Transcript - West Virginia University

Chapter 6
Segmentation, Targeting, and
Positioning in Sport Business
Segmentation
• Segmentation is the division of a whole into parts.
Putting things in order helps arrange them so that we
can make sense of them.
• The division of a consumer market into relatively
homogeneous segments is sport consumer market
segmentation.
• The division of the sport industry into relatively
homogeneous segments is sport industry
segmentation.
• Segmentation of the consumer market allows sport
businesses to understand and target specific groups
that share characteristics and behaviors.
Segmentation (cont’d)
Segmentation (cont’d)
Industry analysis and segmentation can
reveal how a company compares to the
competition or determine if it can compete
in a particular segment. This allows the
company to concentrate its efforts on
particular segments and thus use its
resources most efficiently.
Purposes of Segmentation
• The primary purpose of market segmentation
is specialization.
• Targeting specific populations is the future of
marketing in sport business.
• The sport industry is growing to meet new
consumer needs and to provide new support
and services.
Important Market
Segmentation Criteria
Identifiability: segments must be identifiable and
measurable.
Substantiality: segments must be of a size large
enough to justify marketing mix attention.
Accessibility: segments must be reachable with the
customized marketing mix.
Responsiveness: segments must respond to a
marketing mix customized to that segment.
Bases for Segmentation
The object of market segmentation is
to develop useful data about a particular
group. Segmentation using one base
selects members from a group that share a
particular characteristic, while multiple
base segmentation selects for a variety
of characteristics. The latter method is
increasingly popular as the culture
becomes more multi-faceted.
Bases for Segmentation (cont’d)
Demographic Segmentation
Typical Demographics:
• Age
• Gender
• Household status
• Income: individual or household
• Occupation
• Education
• Race
• Nationality
• Social class
• Religion
Psychographic Segmentation
Demographic information is a good start in describing
and developing segmentation strategies, but
demographics don’t paint the full picture. Personality
characteristics, favorite color, motivation factors,
desires, attitude, and beliefs are some of the many
other types of information that describe and define a
person. These are called psychographics.
Some psychological
factors used:
Personality
Physiological
Psychological
Lifestyle
Desire for
Freedom from
Maslow’s Hierarchy of Needs (1954)
• Self-actualization Needs
self-fulfillment, self-expression
• Esteem Needs
self-esteem, self-respect, recognition
• Social Needs
love, appreciation, fun, belonging
• Safety Needs
security, freedom from pain
• Physiological Needs
food, water, shelter
A Typical Consumer Decision-Making
Process
All are affected and influenced by personal
and social factors.
– Step 1—Problem Recognition
– Step 2—Information Search
– Step 3—Evaluation of Alternatives
– Step 4—Purchase
– Step 5—Postpurchase Behavior
Compilation of factors that affect
attendance
Consumers who already know about or
have experience with a product require a
salesperson who can speak knowledgeably
about the product and answer more
detailed questions.
Product Use and Benefits
Segmentation
A Customer Needs:
a product in order to satisfy a need
or desire. Therefore, the product is
the tool for the consumer to
perform certain functions and
realize certain benefits.
Business Consumer Segmentation

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Sport Business Consumers
Manufacturers
Resellers
Sports Governing Bodies
Institutions
Media Sports Enterprises
Bases for Business Consumer &
Industry Segmentation
Business:
•
•
•
•
•
Geographic location
Customer type
Customer size
Product use
Purchase criteria
Industry:
A Typical Segmentation Process
Step 1—Select a market or industry
Step 2—Select one or more segmentation bases
Step 3—Select specific variables
Step 4—Analyze the segment
Step 5—Select one or more target markets
Step 6—Develop appropriate marketing mix
strategies
When segments are very similar to each other, an
undifferentiated targeting strategy—much like mass
marketing— may be used, whereby all consumers receive
the same marketing treatment.
Positioning the Sport Business
Positioning establishes the image of a
product or company and becomes the
consumer’s base of reference when
deciding which company’s product to
purchase.
A Simple Positioning Process
Step 1—Identify the target market’s
product attribute preferences
 Step 2—Identify current positioning
strategy
 Step 3—Analyze current position and the
market’s preferred product attributes
 Step 4—Determine a positioning strategy

