Thursday, August 29, 2013

Do Sponsorship and Politics Mix?

Companies partner with sports properties through sponsorship for a “transfer effect” in which associations held for the property influence associations people have with a sponsor. In general, image transfer can be effective for shaping a sponsor’s brand image. For example, Mountain Dew is often held up as an example of how sponsorship can benefit image. Its long-running association with action sports established Mountain Dew as a brand that is “young,” “cool” and “edgy.” Image transfer is a response to sponsorship that is often sought by sponsors as brand image-related objectives tend to be a frequently cited objective by sponsors.

The Good and Bad of Image Transfer
Unfortunately for sponsors, image transfer has no filter that only allows the “good stuff” to flow to the audience’s minds. All associations with a sports property, good and bad, are fair game to make their way into how people perceive a brand’s partnership with a sports property. We are reminded of this characteristic of sponsorship occasionally when an athlete’s endorsers feel the sting of a player’s misdeeds such as Ryan Braun’s PED suspension and subsequent termination of endorsements by Nike, Wilson Sporting Goods, and Muscle Milk. The latest situation in which negative associations with a sports property are transferring to sponsors associated with it is the Sochi Winter Olympics. Russia's recently passed law banning gay "propaganda" has led to advocacy groups calling on Olympic sponsors to make a statement against the law by rescinding their sponsorship of the Sochi Games. Sponsors find themselves entangled in an emotionally charged political issue, not exactly what they had in mind when signing on as sponsors. One Olympics partner, Coca-Cola, was singled out in a protest in New York's Times Square yesterday. LGBT activists poured Coke down sewer drains to denounce what they consider Coca-Cola's "sponsorship of hate" by virtue of its association with the Sochi Games.

Can Sponsors Make a Difference?
Sponsors associate with sports properties for potential marketing benefits. Should they be expected to tackle political and social issues, too? Some observers say that Coca-Cola and other corporations heavily vested in the business of Olympics including McDonald's, Procter & Gamble, and NBC Universal knew of the possibility that an anti-gay law would be passed yet did not exert any influence on Russian leaders to rethink the situation. A historical precedent exists- the 1988 Seoul Olympics were instrumental in creating change in South Korea's government from a military dictatorship to a democratic government. Behind-the-scenes pressure from the IOC was said to play a role in the change. It appears no such pressure was put on Russian officials. The situation facing Coca-Cola and other Olympic sponsors illustrates the need for a company to evaluate the political climate in the country of a potential sponsorship just as it would any global business opportunity. The political environment is beyond the control of a firm in the U.S., let alone being able to exert influence in foreign lands. 

Associating with sporting events in countries in which some instability exists means that sponsors should be prepared to face questions about their involvement. Instead of merely enjoying image transfer benefits, sponsors may be forced to weigh in on political and social issues. Ignoring them or pretending they do not exist comes at the risk of harming brand image, ironically the opposite of why a firm undertakes a sponsorship in the first place.

Tuesday, August 27, 2013

What is the Affinity Advantage?

Editorial Note: Beginning this week, the editorial content for Sports Biz U shifts back into classroom mode. The first post each week will relate to the study of sports marketing from topics in the Fetchko, Roy, and Clow Sports Marketing textbook. Other posts during the week will deal with current events in sports business and career issues.

 Brand loyalty is not an unusual behavior to exhibit- you probably have brands of beverages, clothing, and electronics that you like, prefer, and tend to buy that brand only when given a choice. But often brand loyalty is just a behavior, a repeated pattern of action based on past experience. What might be missing? An emotional connection to the brand. Yes, I am loyal to Crest toothpaste but I have no feelings of excitement or passion for Crest. My "loyalty" could be vulnerable if another toothpaste brand came along and persuaded me that its value is superior to Crest and was worthy of me switching brands.

Immunity from Brand Switching
In contrast to the toothpaste example given above, sports brands attract people to connect in emotion-based relationships. Sports brands enjoy an affinity advantage, which refers to the nature and intensity of the relationship many people have with their favorite sport, team, or athletes.You have probably heard stories about people planning their wedding day around their favorite team's schedule in order to not miss a game. How many other products would you consider scheduling such a special event around to accommodate your interests?  Identifying with a team or player often occurs at a young age, and the affinity strengthens over time and can last for the rest of one's life. When a bond between a person and brand is this strong, the chance of the relationship being broken in order to switch to another brand is slight. This characteristic of sports brands makes them the envy of marketers in other categories. If only they could get customers emotionally connected like sports brands can, they dream!

