Nottingham Race Course (NRC)

Conclusion

This chapter has shown that sport marketing fundamentally concerns the satisfaction of sport customer needs with sport offerings that provide benefits in excess of all other sports or pastimes that compete for the customer’s time and money. Sport fans’ needs and benefits were identified as being quite diverse and hence, customer satisfaction can only realistically be achieved amongst a subset of the market, that is, only certain cus-tomers will be predisposed towards a given sport, team or player. In order to achieve customer satisfaction it is necessary for the sport marketer to carry out a detailed analysis of the customer and broader marketing environment to allow for all the key issues to be screened and analysed. The data gathered in the customer audit allows a detailed profile of fans to be compiled and the resultant profile to provide general guidance on the key marketing tasks. Key parts of this profile include geographic, demographic and behavioural factors, all of which allow the marketer to understand the customer and, hence, to design a marketing offering that should be acceptable.

Once the marketer has researched and analysed the operating environment, it is necessary for an approach to that environment to be formulated. Formulation of this approach requires the sport marketer to adopt the operational marketing planning process including further analysis of the audit data such that the marketer (and company) can select the most appropriate and realistic objectives. Given that objec-tives set the framework for strategy development, it is vitally important that they are correct. The SMART mnemonic is a useful one in this respect as it details the criteria for successful objective setting. Of these five criteria, it can be argued that ‘realistic’ is the most important to the marketer, as an unrealistic objective will either be very dif-ficult to achieve and hence will demotivate employees or will be too easy to achieve and so will also demotivate.

On completion of the objectives development, the marketer must plan out the actions required to take the company from its current position to that detailed by the objectives. These actions include tactics that can be individually formulated, but must be collectively considered, as consistency is vital. Implementation, or the act of turn-ing thinkturn-ing and analysis into reality, is the next stage and it is here that the marketer really earns his or her money. This move from thought into reality brings with it uncertainty and hence it is necessary to consider the control process or a series of Conclusion 149 whole, shows that in the region of 15% of the population attend race meetings, about half this figure watch the sport regularly on TV and almost 25% watch the sport occasionally on TV. The question for courses such as Nottingham is, how can the occasional TV spectator be persuaded to attend race meetings?

Discussion questions

6. What are the key factors affecting NRC and horse racing in general?

7. What approaches could NRC consider to build its attendance and sales?

8. How could occasional TV spectators of horse racing be persuaded to attend race meetings?

9. Construct a reasoned sport marketing plan for NRC.

short-term targets against which performance is assessed. Collection of data to test performance against these targets leads to a detailed knowledge of the reasons for suc-cess or failure, which can be used to take the appropriate corrective action to ensure success in the future.

As a final thought, it is essential that the sport marketer is always aware of what he or she is trying to do. Numerous marketing failures can be traced back to a lack of consideration of the core function of sport marketing, namely:

The fundamental aim of the sport marketing activity is to satisfy the right sport cus-tomer needs with sport products or services that offer benefits in excess of all other competitor offerings whilst making the maximum sustainable profit.

If the words ‘Nike’ and ‘brand’ are virtually inseparable, it is down to one man, Phil Knight. But while he may not have run his last race for the company he set up 30 years ago, the signs are that Knight could soon join the bench. In March last year he anointed two co-presidents who now effectively call the shots day-to-day. And if having two ‘number twos’ is not unusual enough, one of them is a creative.

As president, Nike brand, Mark Parker is now in charge of the entire global prod-uct and brand management of Nike – a fitting promotion for a man who spent his formative years as a footwear designer. While his counterpart, Charlie Denson, focuses on distribution, Parker runs product development, his new status testament to the growing importance played by design in Nike’s fortunes.

Parker, the man that invented the cross-trainer, is leading a charge to secure Nike’s future by going back to basics. While Nike has long had a reputation for its design, it was accused of losing its way by focusing on marketing and treating its product as a commodity.

During the mid-1980s, Knight turned Nike into what he dubbed a ‘marketing-oriented company’. The novel idea was to focus on the promotion of wares, rather than on their production; design was somewhat relegated in all the euphoria.