Chapter 6 Questions
1. Describe how the population of your country
has changed over the last 25 years and how it
is going to change in the next 25 years. How
will this affect the sport business industry?
2. What types of marketing strategies are sport
businesses using more often for emerging
markets? Describe each one and how they
work.
3. What are segmentation, sport consumer market
segmentation, and sport industry
segmentation?
Chapter 6 Questions (cont’d)
4. What are bases for segmentation? Describe how
they are used.
5. What is target marketing? Describe how to
determine one or more target markets for a
sport business.
6. What is positioning? Describe how to develop a
positioning strategy for a product and a
consumer market.
Learning Activities
1. Using students in your class, conduct a
study of demographics, psychographics,
and other segmentation bases and
variables using sporting goods as a basis.
What did you learn about the class? How
could this information be used if your
company is a sporting goods retail
company?
Learning Activities (cont’d)
2. Write down a sports product that you
purchased recently, one that is sold by
more than one company. Create two
columns, one labeled “My Buy” and the
other “Didn’t Buy.” In the “My Buy”
column, create a list of all of the reasons
you bought the product. In the “Didn’t
Buy” column, list of all of the reasons you
didn’t buy the product from other
companies. On another sheet, list all the
information that helped you decide on
your purchase (family, friends,
advertising).
Learning Activities (cont’d)
2. (cont.) Write down all the things the
people told you or that you remember
from the advertising. Now compare all
your notes and see if there is a
relationship between any of them. Why do
you think you found a relationship
between, for example, the reasons you
bought the product from a specific
company and the company’s advertising
for that product?
Learning Activities (cont’d)
3. With a group, determine a way to
segment the sport industry. First,
determine a reason for segmenting the
industry, such as pretending that your
group is a television broadcasting
company that focuses on extreme sports
events. Develop bases for segmentation.
Determine an appropriate marketing mix
strategy for your company.
Learning Activities (cont’d)
4. Pretend that your company is a team of
the WNBA. You want to increase
spectator attendance numbers for each
game, but you also want to increase the
number of games that many of your fans
attend during a season. Develop a list of
the factors that have an influence on
attendance and design a study that will
answer the questions you have for your
fans.
Learning Activities (cont’d)
5. Identify some different sport businesses
such as a manufacturer and a sport
facility. Identify different consumer
markets for the products. Develop
positioning statements for each consumer
market.
Chapter 7
Marketing Information Systems
Marketing Information Systems
(MIS)
• Marketing information systems—known as
MIS, CIS, and IAM—deal with large amounts
of information and are essential to the success
of your sport organization or company.
• MIS allows companies to establish channels of
communication in order to maintain a
relationship with consumers. These
relationships allow marketers to increase
consumer loyalty and thus encourage repeat
purchases.
Obtaining Information
The most popular methods for primary
data collection for sports organizations are
direct-mail surveys, telephone interviews,
and personal interviews.
 The three models of consumer loyalty
programs are the points and prizes model,
the plateaus, perks, and prizes model, and
the membership program model.

