History of Sports and Entertainment Marketing Similarities in Marketing Differences in Marketing 2

Chapter Objectives Discuss the history of sports and entertainment. Discuss the impact of sports and entertainment history on today’s markets. Explain how sports and entertainment marketers use tools to sell their products. Explain risks and risk management of sports and entertainment events. Identify differences between marketing sports and entertainment products. 3

Sports and Entertainment Connections What do sports and entertainment have in common? They have thrilled and entertained people for centuries—since the ancient Olympic games and Greek plays. 4

A Brief History of Leisure Marketers sell participation in sports and entertainment events to consumers. consumers people who use products The growth of the sports and entertainment industries has relied on consumers with free time, discretionary income, and a desire for recreation. discretionary income money left to spend after necessary expenses are paid 5

A Brief History of Leisure By the late 1880s, both wealthy and working-class families could seek similar forms of entertainment, thanks to public transportation. kinetoscope a device used to view a sequence of moving pictures In the late 1890s, Thomas Edison invented the kinetoscope. 6

A Brief History of Leisure Other milestones in the history of leisure include: Mary Pickford becomes the first international movie star in 1918. The first talking movie in 1927 (The Jazz Singer) Babe Ruth sets records in baseball that would stand for decades. The development of television 7

Development of Sports and Entertainment Marketing William “Bill” Veeck was a key figure in the development of sports marketing. He conceived of marketing activities and events that surround baseball games. Adolph Zukor, founder of Paramount Pictures, was one of the first film producers to draw big box-office crowds and own a chain of theaters. 8

Marketing Today Sports and entertainment vendors compete for a share of the money people spend on recreation. vendors sellers of products Sports and entertainment marketing directs consumers toward sports and entertainment products. product a good or service that any for-profit industry sells to its customers 9

Fan Clubs Grow Online Fan clubs for athletes and celebrities make good marketing tools. Thanks to the Internet, thousands of official and unofficial clubs are formed. They are run by fans, corporations, and Operating an e-tail business on an electronic channel—the Web—can be costly, due to design, delivery, returns, and operating expenses. Though Many larger dot-com companies crashed in the 1990’s, small stores like Harris Cyclery of West Newton, Massachusetts, actually increase sales using a basic Web site. Today, a third of Harris’s bicycle business rides in on the Web to get hard-to-find parts and personal service. Describe an e-business’s home page to your class after viewing one through marketingseries.glencoe.com. celebrities. Some fan clubs charge fees, such as Tiger Woods’ tigerfans.com at $30. Other Web sites are free. For example, fanemporium.com, which operates for a group of musical celebrities, charges no dues. Sites offer newsletters, merchandise, contests, event updates, and more. For more information on sports and entertainment marketing, go to marketingseries.glencoe.com. 10

1. Name two inventions that helped to enable more equal access to entertainment for the wealthy and the working classes in the 1890s. Who was a key figure in the development of sports marketing? How did Adolph Zukor help the entertainment market grow? 2. Quick Check Answers Inventions were the creation of public transportation – trolleys and buses – and the invention of the kinetoscope. William “Bill” Veeck Rather than showing a ten-minute series of moving pictures, he capitalized on the appeal of dramatic stories and popular stars. 3. 11

Changes in Marketing Communicating through promotion is more important than ever. promotion any form of communication used to persuade people to buy products New technologies have broadened the scope and reach of marketing messages, and they can be entertainment products themselves. 12

Marketing Similarities The marketing of sports and entertainment products differs from marketing traditional products in the following four areas: endorsement approval or support of a product or idea, usually by a celebrity core product the main product, such as sports event, movie, stage show, or book Product Endorsement Core product Ancillary product Revenue ancillary product a product related to or created from the core product revenue gross income continued 13

Marketing Similarities continued Place piracy the unauthorized use of another’s music, movies, or copyrighted material Price Piracy Royalty Copyright royalty a payment for material that has been copyrighted, or legally declared as belonging to the creator continued 14

Marketing Similarities continued Promotion Product tie-in Cross-promotion product tie-in use of ancillary products such as merchandise as promotional tools cross-promotion any form of communication through which one industry relies on another industry to promote its product 15

Marketing Similarities Convergence expands the potential for profit in sports marketing and entertainment marketing. convergence the overlapping of product promotion Convergence and cross-promotion help to develop synergy. synergy a combined action that occurs when products owned by one source promote the growth of related products 16

Risks and Risk Management In any industry, including the entertainment industry, there are risks. risks unforeseen events and obstacles that can negatively affect business Successful sports and entertainment marketers develop risk management strategies. risk management a strategy to offset business risks 17

