial portions
o Communicability of benefits
Product Position
– The elements of a sport product contribute to a consumer’s image of the product
– When all elements of the product provide the same message, the image is clear and distinct
– Positioning occurs at all levels of sport, in all sports
– Five images to consider:
o Trademark imagery
• Mark or logo of an organization
o Product imagery
• Apparel, team performance
o Associative imagery
• Associations with the product (e.g., Nike & top athletes)
o User imagery
• Fans/consumers of a particular product (e.g., NY Yankees fans’ image of Bostonians)
o Usage imagery
• Frequency of use, high-tech, etc.
Brands and Branding
– Branding is both means and an end to product differentiation
o Brand building never ends
– Brands can be communicated through names, marks, logos, images, associations, etc.
– Brand equity- the added value of a product from its brand
o Brand recognition/awareness
o Brand associations
How do we distribute the sport product?
– At the facility
o It’s location, layout, and image
– Other distribution channels
o Retail distribution (merchandise & apparel)
o Ticket Sales
– It’s all about location
– But also…
o Surrounding area
o Artifacts
o History/memories
o Ideologies
o Experiences
o Aesthetics
– Important place considerations:
o Accessibility
o Design
o Layout
o Amenities
o Personnel
Accessibility
– What factors contribute to individuals’ willingness to travel to an event?
o Demographics
o Duration/frequency of the event
o Emotional commitment
o Perception of quality
o Parking
o Surrounding area
Design and layout
– Ease of access, exit, and internal movement to minimize length of lines anywhere
– Access and sight lines for consumers with physical disabilities
– Location/design/number of food services, bars, concessions, restrooms
– Flexibility vs. dedicated usage
– Aesthetics
Amenities
– Connectivity (wireless)
– Screens/displays
– Sound systems
– Upscale food & drink
– What else?
Promotion is…
– The vehicle (s) by which marketers convey information about sport products
– Promotion is a communication tool
– What functions do promotions serve?
o Inform (create awareness)
o Persuade (encourage action)
o Remind
o Position a product in the mind of consumers
Inform
– Associated with the introductory phase of the product life cycle
– Do not take awareness for granted
– Important objective for targeting new consumers
– Also important for product changes and product (or brand) extensions
Persuade
– Attempts to convince a consumer to purchase a product, encourage action
– Informing- informational strategy
o Provide factual, relevant information
– Persuading- transformational strategy
o Associate consumption with consumer motives/satisfaction of consumer need (and/or wants)
Remind
– Remind consumers of product availability and product benefits
– Maintain top-of-mind awareness
– The objective of reminding is retention
– May use informational or transformational strategy
Position
– Establish image and associations in mind of consumers
– This goes beyond informing. It is about establishing specific associations
– What associations do we make with certain brands?
Repositioning a brand
– There all sorts of reasons that we might want to reposition our brand
Promotion Mix
– Advertising
– Sales
– Personal Selling
– Public relations
– Direct marketing
Advertising
– Any paid form of non-personal presentation and promotion of ideas, goods, or services
– Includes broadcast, print, internet, outdoor, and other forms
Advertising Advantages
o To reach mass audience
o To repeat a message
o To reflect seller’s popularity
o To build up a long-term image
Advertising Disadvantages
o Only a one-way communication
o Can be very costly (e.g., TV)
Sales
– What is sales promotion?
o Short term incentives to encourage the purchase or sale of a product or service
– Includes discounts, coupons, displays, and demonstrations
Sales Advantages
o To attract consumer attention
o To offer strong incentives
o To invite quick response
Sales Disadvantages
o Effects are often short lived
o Not as effective as ad or personal selling in building long run brand preference and customer relationships
Personal Selling
– What is personal selling?
o Personal presentation by the firm’s sales force for the purpose of making sales and building customer relationship
– Includes sales presentations, trade shows, and incentive programs
Personal Selling Advantages
o To convey more and complex information to the target audience
o To increase the chances of developing a long-term relationship by solving customer’s problems
Personal Selling Disadvantages
o To require a longer-term commitment but size of a sales force harder to change
o The company’s most expensive promotion tool
Public Relations
– Building good relations with the company’s various publics by…
o Obtaining favorable publicity
o Building up a good corporate reputation and image
o Handling or heading off unfavorable rumors, stories, and events
– Includes press releases, sponsorships, special events, and web pages
Public Relations advantages
o To seem more real and believable
o To dramatize the company or product
o The message gets to consumers as news rather than as ads
Public Relations Disadvantages
o Never controlled by the public relations department whether a message is delivered, interesting, and important or not
Direct Marketing
Direct connections with carefully targeted individual consumers to…
Acquire an immediate response
Retain lasting customer relationships
Includes direct mail, catalogs, telephone, kiosks, the Internet, mobile marketing, and more.