Designing Information Systems
Designing Information Systems (cont’d)
Mullin (1985) and Grantham’s, Patton, York, and
Winick’s (1998) essential characteristics of an
effective sport marketing database:
1. A protocol must be established.
2. It must be linked to a central processing unit.
3. Storage capacity must be planned into the
system.
4. Various databases need to be fully integrated.
5. The data must be retrievable in a form that the
sport marketer can use.
6. Control mechanisms should be designed into the
system to facilitate data security.
Maintaining Data Security
Watch for two potential security
problems with using microcomputers
to help manage data—the erasure of
a disk’s content upon exposure to
magnets or general disk failure and
the availability of data to unqualified
people.
Getting the System to Work
Two common mistakes often made in the
application of computers in sport organizations:
1. Managers buy a computer with the idea that a
job will be found for it to do.
2. The people who will be using the computer
are often not involved in the testing and
purchase of the system.
Getting the System to Work (cont’d)
• Two basic types of programs are available,
custom programs and commercial “off-the
shelf” business applications.
• In the event that your organization has special
needs, you may need to have a software
program written especially for your
applications.
• Many commercial programs have companion
software that will allow you to create and
move information from one application to
another.
Working with the System
MIS cannot be expected to solve problems
efficiently as soon as the computer comes out
of the box.
According to Shaw (1991), an MIS must be
designed “with a view to the people
who will use them, and with an understanding
of how the business in which they work
operates. [An MIS] must deliver the right
information to the right people at the right
time” (p. 60).
Producing Results
The main goal of conducting marketing
research and analyzing data is to
determine who will buy what goods and
when.
Chapter 7 Questions
1. What are the essential characteristics of a
well-designed marketing information
system?
2. What MIS sources would be available for
an intercollegiate athletic program, and
how would you go about setting up an
MIS?
Learning Activities
1. Select your favorite sport and consult a
copy of Simmons Market Research
Bureau. See where you fit in the
demographic segments presented.
2. Take a trip to your local fitness center or
health club, and inquire about the types
of information they have on their clients.
Also look at their application form if they
are uncooperative with your first request.
Chapter 8
The Marketing Mix
and the Sport Industry
The Marketing Mix
Marketing Mix: the strategic combination
of product, price, place, and promotion
decisions and strategies.
Creation of the marketing mix involves the
process of discovering or developing the
right combination of product, price, place,
and promotion.
Marketing Mix Elements
The 4 Ps
 Product
 Price
 Place
 Promotion
Marketing Mix Elements (cont’d)
If the consumer believes that a product is
overpriced or even underpriced, there is a
good chance that the consumer will not
purchase the product.
Marketing Mix Elements (cont’d)
Though
the public is often under the
impression that promotion is strictly
advertising, it is actually a process—the
goal is to create enough interest in a
product to convince a consumer to
purchase it.
Research is the foundation upon which all
marketing decisions are made.
The Interrelationship
of the Elements
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Consumer purchases are not arbitrary—the
consumer is looking for a product that
satisfies a need or desire.
From that perspective, the product and
everything about the product take on
characteristics beyond the intended function
of the product. This notion must be
understood by the sport businessperson and
used during the development of a marketing
mix.
The Marketing Mix Strategy
in the Sport Industry
• As the sport marketer identifies consumer market
segments and selects target markets, the
marketing mix elements are designed specifically
for the consumer.
• Also affecting the decision to open a fitness center
is information concerning the industry
and the competition.
• In addition, the marketing mix should change as
markets change.
• The information gained from research should be
current. Therefore, research should be an ongoing
process within the company.
Chapter 9
The Product in the Sport Industry
Product Defined
Product: should be understood as a
concept and must be used as an umbrella
term that includes goods, services, people,
places, and ideas with tangible or
intangible attributes.
 A tangible product is a concrete, physical
object while an intangible product is
indefinite. To buy a baseball is to receive a
tangible product; to attend a baseball
game is to receive an intangible product.

Four Types of Utility
A product’s utility is its ability to satisfy a
consumer’s need. Four aspects of this
include
Form—using raw materials to produce a product
 Time—making a product available when the

consumer wants it
 Place—getting the product to the venues where
the consumer shops
 Ownership—transferring ownership or possession
of a product from seller to buyer
Sport Product Defined

Sport product: any good, service,
person, place, or idea with tangible or
intangible attributes that satisfy consumer
sport, fitness, or recreation related needs
or desires.
Sport Product Classifications
A product category is a group of products that are
either exactly alike or have homogeneous
characteristics. Studying these categories enables
marketers to fully understand and market their product.
Consumer products are those products offered to the
final consumer for personal
or household use.
Business products are those products offered to
businesses or organizations for use in the production of
other goods and services,
to operate a business, or for resale to other consumers.
Sport Product Classifications (cont’d)
• A rented-goods service is the renting of a
product for a period of time.
• Owned-goods services include those
services to repair or alter something that the
consumer owns.
• Nongoods services do not involve a good at
all. This category includes personal services
offered by the seller.
• Business products in the sport industry are
those products offered to sport businesses for
use in the manufacture of sport products, to
operate a sport business or for resale.
Industry Segmentation