Leverage the Affinity Advantage
While sports brands enjoy an affinity advantage, they may not always use it effectively to strengthen relationships and create more revenue. Do event attendees have a memorable experience that leaves them longing for more? Do sponsors receive support that helps them activate their association to achieve marketing objectives? Are there new products or experiences that could be introduced to give loyal fans additional outlets for expressing identification with the brand? Answers to these questions are ways that a sports brand's affinity advantage can be leveraged. Marketers who can come up with creative responses to these questions add value to their organizations and position themselves for career advancement.

Thursday, August 22, 2013

NFL Sees the Realities of Fantasy

Are you ready for some football? Check that- are you ready for some fantasy football? If you are like 25 million other Americans, the answer is likely "yes." Fantasy football brings together friends, family, co-workers, and strangers alike to compete for bragging rights and in many leagues, cash. Participation in fantasy sports is influenced by psychological motivations (competition or escape from daily life), social motivations (spend time with others or take part in a community of fans), or external motivations (respond to advertising for fantasy games or enticed to play to win prizes). Regardless of the influence that draws people into fantasy football, the fact is that they play and more importantly, it has created shifts in how football is consumed.
Photo by Boz Bros/Flickr
(under Creative Commons License)
Impact of Fantasy Football on the NFL
The shifts in how fans consume NFL news and games are not lost on the NFL. Fantasy football resources on include information resources such as mock drafts and player research as well as hosting a destination where fantasy players can play in custom leagues, standard leagues, and prize leagues. And, the NFL RedZone cable channel is a fantasy football player's fantasy- providing league-wide coverage of scoring situations as they unfold. At the team level, fantasy football is recognized as part of the total consumption experience. The Jacksonville Jaguars have built a fantasy football lounge at EverBank Field. The idea is to create a comfortable physical space in which fantasy players attending Jaguars games can follow and manage their fantasy teams.

These offerings reflect the NFL's understanding that the fantasy football consumer has different needs than the traditional football game viewer. Among the differences:
  • Team Fans vs. Players Fans - Traditional football consumption revolves largely around team performance and success. Fantasy football players may hold team allegiances, but they have a dual interest in the success of players on their fantasy team... even if their fantasy players are on teams playing against their favorite teams.
  • Story line vs. Highlights - Watching a three-hour football game is like watching a story unfold before you. Unexpected performances, turnovers, penalties, injuries, and controversies create some of the dramatic story elements that make the NFL so compelling for many fans. In contrast, fantasy football players are interested in short-form consumption- highlights, statistics, and scores. This contrast in consumption preferences made launching the NFL RedZone a no brainer. It is a market segmentation issue- not all fans want the rapid fire coverage that bounces from game to game on Sunday afternoon. But, for those who do, their needs are met.
  • Team Identification vs. Sport Identification - Building a fan base traditionally has been keyed by football fans identifying with one or more of the NFL's 32 teams. Fantasy football expands the scope of interest in the NFL. Highly involved fantasy football players are likely to be highly involved NFL fans, too. They are knowledgeable about and consume information on a wider range of teams and players than fans connected solely via team identification.
Fantasy Football's Marketing Lessons
The fantasy football phenomenon offers two lessons that marketers in any industry can apply:
  1. Understand why people buy - The differences between traditional football consumption and fantasy football consumption illustrate a marketing fundamental that is often taken forgotten: Different customers consume for different reasons. The NFL cannot market solely to football fans- it has team fans, player fans, NFL fans, and fantasy football fans, to name four of several segments that exist. Marketing strategies should reflect the understanding that customers have different motives and needs.
  2. Make consumption convenient - The NFL is all-in on the fantasy football craze, pushing content to fantasy football players to help them be more competitive while at the same time be more engaged with the league. When customers want to engage with a brand, encourage it by putting engagement opportunities at their fingertips- whether their fingertips are on the remote control, mouse, keypad, or in Section 327. 
If you are one of the 25 million playing fantasy football- good luck this season!

Tuesday, August 20, 2013

How Fox Sports 1 Can Use Positioning to Win

When News Corp. announced plans to launch Fox Sports 1 earlier this year, the initial question  was whether the sports cable channel market needed or would benefit from more competition (see our blog post from March 6). Sports media companies already had fairly well saturated the channel lineup. More recently, sport properties have joined the fray as the NFL, NBA, MLB, NHL, and Big Ten Conference are among those that have launched their own cable networks.