The move into marketing enabled Nike to shrug off its revenue stall of 1987 and achieve meteoric gains. But after racking up record sales of $9.5 billion for its 1998 fiscal year, revenues fell to $8.8 billion in the next. Knight spent millions on Michael Jordan endorsements, but once Jordan’s stardom faded, Nike was left wondering what it could do next.

Finding growth since has not been easy, particularly in its domestic market, and Parker’s role is to do just that.

‘Phil Knight once said “we are a marketing company and our greatest marketing tool is our product”,’ says Parker. ‘But I would say we are as much a design and product-led company as we are anything. The way we work is that marketing comes into design and asks, “what’s going on, what’s interesting?” Design leads the company. I think that’s incredibly rare, not just in our business, but in any business.’

CASE 6.4 Design’s great leap forward ^FT

Conclusion 151 Many businesses might find it hard to employ a ‘creative’ in such a top role, but the word in Nike’s hometown of Portland, Oregon, is that there is definitely a sense that Parker can deliver for Nike.

‘When the announcement about Mark Parker’s promotion was made over a year ago, the reaction was very favourable,’ says Teresa Meyer, analyst at DA Davidson in Portland. ‘The buzz is certainly that this is a very positive step for Nike.’

Parker was born in Poughkeepsie, New York, in 1955. He graduated in political sci-ence from Pennsylvania State University, and joined Nike’s design division in 1979.

He rose through the ranks to become director of footwear design and then general manager for global footwear.

Under his auspices, the marketing-led company of old is now celebrating design again with creations such as the Kukini triathlon shoe (out next year), and the Portable Sport Audio MP3 player. It is probably no coincidence that the creatives at Nike headquarters recently regrouped under a single roof.

Outsiders agree that there has been a visible shift to design at Nike, something traced back to the demise of the Air Jordan ‘marketing juggernaut’.

‘The trend back towards design has probably been the more critical issue (for the brand) in the last few years. Nike has always been a marketing powerhouse first and foremost, but the last three or four years have been different,’ says RBC Capital Markets equity research analyst, Bob Toomey. Under Parker, Nike is putting its innovation expertise to work not just for today’s footwear, apparel and equipment businesses, but also for its categories of the future. He knows that the challenge facing Nike is to keep applying its skills of re-invention to the way the brand is per-ceived by its public, creating new connections and extending its reach.

The strategy, he says, is not simply about selling more and more units, it is about inventing new products and finding new places to take the brand: ‘The future for us isn’t going to be, hey, here’s better shoes, better apparel, better product. Its going to be a lot more dimensionalised than that.’

One potential new dimension is selling services. Parker says Nike is beginning to explore the viability of selling on-brand services in areas like sports coaching or information. Such a move would not only fit Nike’s brand position but, given its access to the top minds and methodologies in sport, it could make solid strategic sense for the business, too.

‘We are definitely looking at (selling services), but we need to pace ourselves to the point where we do what we do well. The worst thing that we can do is to get into something new and not commit,’ he says.

Then there are brand extensions like events. Not long ago, Nike was tipped to be extending its sponsorship of athletes into event sponsorship. But while small initia-tives like its successful ‘Run London’ race have promoted the brand in a more emo-tional context, it remains to be seen whether the Nike marque will be applied to major sporting events. ‘We’re not going to launch heavily into the events business,

Guided reading

For further details on the content covered in this chapter read the following books:

Adcock, D., Halborg, A. and Ross, C. (2001), 4th edn, Marketing Principles and Practice, Financial Times Management, Harlow.

Blackwell, R.D., Miniard, P.W. and Engel, J.F. (2001) Consumer Behaviour, Harcourt, Orlando.

but I think we will definitely scour that service area as another way for Nike to help people to experience athletics or be active,’ Parker says.

And then there is the personalisation of products. ‘One of the things I’ve been deal-ing with a lot lately is the growth of customisation and the personalisation of prod-ucts and services,’ Parkers says. ‘This is going to be a bigger and bigger part of our future. It’s currently one of the higher priority items of our advanced research and development area.’