Industry segmentation is the division of an
industry into industry segments in order to
develop a competitive strategy. The sport
industry can be divided into the sport
performance segment, the sport production
segment, and the sport promotion segment.
Industry Segmentation (cont’d)
The Sport Product Life Cycle
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
Studying, understanding, and managing products and
their life cycle stages can have considerable influence on
the success of a company.
Through research, it is now known that
(a) product lives are shorter now than in the past;
(b) higher investment is now required for new products;
(c) the marketer may use the product life cycle to adjust
marketing strategies; and
(d) the marketer may strategically establish a more
successful product mix in relation to the product life
cycle concept—planning to establish products in
each stage of the cycle so that, as one product
declines, another product is introduced.
Stages of the Product Life Cycle
Stages of the Product Life Cycle
Product promotions stress information
about a product, as well as its features
and, perhaps most important, what it does
for the consumer.
 By the time a product reaches the
maturity stage, all the companies
producing it have most likely discovered
the successful product, price, and other
marketing strategies that keep the product
selling.

The Product Mix and
Product Management
Product mix is the complete set of all products
that the sport company offers to the consumer.
 A product item is a specific product within a
product line.
 Product management involves deciding which
products to offer, what type of a product line to
carry, when to keep or delete a product, when to
add new products, and other product
management strategies.

The Product Mix and
Product Management (cont’d)
A product’s position is the image or
perception that the consumer holds about
the product’s attributes, quality, uses and
other functions as these compare to other
similar products.
 New product development as a
strategy is the addition of a new product
to a company’s product line.

The Product Mix and
Product Management (cont’d)
3 Aspects of Product Mix
 Width is the number of product lines
offered.
 Depth is the number of items within a line.
 Consistency refers to the similarity of
product lines.
Nine Ways to Offer a New Product
1. A product that performs
an entirely new function.
2. A product that offers
improved performance
of an existing function.
3. A product that offers a
new application of an
existing one.
4. A product that offers
additional functions over
an existing product.
5. When an existing
product is offered to a
new consumer market.
6. Offering a lower cost on
a product can attract
new buyers.
7. A product offered as
“upgraded” or an existing
product integrated into
another product.
8. A downgraded product
or the use of less
expensive parts or
components in the
manufacturing process.
9. A restyled product.
New Product Development
Planning and Process
Stages in the New Product
Development Process
1. The idea generation stage involves generating ideas
for new products, product modification, or other types
of product change ideas.
2. The next stage is product screening and analysis.
This involves determining the feasibility of a product, if
the company can market a product profitably, if the
product fits with the company’s mission, if the company
has all the necessary resources or technology, or if it
might be beneficial to form partnerships with other
companies.
3. In the product research and development stage,
product ideas with potential are converted.
Product Identification
The establishment of a brand—a name, symbol,
term, or design that represents a product—is
important because it allows the idea of a
product to exist in a consumer’s mind even
when the product itself isn’t visible.
 Consumers react to branding on three levels:
brand recognition, brand preference, and brand
insistence. Companies aim for brand insistence,
the level at which consumers will buy only their
brand and no other.

Product Identification (cont’d)

It is important to remember that sport
event packaging includes not only the
product or services themselves, but also
certain elements of presentation such as
the cleanliness of facilities, the attitude of
the staff, and the amount of attention paid
to the consumer during the event.
Product Deletion