Fast forward to August- the planned launch of Fox Sports 1 has occurred and now the question has become how the network will fare against the established category king, ESPN. NBC would like to have something to say about this question, too, as it invested heavily in rebranding Versus as the NBC Sports Network and paid handsomely for broadcast rights to the English Premier League and National Hockey League. Now that the question is no longer whether another sports channel is needed, attention turns to how Fox Sports 1 can successfully compete in the category.

Differentiation Options
When a new brand enters a well populated category as Fox Sports 1 has done, a marketing priority is to develop and leverage a point of difference. What is it that Fox Sports 1 does that is unique, better, or different from the existing choices consumers have for sports news, programs, and live sporting events? Without a distinctive point of difference Fox Sports 1 (or any brand in any category) faces challenges to convince people to change their consumption behaviors and begin watching Fox Sports 1. The significance of this challenge is perhaps summed up best in the title of a book by branding expert Jack Trout- Differentiate or Die. A strong and gloomy prediction for sure, but when you consider product failures in any industry, lack of differentiation is often a contributing factor.

Given the importance of brand differentiation, observers who watched Fox Sports 1 programming during its debut weekend remarked on ways that the new network can differentiate:

  • The anti-ESPN - Sometimes, when a brand dominates a category like ESPN does in sports media, there is desire for a formidable competitor to come along to offer an alternative. 
  • Programming - Original formats that deliver sports content in a way that appeals to casual fans and gives highly involved fans their fix of sports information and entertainment.
  • Personalities - ESPN changed the role of sports news broadcasters, creating celebrities out of several ESPN anchors over the years. FS1 could take a similar route and attempt to build a following around their on-air talent.
  • Sports - Oh yes, let's not forget sports as a way to differentiate. Some observers have suggested FS1 could become the go to cable channel for international sporting events. Others believe FS1 should build around existing Fox assets such as UFC and NASCAR to build audiences.

Why Positioning Matters
Brand differentiation is important because it is at the heart of a key marketing strategy known as brand positioning, defined as the part of a brand's identity that is actively communicated and demonstrates an advantage over competition (i.e., differentiation). A brand must stake a position or run the risk of succumbing to the undesirable outcome in the "differentiate or die" mantra. Without a clear position, a brand may be viewed as a commodity that is interchangeable; alternatives on the market can be chosen that meet the same need.

Will Fox Sports 1 succeed in the long run? That question will be answered largely by the positioning strategy used to connect the brand with its target market. A positive characteristic of brand positioning is that there is no "one right way" to position. Marketing managers make that determination based on a brand's strengths, customer needs, and standing of other brands in the marketplace. Fox Sports 1 can succeed if positioned effectively- that much is understood. What is not known is the best approach to transform FS1's differentiation into a distinctive brand position. Any ideas?

Wednesday, August 14, 2013

Is Deterring Customers a Good Strategy?

The thought of a business intentionally attempting to discourage customers from making purchases is barely fathomable. Going out of your way to scare off buyers seems like a recipe to doom the organization. Yet, that is exactly what one NHL franchise is doing this season. The Nashville Predators have come up with a creative plan to minimize an invasion by fans of division rival Chicago Blackhawks. The team's Keep Out the Red campaign is aimed at filling Bridgestone Arena the three times the teams meet this season... only without the red jerseys worn by Chicago fans traveling south for the games. Anyone wanting to buy a single-game ticket to any of the Blackhawks-Predators games in Nashville will be required to by a ticket to another game. The idea behind this ticket plan is to discourage Blackhawk fans from coming to Nashville to cheer on their team.

What's the Point?
So what are the Nashville Predators front office executives thinking when deciding to add a hurdle to buying tickets to the three Predators-Blackhawks games? Their desire is to build and preserve a home team advantage in Bridgestone Arena. For many years, fans of the Detroit Red Wings flocked to Nashville, creating pockets of red throughout the arena. Now, Detroit has moved to the Eastern Conference but Chicago's success in recent seasons has created another red headache for the Predators. Team President and Chief Operating Officer Sean Henry said of the plan “For Blackhawks games, we want to make sure that we preserve this building as much as we can for those who live in Smashville." The Predators will seek to make this happen by holding ticket pre-sales available only in specific zip codes in order to maximize sales in the local market.

