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Marketing to the Emerging Fan Base

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  1. Marketing to the Emerging Fan Base Joe Louis Barrow Jr. Senior Vice President World Golf Foundation

  2. THE EMERGING POPULATION THE CHALLENGE: Expand the participation in golf to reflect the changing population.

  3. THE EMERGING POPULATION • PART ONE • THE SHIFTING DEMOGRAPHICS • PART TWO • WHAT CORPORATE AMERICA IS DOING • PART THREE • WHERE DO WE GO FROM HERE? • WHAT CAN WE LEARN FROM CORPORATE AMERICA

  4. The Emerging Population The Business Case • The culture and buying habits of the U.S. are changing • The Golf Industry must understand and actively market to this emerging customer base. • Supplier diversity and workforce diversity is critical to the golf industry’s long term success in the evolving marketplace.

  5. The Emerging Population The Business Case • The emerging market focus must be integrated into business plans and strategies, otherwise these efforts are doomed to fail. • Industry diversity initiatives must have total buy-in from the top executives including leaders from all sectors.

  6. Shifting Demographics and Economic Opportunities Ken Lovell Director, Research & Development PGA TOUR

  7. Presentation Overview • Golf Demographics and the Economic Opportunity • Demographic Projections • Characteristics of the Emerging Fan Base – And Competition for It

  8. GOLF DEMOGRAPHICS

  9. Fan Base Demographics Pro Golf Minority Fan Base Growth, 1995-Present Minority Fan Penetration (12 Month Moving Average) % Interested in Pro Golf +49% Minority Interest Since 1995! Source: ESPN Sports Poll

  10. Fan Base Demographics Minority Fan Base Growth Versus Total Growth Fan Penetration (12 Month Moving Average) % Interested in Pro Golf Source: ESPN Sports Poll

  11. Fan Base • Fan base becomingmore diverse • Remains below levelof non-minority fans • TV audience showssimilar trends andsome opportunities

  12. Recent Shift in Golf Fans In 1995 whites were overrepresented in the golf fan base compared with the US population 1995 DEMOGRAPHICS US Population Pro Golf Fans Source: ESPN Sports Poll / US Census

  13. Profile of Today’s Golf Fans Non-white population is 30.9% of totalUS Population versus 25.6% of Pro Golf Fans 2001 DEMOGRAPHICS US Population Pro Golf Fans White White Source: ESPN Sports Poll / US Census

  14. Television Viewership Pro Golf Television Ratings Average Rating Source: Nielsen Media Research

  15. The Future of Emerging Markets • Minority youth are disproportionately more interested in watching golf % of Kids Watching Pro Golf Source: Nielsen Media Research

  16. DEMOGRAPHIC PROJECTIONS

  17. Demographic Profile • Today, there are 275m Americans • 196.7m White • 32.5m Hispanic • 33.5m African Americans • 10.6m Asian Americans • 2.0m Other Year 2000 Source: US Census 2000

  18. Demographic Projections Year 2020 • By 2020, it is expected that there will be 325m Americans • 207m White • 55.0m Hispanic • 41.5m African Americans • 18.5m Asian Americans • 2.5m Other Source: US Census 2000

  19. Demographic Projections Year 2040 • By 2040, it is expected that there will be 390m Americans • 212.5m White • 82.7m Hispanic • 49.6m African Americans • 29.5m Asian Americans • 3.0m Other Source: US Census 2000

  20. Demographic Projections By 2060, “Minorities” will no longer be the minority % of US Population Source: US Census 2000

  21. CHARACTERISTICS OF THE EMERGING FAN BASE - AND COMPETITION FOR IT

  22. Characteristics ofEmerging Markets • Black consumers will spend 572.1 billion this year, nearly double the 301 billion in spending powerBlacks had in 1990 • Hispanics are more brand loyal than non-Hispanics - 39% of Hispanics buy products based on quality rather than price vs. 20% of Non-Hispanics • In the past 20 years, HH Hispanic Median Income grew 130%, vs. 17% for the general population Source: Selig Center for Economic Growth and DYG

  23. Shifting Demographics • Minorities younger • Generation to be majority • Developing recreationpreferences now Source: US Census 2000

  24. Minority Buying Power As The Minority Population Grows, Its Purchasing Weight Grows Proportionately Buying Power (Billions) Source: Selig Center for Economic Growth

  25. Other Sports AggressivelyPursuing Hispanics

  26. Competitive Landscape –Media Spending • Corporate America Increasing Multicultural Spending Top Hispanic Advertisers (2001 Media) % change vs. 2000 $M Source: Hispanic Business Magazine