For most products, the time will arrive
when it no longer is fulfilling a need or
desire for a consumer. The sport marketer
must be able to identify that time and
make the decision to eliminate the
product. The decision should be based on
an analysis of the product’s situation:
sales and sales trends, profits trends, cost
analysis, and product life cycle stage.
Chapter 9 Questions
1. What is a product? What is a sport
product? List examples of sport products.
2. Why do people purchase sport products?
3. Define these terms: form utility, time
utility, place utility, and ownership utility.
Give an example of each.
4. What is product classification?
Chapter 9 Questions (cont’d)
5. What is the product life cycle? What are
the stages in the product life cycle?
6. Give examples of sport products in each
product life cycle.
7. Why is it important for the sport marketer
to know in which stage of the product life
cycle each of the sport company’s
products may be categorized?
Chapter 9 Questions (cont’d)
8. What is the product mix? Why is it
important?
9. How many ways might a sport company
offer a new product?
10. What is the new product development
planning process? What are the stages?
11. What is product identification? Why is it
important? How is it used in the sport
industry?
Learning Activities
1. Using the definition of sport product in this
chapter, create a list of 10 sport products for
each of the categories: goods, services,
people, places, and ideas.
2. Using the Pitts, Fielding, and Miller Sport
Industry Segmentation segments, list
products offered to consumers and business
consumers in your city or community.
3. Determine in which stage each of the
products you listed in number 2 fall onto the
product lifecycle.
Learning Activities (cont’d)
4. Interview some of the sport businesses, organizations,
or other enterprises in your city or community and ask
about new product development and new product
research and development.
5. Conduct a class study of product identification. Show
company brand names or logos on overhead
transparencies and ask students to try to identify
each.
6. To study how today’s sports events are packaged,
attend a small sporting event and a large sporting
event. Take a notebook. Make a list of everything
involved and surrounded the events: parking, preevent events (such as, pre-game shows), and other
activities and services offered.
Chapter 10
Pricing Strategies for the Sport Industry
Price
Price is the exchange value of a good or
service. It fluctuates according to its
exchange value in the marketplace, or its
market value.
 Value is the quantitative measure of the
worth of a product.
 Perceived value is what the consumer
thinks something is worth.

The Four Cs of Price
Determination
Consumer
 the Competitor
 the Company
 the Climate (environment)

the
Developing an
Effective Pricing Strategy
Elasticity of Demand
Elasticity is a measure of how consumers react—consumer
sensitivity—to changes in price. The following questions
can help you understand this concept:
1. What will happen if we raise the price of a sport
product? If fewer consumers purchase the product,
how many is “fewer”? How will that affect revenue,
profit, and sales?
2. What will happen if we decrease prices? Will more
consumers purchase the products?
How will this affect revenue, profit, and sales?
3. Is there any guarantee that any change in price will
result in a change in consumer purchase pattern?
Elasticity of Demand—
Relatively Inelastic
Elasticity of Demand—
Relatively Elastic
Some Factors That
Effect Elasticity of Demand
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product necessity or luxury
product substitute availability
frequency of purchase
proportion of income available for a specific
product
economy
brand loyalty
competition (quantity and quality)
quality of the product
product specialization
time frame of demand
Pricing Objectives for the Sport Business
The 4 Cs
Consumer
• price sensitivity
• purchase decision
• fairness
• image
• maximize
opportunity
• targeted markets
Climate
• legal restraints
• sensitivity
Competition
• meet competitive
prices
• be price leader
• stabilize the
market
• discourage
entrants to
the market
Company
• image
• cost
• efficient use
• return on
investment
• profit margin
• increase market
share
• survival
• growth
Pricing Methods and Strategies
for the Sport Business
Going-rate pricing (also called status quo pricing)
Demand-oriented pricing
Price discrimination
Peak-load and off-load pricing
Seasonal pricing
Average cost pricing
Penetration pricing
Cost-plus pricing
Break-even analysis
Short-term pricing methods
Product line pricing
Single price
Secondary market pricing
Short-term Pricing Methods
Quantity discounts (the more you buy, the
lower the price per unit)
 Special sales
 Allowances
 Rebates
 Clearance sales
 Promotional sales

Chapter 10 Questions
1. How does the consumer perceive “price”?
2. Discuss the concept of price.
3. List some examples of words used in place
of the word price that can be found in the
sport industry. Explain why these words are
used.
4. What are the 4 Cs of price consideration?
Discuss each and give examples.
5. Discuss the concept of the elasticity of
demand.
6. List some examples of pricing objectives for
sport.
7. List and describe some pricing strategies
for the sport industry.
Learning Activities
1. Identify sport businesses, organizations,
or other enterprises and their products in
your city or community that use these
pricing strategies: going-rate pricing,
demand-oriented pricing, price
discrimination, seasonal pricing, shortterm pricing, and product line pricing.
2. Identify in your city or community some
of the sport businesses, organizations, or
other enterprises that use the price titles
as presented in this chapter such as
licensing fee, admission, and purse.