Direct Marketing Advantages
Messages can be immediate and customized to appeal to specific consumers
Messages can be altered depending on the consumer’s response
Building one-to-one relationships
Direct Marketing Disadvantages
To face growing invasion-of-privacy concerns [The internet security issues]
Unwanted junk mail, spam, pop-under ads
Promotional objectives
– The goal of promotion in particular is to move target consumers through the buying process
– It all starts with understanding customer needs and wants
Dynamic Pricing
– Pricing the sport product is often based on the marketer’s sense of consumer demand- for certain seat, for certain times of day, for certain privileges.
Fixed Pricing
– What if we fixed our prices? Everyone pays the same price for every seat, no matter where it is. What if we did the same for concessions too?
Sport Pricing
– Sport Marketers need to consider…
o What strategy would you implement to set the right price?
o What factors would you consider when making your pricing decision?
o Will the financial benefit of increasing prices offset the negative fan relations
Sport pricing concepts
– What is the Price?
o Price is a statement of value for a sport product
o The sum of the values that customer exchange for the benefits of having or using the sport good or service
o The price paid by the consumer is a function of the value placed on the sport product
The Basics of Pricing
– Price is critical element in the marketing mix because…
o It is the only element that produces revenues; all other elements represent costs
o It is the one of the most flexible marketing mix elements; it can be readily changed and easily communicated
o It has a direct impact on a company’s bottom line (i.e., the overall profit)
Core Issues
– Cost vs. Price
o A range of prices for the real cost of attendance might be paid based on certain values (e.g., seat)
o The price of a ticket does not represent the real “COST” of attendance
o The obvious point is that sport marketers must appreciate total cost from the consumer’s perspective
– If the company prices the product below its costs, the company’s profits will suffer
– Price Floor= no profit below this price
– Fan cost Index (FCI) by TEAM MARKETING REPORT
o It measures the real price of attending a game
– FCI price elements
o Two adult average price tickets
o Two child average price tickets
o Four small soft drinks
o Two small beers
o Four hot dogs
o Two programs
o Parking
o Two least-expensive adult-size caps
Perceived benefits minus total cost = value satisfaction
– Each consumer’s perception of value is based on his or her own unique set of experiences with the sport product
– If customers perceive that a product’s price is greater than its value, they won’t buy it
– Price Ceiling-
no demand above this price
– Customer Value-Based Pricing
o Setting price based on consumers’ perceptions of value rather than on the seller’s cost
Cost-Based Pricing
– Setting price based on the costs for producing, distributing, and selling the product plus a fair rate of return for its efforts and risk
– Internal factors of pricing
o Product
o Promotion
o Distribution
o Cost
o Organization objectives
– External Factors of pricing
o Consumer demand
o Competition
o Legal
o Economy
o Technology
– Pricing objectives
o Sport marketers must also consider their organization’s objectives when setting product prices
• Profit
• Survival against competitors
• Maximum product exposure and distribution
• Positive user attitudes or image
– No matter what the state of the economy, companies should sell value, not price
What is public relations?
– “… a strategic communication process that involves identifying, establishing, and maintaining mutually beneficial relationships between a sports organization and the various publics on which its success or failure depends.”
– Anticipating, analyzing and interpreting public opinion, attitudes and issues that might impact, for good or ill, the operations and plans of the organizations
– Counseling management at all levels in the organization with regard to policy decisions, courses of action and communication, taking into account their public ramifications and the organization’s social or citizenship responsibilities
– Researching, conducting and evaluating, on a continuing basis, programs of action and communication to achieve the informed public understanding necessary to the success of an organization’s aims
– Planning and implementing the organization’s efforts to influence or change public policy
Why is it important?
– What do the various publics think about the sport organization?
– What is going on that may influence what the various publics think about the sport organization?
– What can be done that may influence what the various publics think about the sport organization
– Media Relations:
Involve formulating and shaping favorable opinion through the mass media
o News (press) releases
o Interviews
o Media guides
o Blogs/Tweets
– Proactive- shape/formulate
– Reactive- respond
– Interactive- work with
Community Relations
Activities which benefit a community and its members, which in turn may foster community support, loyalty, and goodwill
– Corporate Social Responsibility (CSR)
o Corporate citizenship
o Corporate philanthropy
Perception is reality
– If our consumers think something about us, it does not matter if we think it is true or not
– Consumer’s perception is what matters, because their decision to engage us depends on what they think
– We can control the images we send out, but what is reflected back (reputation)
The “old-new” concept
– Relationship marketing is not a new concept
– Earning customer’s favor and loyalty by satisfying their needs and wants
o “As merchant, you’d better have a friend in every town”
– Relationship marketing did not enter the literature until the 1980’s
– What is surprising is that (1) researchers and businessmen have concentrated far more on how to attract customers to products and services than on how to retain those customers, (2) there is almost no published research on the retention of service customers, and (3) consumer evaluation of products or services has rarely been used as a criterion or index of organizational achievements
Retaining customers
– Phrase “relationship marketing” first appeared in work by Berry
o Attracting, maintaining, and – in multi-service organizations – enhancing customer relationships
– Why are we not trying to hold onto the customers that we already have?
