Segmentation in Sport Business: Understanding and Targeting Specific Consumer Groups

1. Chapter 6 Segmentation, Targeting, and Positioning in Sport Business

2. Segmentation •Segmentation is the division of a whole into parts. Putting things in order helps arrange them so that we can make sense of them. •The division of a consumer market into relatively homogeneous segments is sport consumer market segmentation. •The division of the sport industry into relatively homogeneous segments is sport industry segmentation. •Segmentation of the consumer market allows sport businesses to understand and target specific groups that share characteristics and behaviors.

3. Segmentation (cont’d)

4. Segmentation (cont’d) Industry analysis and segmentation can reveal how a company compares to the competition or determine if it can compete in a particular segment. This allows the company to concentrate its efforts on particular segments and thus use its resources most efficiently.

5. Purposes of Segmentation •The primary purpose of market segmentation is specialization. •Targeting specific populations is the future of marketing in sport business. •The sport industry is growing to meet new consumer needs and to provide new support and services.

6. Important MarketSegmentation Criteria Identifiability: segments must be identifiable and measurable. Substantiality: segments must be of a size large enough to justify marketing mix attention. Accessibility: segments must be reachable with the customized marketing mix. Responsiveness: segments must respond to a marketing mix customized to that segment.

7. Bases for Segmentation The object of market segmentation is to develop useful data about a particular group. Segmentation using one base selects members from a group that share a particular characteristic, while multiple base segmentation selects for a variety of characteristics. The latter method is increasingly popular as the culture becomes more multi-faceted.

8. Bases for Segmentation (cont’d)

9. Demographic Segmentation Typical Demographics: •Age •Gender •Household status •Income: individual or household •Occupation •Education •Race •Nationality •Social class •Religion

10. Psychographic Segmentation Demographic information is a good start in describing and developing segmentation strategies, but demographics don’t paint the full picture. Personality characteristics, favorite color, motivation factors, desires, attitude, and beliefs are some of the many other types of information that describe and define a person. These are called psychographics. Personality Physiological Psychological Lifestyle Desire for Freedom from Some psychological factors used:

11. Maslow’s Hierarchy of Needs (1954) • Self-actualization Needs self-fulfillment, self-expression • Esteem Needs self-esteem, self-respect, recognition • Social Needs love, appreciation, fun, belonging • Safety Needs security, freedom from pain • Physiological Needs food, water, shelter

12. A Typical Consumer Decision-Making Process All are affected and influenced by personal and social factors. • Step 1—Problem Recognition • Step 2—Information Search • Step 3—Evaluation of Alternatives • Step 4—Purchase • Step 5—Postpurchase Behavior

13. Compilation of factors that affect attendance Consumers who already know about or have experience with a product require a salesperson who can speak knowledgeably about the product and answer more detailed questions.

14. Product Use and Benefits Segmentation A Customer Needs: a product in order to satisfy a need or desire. Therefore, the product is the tool for the consumer to perform certain functions and realize certain benefits.

15. Business Consumer Segmentation Sport Business Consumers • Manufacturers • Resellers • Sports Governing Bodies • Institutions • Media Sports Enterprises

16. Bases for Business Consumer & Industry Segmentation Industry: Business: •Geographic location •Customer type •Customer size •Product use •Purchase criteria

17. A Typical Segmentation Process Step 1—Select a market or industry Step 2—Select one or more segmentation bases Step 3—Select specific variables Step 4—Analyze the segment Step 5—Select one or more target markets Step 6—Develop appropriate marketing mix strategies When segments are very similar to each other, an undifferentiated targeting strategy—much like mass marketing— may be used, whereby all consumers receive the same marketing treatment.

18. Positioning the Sport Business Positioning establishes the image of a product or company and becomes the consumer’s base of reference when deciding which company’s product to purchase.

19. A Simple Positioning Process • Step 1—Identify the target market’s product attribute preferences • Step 2—Identify current positioning strategy • Step 3—Analyze current position and the market’s preferred product attributes • Step 4—Determine a positioning strategy

20. Chapter 6 Questions 1. Describe how the population of your country has changed over the last 25 years and how it is going to change in the next 25 years. How will this affect the sport business industry? 2. What types of marketing strategies are sport businesses using more often for emerging markets? Describe each one and how they work. 3. What are segmentation, sport consumer market segmentation, and sport industry segmentation?

21. Chapter 6 Questions (cont’d) 4. What are bases for segmentation? Describe how they are used. 5. What is target marketing? Describe how to determine one or more target markets for a sport business. 6. What is positioning? Describe how to develop a positioning strategy for a product and a consumer market.

22. Learning Activities 1. Using students in your class, conduct a study of demographics, psychographics, and other segmentation bases and variables using sporting goods as a basis. What did you learn about the class? How could this information be used if your company is a sporting goods retail company?

23. Learning Activities (cont’d) 2. Write down a sports product that you purchased recently, one that is sold by more than one company. Create two columns, one labeled “My Buy” and the other “Didn’t Buy.” In the “My Buy” column, create a list of all of the reasons you bought the product. In the “Didn’t Buy” column, list of all of the reasons you didn’t buy the product from other companies. On another sheet, list all the information that helped you decide on your purchase (family, friends, advertising).

24. Learning Activities (cont’d) 2. (cont.) Write down all the things the people told you or that you remember from the advertising. Now compare all your notes and see if there is a relationship between any of them. Why do you think you found a relationship between, for example, the reasons you bought the product from a specific company and the company’s advertising for that product?