Keeping out Red and Green
Reaction from Blackhawks fans has been a mixture of anger and disbelief. Fans who left comments on the blog post about the Keep out the Red campaign insist that it will not work, that they will get tickets and be there for those three games. Moreover, some fans raised an interesting point- when you keep out the red you are also keeping out the green, as in money that out-of-town visitors spend in hotels and restaurants. Even if the Predators succeed in selling out all three Blackhawks games it is likely that the customers buying some of the tickets normally bought by visiting team fans will not be spending as much locally. 

For those of you teaching or studying sports marketing, here is a question for you: Is it an appropriate strategy to attempt to deter fans of an opposing team from buying tickets and attending games? Or, in this case is "Predators pride" getting in the way and clouding good business judgment? - Preds Getting Creative to Keep the Red Out

Monday, August 12, 2013

A Club of Their Own: NFL Teams Target the Female Market

How do you grow a business? The answer is not too complicated- you attract more customers, sell more products, or pursue a combination of the two approaches. This formula is remarkably applicable across a wide range of industries and product categories, including professional sports. Pro sport properties are using a variety of strategies to create new revenue such as:
  • Entering complementary lines of business (e.g., New York Yankees and Dallas Cowboys forming Legends.
  • Diversifying into other sports (e.g., Fenway Sports Group investments in NASCAR, Liverpool FC, and NESN)
But, pursuing growth need not be as bold and risky as joint ventures into new product markets. Another growth strategy is to intensify efforts to appeal to a new market segment. A geographic area or demographic segment are examples of ways to grow via new market expansion. It is the latter option that some NFL teams are pursuing to grow its fan base.

Women's Fan Clubs
The new market strategy adopted by a few NFL teams has been to build customer relationships among female fans. Official team fan clubs exclusively for women have been formed to create unique experiences for an often overlooked market segment. The Tennessee Titans were the latest team to offer a fan club for women when it recently launched Titan True. Membership benefits in Titan True include:
  • Members only gift bag 
  • One game ticket
  • Exclusive members only event with players and coaches at LP Field
  • "Chick Flick" movie night at LP Field
  • Community service volunteer opportunity with Titans players' and coaches' spouses
  • 20% discount at online team store 
The Titans are among only of eight of the NFL's 32 teams that have established official fan clubs for women. According to an article on the blog posted in April of this year, the other seven teams have women's fan clubs include:
  1. Baltimore Ravens
  2. Denver Broncos
  3. Houston Texans
  4. Indianapolis Colts
  5. Jacksonville Jaguars
  6. San Diego Chargers
  7. Washington Redksins
In other words, three-fourths of NFL teams have opted not to create an exclusive club for women as part of a broader strategy to strengthen relationships with their female fans. Of course, a women's fan club is not the only tactic for targeting female fans, so it would be unfair to say the other 24 clubs are not targeting women. But, it appears that a strategy to expand their footprint among females is not a priority.
Think Outside the Tackle Box
Forming women's fan clubs is a signal sent by the eight NFL teams that female fans are important to them. The implications of building and strengthening relationships among women goes beyond increasing fan base headcount. Women are highly influential in making household purchase decisions as well as their own entertainment consumption decisions. Thus, rather than being "football widows," NFL teams targeting women seek to include them in the community of fans. 

Another aspect of women's fan clubs is their potential to create revenue. For example, Titan True membership is $100. The membership fee itself will not be a game changer for any organization, but building more involvement among club members could escalate their consumption in the form of ticket purchases, licensed merchandise purchases, and loyalty to team sponsors. Whether it is a women's fan club, kids' club, or some other program to appeal to a specific customer segment, sport properties should be constantly on the lookout for products or experiences to create relevance among market segments previously neglected or underserved.

Wednesday, August 7, 2013

How Much Influence Should Sponsors Have?

Sponsors are integral partners for many sport properties. Corporate sponsorships represent a revenue stream that brings in valuable financial resources. In a sport like auto racing, sponsors are more than additional revenue; they can be the difference between a racing team being able to enter races and having to sit out because of lack of funds. When it comes to the highest levels of auto racing, the commitment required to sponsor top teams is in the neighborhood of $20 million, and that does not include additional marketing spending to support the sponsorship. With stakes this high, sponsors cannot be blamed if they have high performance expectations.

