By Dr. Tony Lachowetz and Dr. Mark McDonald
Tony Lachowetz, PhD, is an Assistant Professor at Georgia Southern University, in the Department of Recreation and Sport Management. Mark McDonald, PhD, is an Assistant Professor of Sport Management at the University of Massachusetts-Amherst.
Athletic Management, 13.6, October/November 2001, http://www.momentummedia.com/articles/am/am1306/ovohands.htm
The time is ripe for collegiate athletic departments to rethink the nature of competition. Not on the fields and courts, but in their marketing strategies.
As part of the growing entertainment industry, spectator sport is simply one of many segments competing for disposable consumer income. In marketing our athletic teams, we need to realize that competition exists in many different places. And we must also realize that our competitors can be our allies.
The good news for marketers is that more dollars are being spent on sport each year. The bad news is that as a percentage of the money spent on the entire entertainment industry these dollars are shrinking. Throw in the escalating costs of college sports and the need to innovate is clear.
Under these conditions, one evolving strategy is the formation of strategic marketing alliances. All for one and one for all? Well, not exactly, although that is the underlying idea.
This article will introduce three different types of marketing alliances available to collegiate athletic departments of varying sizes and locations. The first type of alliance is designed for a college or university whose primary goal is to increase attendance for its revenue-generating athletic teams. The second type of alliance involves a university expanding to the local community to form alliances with other entertainment options. The third example, a "regional sports alliance," will illustrate the marketing possibilities available to those large athletic departments located in metropolitan areas that are home to multiple professional sport franchises.
The goals for each of these alliances are similar. Depending on the size of the athletic department and its community, these alliances should:
€ Serve as an insurance policy against the cyclical nature of teams suffering through losing seasons.
€ Broaden the market by treating consumers as sports fans as opposed to a segmented market (e.g., football fans).
€ Increase the alliance's market share of a growing entertainment market.
€ Reduce advertising and marketing costs by pooling the resources of the alliance.
€ Increase the leverage of alliance members when negotiating TV and sponsorship contracts, and enhance brand loyalty through the active promotion of strong fan relationships.
In-House Alliances
The first type of alliance unites revenue-generating teams within the same athletic department. Its goal is to increase attendance for each team by introducing fans of one team to the others.
Although members of the same department, these teams are really competitors from a marketing perspective. Regardless of the size of a local community, residents still have a limited amount of disposable income to spend on entertainment options--each dollar spent on a basketball ticket means one less dollar available for ice hockey tickets. Therefore, the idea is to provide fans with some type of added-value product that introduces them to other teams.
To illustrate this type of alliance, let's use the University of Massachusetts as an example. Currently, the school has four revenue-generating teams: men's and women's basketball, men's ice hockey, and football. All four teams see moderate to low attendance with occasional sell-outs for nationally ranked opponents.
Here's how it might work: The marketing department creates a 16-ticket package consisting of two tickets to two games for each of the four teams, with each ticket priced at a 10-percent discount. The package would include one contest against a top opponent from each team's schedule and one less popular matchup.
Why, one might ask, would the athletic department reduce their ticket prices or include a well-attended game as part of the package? The answer lies in the department's long-term vision. The intent is to introduce non-users of a particular product to an exciting game atmosphere in an attempt to elevate their fan status from non-user to that of a light user, thus moving them up the user-group "escalator."
According to Bill Sutton, Vice-President of Team Marketing Services for the National Basketball Association, "the escalator is crucial because fan surveys indicate clear intentions to move up the escalator." For instance, fans that currently attend three games per year often indicate intentions to attend five or six the following season.
Entertainment Alliances
The second type of alliance will align the University of Massachusetts athletic department with other entertainment options located in and around Amherst, Mass. The concept is similar to the first example, except it uses non-athletic types of entertainment as partners.
The ticket package can be reduced to eight tickets (two tickets to one game for each team) and then combined with two movie theater tickets and a $25 restaurant gift certificate. The sporting event tickets would still be offered at a 10-percent discount and include key match-ups from each team's schedule. The primary goal here is to increase attendance for the athletic teams, as well as drive consumer traffic to each of the participating members of the alliance.
This type of alliance allows the university marketing department to be creative in their promotions. For example, the Los Angeles Dodgers conducted a consumer research study and found that 40 percent of fans who attended the Dodgers' games also attended movie theaters in L.A. Consumers now see two-minute promotional spots about the Dodgers prior to movies and Dodgers fans can redeem their tickets for a 10-percent discount to local movie theaters. The Dodgers also provide in-stadium promotions for the movie theaters they are aligned with.
A simple research study involving arena and stadium surveys, similar to the one conducted by the Dodgers, can help the UMass athletic department identify potential alliance members in the Amherst area. The alliances are limited only by a marketer's imagination.
City Alliances
The third type of alliance primarily involves professional teams and large athletic departments in metropolitan areas. However, it may also be applicable for athletic departments in mid-sized cities with minor league teams. This type of alliance is designed to help a group of unrelated sports teams compete against other forms of entertainment, and benefits most from reduced marketing expenses.
Let's use Arizona State University as an example. Located in the Phoenix suburb of Tempe, Arizona State athletics must compete against a long list of other sporting options. In 1998-99 alone, Phoenix hosted PGA and LPGA golf events, NASCAR auto racing, Major League Baseball spring training, the Arena Football League, the NBA Suns, the WNBA Mercury, the NHL Coyotes, the NFL Cardinals, and Major League Baseball's Diamondbacks.
In this scenario, five teams from that region could be selected to participate in the Phoenix Sports Alliance. The alliance members might be the Cardinals, Suns, Mercury, Diamondbacks, and the Arizona State Sun Devils football team. Again, the same concept of added-value for the consumer is applied in this example through the discounting of the five-team ticket package and the inclusion of key match-ups.
In this type of alliance, reduced ticket margins can be offset by the reduced promotional and marketing expenses of each team. For example, rather than each team purchasing individual promotional spots, a five-team alliance can purchase three spots. This equals a 40-percent reduction in costs, yet increases each individual team's exposure to the market from one spot to three. As market share continues to grow for the alliance, each team will experience increased revenues from sponsorship fees, TV and radio rights fees, parking, concessions, merchandise, and ticket sales.
Question Marks
Obviously, the question must be posed: If alliances provide such a competitive advantage within the entertainment industry, why do so few exist? The answer may be that the spectator sport industry typically is years behind marketers from more traditional industries. Strategic alliances have already become common practice in the automotive, technology, and telecommunications industries, just to name a few.
Other reasons might be a fear of cannibalization of one's own consumers, the sheer complexity involving the logistics of such an alliance, and a hesitation to work with unknown entities. But then, it might not be any of these reasons. Rather it might be that the few that do exist (such as the Toronto Raptors/Maple Leafs; Tampa Bay Lightning/Storm; Texas Rangers/Dallas Stars) are simply ahead of their time--and the majority of the spectator sport industry.