Sports and Entertainment Marketing I – Review Materials

Topic / The concept of marketing and how it relates to the Sports and Entertainment Marketing Industry
Concept of Marketing / Marketing is simply: “an exchange or transaction intended to satisfy the needs and wants of customers.”

Definition and History of Sports and Entertainment Marketing /
  • Sports and Entertainment Marketing is a growing division of Marketing that focuses on: Businesses and use of sports and entertainment.
  • Sports and Entertainment Marketing has aGLOBAL appeal and reach. Sports and forms of entertainment are accessible and understood by all, and evoke emotional highs and lows.
  • The foundation of Sports and Entertainment Marketing can be traced back to the 1860's when many businesses, recognized the growing popularity of baseball, and began using photographs of the teams (baseball cards) to help sell their products and services.
  • Timeline of Sports and Entertainment Marketing:
  • 1860’s: Tobacco companies inserted baseball cards in cigarette cartons to increase sales
  • Jesse Owens received free shoes in the 1936 Berlin Olympics from Adidas (first idea of athletic endorsements)
  • 1950’s: Television became a household means to watch broadcasted games and increased spectators ship from the hundreds to the millions
  • 1970’s: Boom of Sponsorships
  • Sports and Entertainment Marketing has grown since then to be a more than $200 billion dollar a year industry.

Three Main Elements in Marketing /
  • 1. MARKETERS
Examples:Careers in Sports and Entertainment Marketing (Public Relations, Ticket Sales, etc.)
  • 2. CUSTOMERS (Target Market)
Examples: Spectators and Participants
  • 3. GOODS AND SERVICES( What is being promoted)
Examples: Soccer Balls, Baseball Helmets, Physical Training, etc.
Marketing Mix (“Four P’s of Marketing”) /
  • PRODUCT
  • An item that satisfies what a consumer needs or wants.
  • Good (Tangible) vs. Service (Intangible)
Examples: Sneakers, Athletic Events, Concerts
  • PLACE
  • Providing the product at a location which is convenient for consumers to access.
  • Incorporates the concept of Distribution
Examples: Dick’s Sporting Goods, High School Football Stadiums
  • PRICE
  • The amount of money a customer pays for the product or service.
  • Very significant as it governs the company’s profit and existence.
Examples: $149.99 for Jordan sneakers; $10 for movie ticket.
  • PROMOTION
  • Main goal of promoting a product: Attract, develop and retain customers.
  • The delivery of information to various people about the product.
  • Consists of advertising, public relations, personal selling, or sales promotion.
  • Promotion is essentially how you get the word out about products and services.
Examples: TV and Radio Ads, Billboards
The “Seven Functions of Marketing” /
  • PRICING
The cost of producing a product, the price that the competition is selling the product for, and how much people are willing to pay for the product.
Examples: $149.99 for Jordan sneakers, $10 for movie ticket.
  • SELLING
Determining the customer's needs and wants, and responding to them through planned, personalized communication (Personal Selling)
Examples: Season Ticket Sales
  • DISTRIBUTION
The process of deciding how to get goods to customers.
Examples: Retail Stores, On-line Ticket Sales
  • FINANCING
Getting the money that is necessary to pay for setting up and running a business.
Examples: Getting a business loan from a bank
  • MARKETING-INFORMATION MANAGEMENT (Marketing Research)The gathering and analysis of information regarding customers, trends, and the competing products.
Examples: Surveys, Census
  • PROMOTION
The delivery of information to various people about the product.
Examples: Television Advertisements, Press Releases, Endorsements, Sponsorships
  • PRODUCT-SERVICE MANAGMENT
Developing and improving a product in response to a customer’s needs and wants.
Examples: Putting better ankle support in basketball sneakers.
Topic: / Economic Elements of Marketing
Supply and Demand /
  • The concept of supply and demand is perhaps one of the most fundamental concepts of economics and it is the backbone of a market economy.
  • DEMANDrefers to how much (quantity) of a product or service is desired by consumers. The quantity demanded is the amount of a product people are willing to buy at a certain price. In a nutshell: how much of something people want.
LAW OF DEMAND: If all other factors remain equal, the higher the price of a good, the less people will demand that good. In other words, the higher the price, the lower the quantity demanded.

  • SUPPLY represents how much the market can offer. The quantity supplied refers to the amount of a certain good producers are willing to supply when receiving a certain price. In a nutshell: how much of something is available.
LAW OF SUPPLY: Demonstrates the quantities that will be sold at a certain price. The higher the price, the higher the quantity supplied. Producers supply more at a higher price because selling a higher quantity at higher price increases revenue.

  • Price, therefore, is a reflection of supply and demand.
Example: Imagine that a special edition CD of your favorite band is released for $20. Because the record company's previous analysis showed that consumers will not demand CDs at a price higher than $20, only ten CDs were released because the opportunity cost is too high for suppliers to produce more. If, however, the ten CDs are demanded by 20 people, the price will subsequently rise because, according to the demand relationship, as demand increases, so does the price. Consequently, the rise in price should prompt more CDs to be supplied as the supply relationship shows that the higher the price, the higher the quantity supplied. If, however, there are 30 CDs produced and demand is still at 20, the price will not be pushed up because the supply more than accommodates demand. In fact after the 20 consumers have been satisfied with their CD purchases, the price of the leftover CDs may drop as CD producers attempt to sell the remaining ten CDs. The lower price will then make the CD more available to people who had previously decided that the opportunity cost of buying the CD at $20 was too high.
Market Structure/ Competition / There are four main categories of market structure:
  • 1. MONOPOLY: market where there is only one producer and seller for a product; the only business in the entire industry. Other businesses cannot enter the industry because of high costs and many times, economical, social or political restrictions.
Example: Government wants to control the power industry and be the only supplier of electricity. Therefore, the government can create a monopoly to keep out any competitors.
  • 2. OLIGOPOLY: market where there are only a few firms in an industry. This small and elite group of firms has complete control over pricing in the industry.
Example: Oil
  • 3. MONOPOLISTIC COMPETITION: market that shares characteristics of competition and monopoly. There are many buyers and sellers which offer substitute products that are differentiated in image, physical attributes, advertisements and services. This is where the majority of goods and services in the Sports and Entertainment Industry reside.
Example: Nike and Reebok over similar sporting good products but are different in image, advertisements, physical attributes, etc.
  • 4. PERFECT COMPETITION: market with many small sellers and buyers. Firms in this market produce products with no differentiation and consumers have complete and accurate information about their prices. The market has no single market leader and each must offer high quality products to retain customers and remain competitive. Perfect Competition is the exact opposite of a Monopoly.
Example: Wheat, milk.