Up in Smoke
The question of how much influence sponsors should expect to have with their sport property partners surfaced this week when NASCAR Sprint Cup star Tony "Smoke" Stewart suffered a broken leg in a race. What makes Stewart's injury problematic is that it did not occur on his "day job" as a Sprint Cup Series driver. He suffered the injury during a sprint car race in Iowa, far removed from the bright lights of NASCAR's top series. For Stewart, racing is more than his occupation; it is his passion. Stewart regularly races at local and regional events in a variety of classifications for one simple reason: He loves racing. But, racing inevitably entails risk, and Stewart finally lost his stare down with danger. Tony Stewart's two broken bones all but assure that any chances he had for winning his fourth Sprint Cup Series championship this year will not happen.

What are Sponsors' Rights?
Tony Stewart's affinity for racing not only cost him a chance at another championship, but it also put to an end payoffs his sponsors could have enjoyed had Stewart remained in contention for a championship. Had Stewart made the Chase for the Cup playoff, he and his team would be assured of gaining added exposure in racing broadcasts and shoulder programming. Now, rather than being one of the 12 drivers contending for a championship and appearing in the spotlight, Stewart's #14 Chevrolet will be relegated to also-ran status as a replacement driver will compete in the season's remaining races. Such a predicament is not what Stewart's sponsors signed up for.

Should sponsors' interests weigh into a partner's decisions such as what athletes are allowed to do during their off time? Sponsorship and endorsement deals typically contain morals clauses that protect companies from athletes' bad behavior. But, are sponsors entitled to greater protections that reduce the possibility that situations like Tony Stewart's broken leg will not occur? The general question of sponsor influence cextends to other issues. Would NCAA, SEC, and Texas A&M sponsors like to see Johnny Manziel play every game this year? Absolutely. Will sponsor interests have any sway on possible penalties coming out of Manziel allegedly being paid for autograph sessions? Should sponsors even be a consideration?

Sport properties like to refer to their sponsors as partners. As sponsors write larger checks for rights fees, will they have greater expectations that their investments will be protected? - Tony Stewart is Mortal After All

Monday, August 5, 2013

Licensed Merchandise: Gravy or Growth Strategy?

Photo by  Ostia/Flickr
(under Creative Commons License)
Sales of merchandise bearing brand names and logos are big business, with one estimate of the global licensed merchandise market being $153 billion in 2012. Sports is a key category in the licensed merchandise industry as fans are able to express their identification with a team or player by wearing or using branded gear. Minor League Baseball (MiLB) enjoyed a robust year in 2012, too. The 160 Major League Baseball-affiliated clubs of MiLB sold $54.1 million in licensed merchandise in 2012, second only to 2008 in annual sales. MiLB has tracked sales since 1993. Two clubs, the Durham Bulls and Portland Sea Dogs, have been in the top 25 in team sales every year. Seven other clubs have made the list every year of their existence, ranging from three years for the Richmond Flying Squirrels to 19 years for the Trenton Thunder.

What Drives Sales
Expressing fandom is an obvious and important motivation for sports-related licensed merchandise consumption. But, being a fan is not the sole influence on the decision to don a team t-shirt or cap. Other factors that influence licensed merchandise sales includes:

  • Image - A brand is attractive to consumers when its image is compatible with a person's values and beliefs. 
  • Quality - Officially licensed merchandise is typically sold at a price premium compared to a comparable item without a logo on it. Thus, buyers expect quality- they want products that last.
  • Design - Functionality is important but buyers want good looking products, too. Licensees have stepped up their attention to design; slapping a logo on a product is no longer enough to create appeal.
  • Brand Appeal - Some brands have an added "cool" factor that drives sales. In MiLB, the Lakewood Blue Claws, Richmond Flying Squirrels, and Savannah Sand Gnats that have parlayed the popularity of name or logo into licensed product sales.
  • Novelty - Licensed product sales can be stimulated when a team undertakes a logo redesign or changes brand name, such as the NBA's New Orleans Hornets rebranding as the New Orleans Pelicans. Similarly, brands that are new to the market often enjoy strong initial sales.
Think Strategically
Sports properties are in the enviable position of having an audience interested in licensed merchandise consumption. It extends a sports fan's relationship and is a way to make the sport consumption experience tangible. With that said, licensed product sales should be thought of as more than add-on revenue that is extracted from fans. Decisions pertaining to merchandise mix, licensees, and channel partners play a major role in determining the success of licensing programs. And, licensed merchandise can strengthen bonds with casual fans. For example, the NFL has ambitious licensed product sales goals over the next few years, and a significant percentage of sales is expected to come from products targeting women. So, while using licensed products to tap the affinity of fans, sports marketers should think about how to expand the appeal of their brands through products bearing their names and logos.

Sports Business Journal - "MiLB Sales Near Record Level"