25. Learning Activities (cont’d) 3. With a group, determine a way to segment the sport industry. First, determine a reason for segmenting the industry, such as pretending that your group is a television broadcasting company that focuses on extreme sports events. Develop bases for segmentation. Determine an appropriate marketing mix strategy for your company.

26. Learning Activities (cont’d) 4. Pretend that your company is a team of the WNBA. You want to increase spectator attendance numbers for each game, but you also want to increase the number of games that many of your fans attend during a season. Develop a list of the factors that have an influence on attendance and design a study that will answer the questions you have for your fans.

27. Learning Activities (cont’d) 5. Identify some different sport businesses such as a manufacturer and a sport facility. Identify different consumer markets for the products. Develop positioning statements for each consumer market.

28. Chapter 7 Marketing Information Systems

29. Marketing Information Systems (MIS) • Marketing information systems—known as MIS, CIS, and IAM—deal with large amounts of information and are essential to the success of your sport organization or company. •MIS allows companies to establish channels of communication in order to maintain a relationship with consumers. These relationships allow marketers to increase consumer loyalty and thus encourage repeat purchases.

30. Obtaining Information • The most popular methods for primary data collection for sports organizations are direct-mail surveys, telephone interviews, and personal interviews. • The three models of consumer loyalty programs are the points and prizes model, the plateaus, perks, and prizes model, and the membership program model.

31. Designing Information Systems

32. Designing Information Systems (cont’d) Mullin (1985) and Grantham’s, Patton, York, and Winick’s (1998) essential characteristics of an effective sport marketing database: 1. A protocol must be established. 2. It must be linked to a central processing unit. 3. Storage capacity must be planned into the system. 4. Various databases need to be fully integrated. 5. The data must be retrievable in a form that the sport marketer can use. 6. Control mechanisms should be designed into the system to facilitate data security.

33. Maintaining Data Security Watch for two potential security problems with using microcomputers to help manage data—the erasure of a disk’s content upon exposure to magnets or general disk failure and the availability of data to unqualified people.

34. Getting the System to Work Two common mistakes often made in the application of computers in sport organizations: 1. Managers buy a computer with the idea that a job will be found for it to do. 2. The people who will be using the computer are often not involved in the testing and purchase of the system.

35. Getting the System to Work (cont’d) • Two basic types of programs are available, custom programs and commercial “off-the shelf” business applications. • In the event that your organization has special needs, you may need to have a software program written especially for your applications. • Many commercial programs have companion software that will allow you to create and move information from one application to another.

36. Working with the System MIS cannot be expected to solve problems efficiently as soon as the computer comes out of the box. According to Shaw (1991), an MIS must be designed “with a view to the people who will use them, and with an understanding of how the business in which they work operates. [An MIS] must deliver the right information to the right people at the right time” (p. 60).

37. Producing Results The main goal of conducting marketing research and analyzing data is to determine who will buy what goods and when.

38. Chapter 7 Questions 1. What are the essential characteristics of a well-designed marketing information system? 2. What MIS sources would be available for an intercollegiate athletic program, and how would you go about setting up an MIS?

39. Learning Activities 1. Select your favorite sport and consult a copy of Simmons Market Research Bureau. See where you fit in the demographic segments presented. 2. Take a trip to your local fitness center or health club, and inquire about the types of information they have on their clients. Also look at their application form if they are uncooperative with your first request.

40. Chapter 8 The Marketing Mix and the Sport Industry

41. The Marketing Mix Marketing Mix: the strategic combination of product, price, place, and promotion decisions and strategies. Creation of the marketing mix involves the process of discovering or developing the right combination of product, price, place, and promotion.

42. Marketing Mix Elements The 4 Ps • Product • Price • Place • Promotion

43. Marketing Mix Elements (cont’d) If the consumer believes that a product is overpriced or even underpriced, there is a good chance that the consumer will not purchase the product.

44. Marketing Mix Elements (cont’d) • Though the public is often under the impression that promotion is strictly advertising, it is actually a process—the goal is to create enough interest in a product to convince a consumer to purchase it. • Research is the foundation upon which all marketing decisions are made.

45. The Interrelationshipof the Elements • Consumer purchases are not arbitrary—the consumer is looking for a product that satisfies a need or desire. • From that perspective, the product and everything about the product take on characteristics beyond the intended function of the product. This notion must be understood by the sport businessperson and used during the development of a marketing mix.

46. The Marketing Mix Strategyin the Sport Industry • As the sport marketer identifies consumer market segments and selects target markets, the marketing mix elements are designed specifically for the consumer. • Also affecting the decision to open a fitness center is information concerning the industry and the competition. • In addition, the marketing mix should change as markets change. • The information gained from research should be current. Therefore, research should be an ongoing process within the company.

47. Chapter 9 The Product in the Sport Industry

48. Product Defined • Product: should be understood as a concept and must be used as an umbrella term that includes goods, services, people, places, and ideas with tangible or intangible attributes. • A tangible product is a concrete, physical object while an intangible product is indefinite. To buy a baseball is to receive a tangible product; to attend a baseball game is to receive an intangible product.

49. Four Types of Utility A product’s utility is its ability to satisfy a consumer’s need. Four aspects of this include • Form—using raw materials to produce a product • Time—making a product available when the consumer wants it • Place—getting the product to the venues where the consumer shops • Ownership—transferring ownership or possession of a product from seller to buyer

50. Sport Product Defined • Sport product: any good, service, person, place, or idea with tangible or intangible attributes that satisfy consumer sport, fitness, or recreation related needs or desires.