The leaky bucket
– Businesses spend a lot of money (and other resources) trying to attract new customers
– Known as the “leaky bucket” phenomenon
– When you expend all your resources on attracting new customers, there are none left to keep your existing ones happy!
Emergence of Relationship Marketing
– Businesses began to realize that it is more expensive to continually attract new customers that it is to retain your existing ones
– Described as a paradigm shift
– Paradigm is a way of looking at something
– Moving away from traditional views of looking at marketing -> seeing relationships as valuable
Benefits of Relationship Marketing
– There are benefits of relationship marketing for both the organization, and for consumers
– Benefits to the organization
o Reduce costs
o Create consumer loyalty
o Get feedback from consumers
– Benefits to the consumer
o Continuity of service
• We want to be loyal
• Organizations/companies have to give us a reason
o Chance to give feedback
o Influence future service provision
Prosumers vs. Consumers
– Relationships allow consumers to give feedback, and organizations to use feedback
– If our consumers only use our service once, we never really know what they think
– Consumers: Those who consume products (passive consumption)
– Prosumers: Blending of “Producer” and “consumer” roles – i.e., consumers have a hand in designing services
Prosumers vs. consumers
– Modern consumption often characterized as presumption, but….
o It is a great leap to presume that the availability of digital networked technologies turns everyone into active participants
– Not everyone is a prosumer, some people still consume passively
Prosumers study
– Study of participants in a running organization for African American women
– Do people’s behaviors on the organization’s website social media platforms (Facebook and Twitter) affect their perceptions of membership value?
o Prosumption: Posting on social media (creation of user-generated content)
o Consumption: Reading/viewing others’ user-generated content (passive consumption)
o Non-consumption: Not engaging at all with the organization’s social media platforms
Prosumers study
– Interactions can form relationships
– Prosumption creates value…
o …. For prosumers: member-to-member interactions and member-to-organization interactions create value
o For consumers: Passive consumption creates more value than non-consumption
– Social media is a good way for sports organizations to build relationships with consumers, and help them to build relationships with each other
Where does service value come form?
– Remember, value is “what I get for what I give”
o Value= Perceived benefits + Perceived sacrifice
– Prosumption generates value for both the organization and the consumer
o Consumer has influence on the way products are designed and/or delivered
o Organizations get feedback to help design/deliver products that consumers want
Co-creation of value
– The value that is created is the result of a process of value co-creation
– Value is created by both parties (i.e., the organization and the consumer)
– Value is also created for both parties
Value-creating interactions
– Through interactions with our consumers, we…
o … find out what they think about us
o … find out why they like us, and why they don’t like us
o … find out what they want
o … find out how to give them what they want
Creating loyalty through social exchange
– Social exchange theory states that reciprocity is a key part of exchange
– When somebody does something for somebody, it creates and “obligation” to reciprocate
– These obligations are not mandatory, but are grounded in different norms:
o Reciprocity as interdependent exchanges
o Reciprocity as a folk belief
o Reciprocity as a norm and an individual orientation
Reciprocity as independent exchanges
– An actor can have at least three different postures to another person (i.e., and exchange partner)
o Independence: outcomes are based solely on that person’s effort (s)
o Dependence: outcomes are based solely on the other person’s effort (s)
o Interdependence: outcomes are based on the efforts of both parties
– For reciprocity, something has to be given, and something has to be returned
Reciprocity as a folk belief
– Reciprocity as a folk belief involves the cultural expectation that people will get what they deserve:
o A sense that, over time, all exchanges reach a fair equilibrium
o Those who are unhelpful will be punished
o Those who are helpful will receive help in the future
– In other words, everything works out in the end
Reciprocity as a norm
– Reciprocity as a norm, or a cultural mandate
– This is similar to reciprocity as a folk belief, but with one key difference…
– Whereas the folk belief represents a set of assumptions about behavior, the cultural mandate refers to the idea that people ought to reciprocate
– If people do not do what they ought to, they will be punished
Relationship quality
– What makes a relationship?
– Five dimensions of relationship quality:
o Trust
o Commitment
o Intimacy
o Reciprocity
o Self-connection
– Trust
One party’s belief that its needs will be fulfilled by actions undertaken by the other party
– Commitment
An exchange partner believing that an ongoing relationship with another is so important as to warrant maximum efforts at maintaining it
– Intimacy
The degree of familiarity, openness, and emotional closeness of exchange partners
– Self-connection
The extent to which an exchange partner sees their values and/or beliefs reflected in the other
The Schmitter
Kaiser Top
Cheese
Special sauce
Grilled Salami
More cheese
Tomatoes
Fried onions
Steak
Even more cheese
Kaiser bottom