  27. PARTICIPATION

  28. Participation • Minorities have lower participation rates than whites Estimated Participation Rates 2001 Source: National Golf Foundation

  29. Participation • Leading to much lower numbers of participating golfers Estimated Total Participants 2001 Source: National Golf Foundation

  30. Measuring GolfParticipation Rates • Estimating Participation • Overall numbers reliable • Subgroups difficult to measure • Most data sources under-represent • Financial upsideworthy of investmentin better data

  31. THE ECONOMIC OPPORTUNITY

  32. Quantifying the Opportunity • Assume “upside” is current US average participation rate • Assume spending remains constant based on Golf 20/20 per golfer spending study Objective: Estimate the revenue available to the industry if minorities were fully activated

  33. Quantifying the Opportunity • Average Spending per golfer • African Americans: $988 per year • Hispanics: $872 per year • Average Participation Rate • Assume 12% for all minority golfers • Projections based on US Census population projections through 2020

  34. Participation Projections Estimated Incremental Minority Golfers in 2001 (Assumes 12% participation rate)

  35. Participation Projections Estimated Incremental African-American and Hispanic Golfers Through 2020 (Assumes 12% participation rate) 6.0 5.5 5.0 4.5 4.0 Millions 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0

  36. Quantifying the Opportunity Best Customer Upside • Definition • Must be a golfer (at least 1 round in last year) • Age 18+ • AND Either • Play 25+ Rounds OR • Household spends at least $1,000 per year on equipment and fees

  37. Quantifying the Opportunity • Total Incremental African Americanand Hispanic Golfers in 2001 • African Americans: 1.9 Million • Hispanics: 1.7 Million • Percentage of “Best Customers”in each group: • African-Americans: 42% • Hispanics: 32% • Total Incremental “Best Customers” in 2001 • 1.3 Million

  38. Participation Projections Incremental African-American and Hispanic“Best Customers” Through 2020 2.5 2.0 1.5 Millions 1.0 0.5 0.0 Note:: Assumes a jump from 5%-12% in participation and current rates of “Best Customers” in each group and growth based solely on population

  39. Quantifying the Opportunity • Estimated 2001 Incremental Minority Spending • Average Spending per golfer • African Americans: $988 per year • Hispanics: $872 per year • Incremental Golfers • African Americans: 1.9 Million • Hispanics: 1.7 Million • Estimated Incremental Spending in 2001: • $3.4 Billion

  40. Incremental Spending Projections Estimated Incremental African-American and Hispanic Core Golf Spending $6.0 $5.0 $4.0 Millions $3.0 $2.0 $1.0 $0.0 Note:: Assumes a jump from 5%-12% in participation rate and current rates of spending for each group and growth based solely on population

  41. Summary • Minorities are growing • Minority interest in golf is growing • Minority participation is low • The upside for golf marketing to minorities is substantial

  42. MARKETING TO THE FAN BASE Gregory Dixon Manager for Diversity Marketing and Communications Volvo Cars of North America

  43. VCNA MISSION We, Volvo, deliver the Best Product, the Best Value and the Best Experience To a Diverse Target Audience Via our Product-, Communication- and Retailer Network Strategies and Actions

  44. CHALLENGES FACING VOLVO: Lagging in Diversity • Lowest ratio of sales to African Americans, Asians and Hispanics among all Premium/Luxury brands.* • Diverse consumers represents 9% of total Volvo sales.* * = Source: Strategic Vision 2002 NVES Early Buyers Study

  45. KEY INITIATIVES RECENTLY LAUNCHED Sponsorship • Hispanic Heritage Awards • LA Black Business Expo • Hispanic Chamber of Commerce • Latin Grammy’s • Little Saigon Expo Advertising • Incorporate diversity into mainstream advertising • Measure the reach of placement in diverse communities

  46. KEY INITIATIVES IN LAST 90 DAYS People • Team Planning Session with the Marketing Business Unit to establish diversity objectives • Review diversity focus group material conducted by Market Intelligence Resources • Meetings held with diversity events vendor to renew contract and review events for 2003 • Solicit feedback for the Marketing Diversity Council Sub-committee

  47. SPECIAL FOCUS ON DIVERSE CONSUMERS Action Plan: For any diversity strategy to work there needs to be multiple levels of commitment • Diversity must be integrated in everything we do. • The face of diversity should be blended into communications in an “ethnic neutral” way.

  48. SPECIAL FOCUS ON DIVERSE CONSUMERS • Dedicating an incremental budget to reach these groups in non mainstream ways: targeted events, publications, one-to-one relationship building, media etc. • Dealer appointments when available. • VCNA and dealer employment.