WHY BEER COMPANIES AND OTHERS ALIGN THEMSELVES WITH SPORTS

For the purpose of this article, we have identified two classes of products: non-sports and sports. Similarly,
we have acknowledged two types of strategies for marketing products through sports: traditional and sponsorship. In considering the marketing of non-sports products with traditional strategies, we emphasize the selection of target markets and the development of a corresponding marketing mix for each designated target market. However, the environment in which we are operating is sports. So a typical question might be: How can we use soccer to appeal
to one of our target markets with a marketing mix designed to sell more mini-vans, or what type of beverage
appeals to avid runners? This series of articles attempts to address questions such as these.
Target Markets
In many cases, the target market of the organisation seeking to develop the consumers’ interest in its products will coincide with the target market of a sports property. It is sports’ ability to provide access to the organization’s target markets that makes the marketing of products through sports viable. Marketers that have a good understanding of their own customers will align themselves with sports entities that allow them to develop strategies designed to capitalize on the similarities of the two organizations’ target markets. Once identified, the emphasis becomes one of developing a marketing mix that corresponds to the target market. In this respect, marketing through sports is no different from any other marketing effort. Beer companies seeking to reach adult males may align with football; they may use football themes in advertising or they might reach an agreement with a bar owner to feature its brand at discounted prices during the broadcast of an important game. Mountain Dew
uses advertising featuring X-treme sports as a means of reaching its 13-25-year-old, male target market. Cadillac uses golf to appeal to an older, more affluent market. In a theme that will be dominant in this book, the marketer needs to find the appropriate match with a sports entity that can provide access to its own target markets. Once this decision has been made, the focus shifts to the four variables in the marketing mix. Price Because of the costs associated with sponsorship, many marketers shy away from domain-focused strategies. But even when the marketer is considering a mainstream strategy, some options have costs that can be a barrier. For example,
traditional advertising during high-profile events can be characterized by prohibitive costs; for example, it was noted that a 30-second ad during the 2006 Super Bowl cost more than $2.4 million. A common concern is that alignment with sports and athletes can be very expensive, and this cost is invariably passed on to consumers in the form of higher prices. It is this concern that leads many marketers to adopt a mainstream strategy that incorporates sports at the most basic level. Instead of higher prices, marketers intent on the implementation of a
mainstream strategy generally seek ways in which they can provide discounted prices while projecting an informal relationship with sports. A producer of hot dogs might offer its product to operators of sport venues at a discounted price. While that discount is not likely to be passed on to spectators in attendance, it may
be the determining factor that persuades the venue operator to sell one particular brand rather than that of a
competitor. Once the manufacturer has been selected, it can capitalize on the opportunity in which it is
likely to have a monopoly with no direct competition. Another benefit is that fans who purchase and enjoy
the hot dog at the sports venue may shift their own purchase behaviour in favour of that brand. Resultant
purchases at the supermarket do not have to rely on discounted pricing. A second example of a mainstream
strategy is the combination of a discounted price with a sports-oriented promotion. A brewery might engage in a cooperative effort with a bar to allow its beer to be featured in promotions and sold at a reduced price during the broadcast of popular sports events. Other bars often offer discounted food during broadcasts of games played by local teams. Yet another perspective is that effective marketing is typically designed to increase sales. Undoubtedly, this is the goal of many marketers that attempt to create an association with sports. If the anticipated increase in demand does materialise, then there is a corresponding need to increase production.
The typical result is the achievement of economies of scale. As production goes up, the cost of producing each item should go down. The lower cost has the potential to translate into lower prices. If a price decrease is not forthcoming, then the firm’s profits will increase. These resources may be put back into research and development for new products or into other strategic initiatives such as increased levels of advertising. Alternatively, any
increased profits may be distributed to stockholders in the form of stock dividend payments. It is evident that there is no clear outcome or strategy when considering the creation of a sports overlay in the development of a mainstream strategy. Marketers that associate themselves with sports often manipulate their prices and offer special deals. Retail prices may vary depending upon the product’s availability and the type of stores in which the product is sold. Clearly all elements of the marketing mix must be coordinated if they are to be effective. Keep your eyes peeled for our next issue as we will be discussing product as our second element in the marketing mix.

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