What is celebrity endorsement? 1. What is celebrity endorsement? What is the difference between core and ancillary products? Give an example of synergy. 2. Quick Check Answers A celebrity gives approval or support of a product by lending his or her name or image. The core product is the event or film or show itself; ancillary products are related to or created from the core product. Answers will vary, but many will use the Oprah Winfrey example in which a magazine and television show create synergy. 3. 18

Different Players, Different Games The differences between sports and entertainment can be found in three areas: Consumer loyalty Product Revenue stream 19

Differences in Consumer Loyalty If sports fans feel their team is trying to win, the team can retain its consumer loyalty. consumer loyalty consumers’ attitude that occurs when they are happy with a company and become repeat customers The entertainment consumer is not motivated by brand or team loyalty, but by a desire for satisfying entertainment. 20

Differences in Product The sports product is consistent, or stable. The entertainment product is variable, or changeable. 21

Differences in Revenue Stream The streams of revenue created by marketing products in entertainment are very diverse. Sporting events do not usually produce the same amount of revenue from merchandising and royalties as entertainment events. 22

Differences in Revenue Stream Sports franchises earn revenue from sponsorship. sponsorship the promotion of a company in association with a property Sports franchises also earn revenue from advertising and broadcast rights. 23

Similarities and Differences in Marketing Sports Marketing Entertainment Marketing Lack of Consumer Loyalty Consumer Loyalty Product Place Consistent Product Variable Product Price Few Ancillary Products Many Ancillary Products Promotion Convergence 24

1. List two differences in consumer loyalty between sports and entertainment. What are differences between marketing sports product and entertainment product? In what one way does the stream of revenue in sports differ from the stream of revenue in entertainment? 2. Quick Check Answers In sports, consumers usually support one or two teams they like, whereas the entertainment consumer is not motivated by brand or team loyalty; film and music fans will see films made by more than one production company, or buy CDs produced by many different record labels, whereas a sports fan maintains his loyalty. The sports marketer knows what the consumer wants and then tries to deliver it; the entertainment marketer will try to know what consumers want and then create that product. Entertainment products can be developed into merchandise. A sporting event primarily develops a revenue stream from ticket sales, media advertising, and video games, and so on. 3. 25

Checking Concepts Identify three people in sports and entertainment history. 1. As new inventions and technology made entertainment more available to the working classes, marketing was affected; it is currently being affected by computer technology and the Internet. 2. endorsements, ancillary products, convergence, and synergy 3. William “Bill” Veeck conceived of marketing activities and events that surround baseball games.  Adolph Zukor was one of the first to market dramatic stories and popular stars in movies.  Charles Howard marketed Seabiscuit well enough that some say he invented sports marketing.  Other answers are possible.  1. Discuss one way that sports and entertainment history has affected marketing today. 2. Checking Concepts Answers William “Bill” Veeck conceived of marketing activities and events that surround baseball games. Adolph Zukor was one of the first to market dramatic stories and popular stars in movies. Charles Howard marketed Seabiscuit well enough that some say he invented sports marketing. Other answers are possible.  As new inventions and technology made entertainment more available to the working classes, marketing was affected; it is currently being affected by computer technology and the Internet. endorsements, ancillary products, convergence, and synergy Name three different marketing tools. 3. continued 26

Checking Concepts Define royalty. 4. 5. Give an example of a royalty. Answers will vary but may include the star of a new movie can appear on a talk show. 6. Many answers are possible, including damaged property, cancellation, injury to audience, damage to equipment. 7. Answers will vary because anything that can be copyrighted can earn a royalty if it is used by a person or entity other than the creator. Some examples might be books, songs, scripts, etc. 5. A royalty is a payment for material that has been copyrighted, or legally declared as belonging to the creator. 4. 5. Give an example of a royalty. 6. Give an example of cross-promotion for a film. Checking Concepts Answers A royalty is a payment for material that has been copyrighted, or legally declared as belonging to the creator. Answers will vary because anything that can be copyrighted can earn a royalty if it is used by a person or entity other than the creator. Some examples might be books, songs, scripts, etc. Answers will vary but may include the star of a new movie can appear on a talk show. Many answers are possible, including damaged property, cancellation, injury to audience, damage to equipment. Describe one risk involved in a sports event. 7. continued 27

Checking Concepts Critical Thinking 8. Explain one method of risk management for one risk. Answers will vary. One possibility is purchasing insurance policies to protect clients from industry-related risks. 8. Checking Concepts Answers Answers will vary. One possibility is purchasing insurance policies to protect clients from industry-related risks. 28

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