Aside from developing concepts to rejuvenate existing lines such as shoes, equip-ment and clothing, Parker’s aim now is to devote time and resources to tomorrow’s game plan. For this he has set up a crack team called the ‘explore group’.

‘The explore group is way out there in what we call “deep space”. It’s a small group of Green Beret–Navy Seal-type operatives who are really big thinkers. And they are supported by a network of some of the most leading-edge technology specialists out there. We don’t talk a lot about this, but it’s a big deal,’ Parker says.

‘Together with the Massachusetts Institute of Technology, Nasa and digital companies like Philips, they are exploring things like smart products that can feed into networks,’ he continues. ‘One of the biggest items on their agenda is customi-sation and personalicustomi-sation.’

Parker sees a future for Nike in which, through personalisation, customisation and service, Nike’s product becomes more dynamic and more integrated with tech-nology. And though the question of Phil Knight’s succession is not clear, maybe it takes a creative to believe that there are places the brand can go that have not yet even been imagined.

Source: Michael Exon, Financial Times, 3 December 2002

Discussion questions

10. What does Nike contribute to the sport industry, should the company be seen as a marketing friend or a marketing foe, and what lessons can sport managers learn about marketing from the company?

11. If Nike becomes involved in selling services such as sports coaching, would you, as the manager of another business in the sport industry, see this as the inevitable

development of a powerful global brand signalling the end of your business? Or would you be more optimistic and see this as an opportunity for the development of your business? Discuss, indicating how different sport businesses might respond to the commercial challenges this might pose.

Jobber, D. (2001) Principles and Practice of Marketing, McGraw-Hill, Maidenhead.

The following articles add extra detail in specific areas:

Bradish, C. and Lathrop, A.H. (2001) ‘Girl power: examining the female pre-teen as a distinct segment of the sport marketplace’, Sport Marketing Quarterly, 10(1), pp. 19–25.

Fink, J.S., Galen, T.T. and Anderson, D.F. (2002) ‘Environmental factors associated with spec-tator attendance and sport consumption behaviour: gender and team differences’, Sport Marketing Quarterly, 11(1), pp. 8–19.

Hopkinson, G.C. and Pujari, D. (1999), ‘A factor analytic study of the sources of meaning in hedonic consumption’, European Journal of Marketing, 33(3/4), pp. 273–90.

Kwon, H.H. and Armstrong, K.L. (2002) ‘Factors influencing impulse buying of sport team licensed merchandise’, Sport Marketing Quarterly, 11(3), pp. 151–63.

Mason, D.S. (1999) ‘What is it the sports product and who buys it? The marketing of pro-fessional sports leagues’, European Journal of Marketing, 33(3/4), pp. 402–18.

McDonald, M.A., Milne, G.R. and Hong, J. (2002) ‘Motivational factors for evaluating sport spectator and participant markets’, Sports Marketing Quarterly, 11(2), pp. 100–13.

Real, M.R. and Mechikoff, R.A. (1992) ‘Deep fan: mythic identification, technology and adver-tising to spectator sports’, Sociology of Sport Journal, 9, pp. 323–39.

Recommended websites

The Olympic Marketing Structure: http://www.olympic.org/uk/organisation/facts/

structure/index_uk.asp

The Sports Journal (published by the United States Sports Academy:

http://www.thesportjournal.org

The Australian Sports Commission’s website on Sports Administration, Marketing and Sponsorship: http://www.ausport.gov.au/info/administration.htm

Visit www.booksites.net/chadwickbeech for links to these and other relevant websites.

Keywords

Behavioural factors; benefits; demographic factors; devoted fan; dysfunctional fan;

fanatical fan; geographic factors; local fan; needs; operational sport marketing; qual-ity; sport marketing plan; temporary fan.

Bibliography

Cobb, C.J. and Hoyer, W.D. (1986) ‘Planned versus impulse purchase behavior’, Journal of Retailing, 62(4), pp. 384–409.

Hunt, K.D., Bristol, T. and Bashaw, R.E. (1999) ‘A conceptual approach to classifying sports fans’, Journal of Services Marketing, 13(6), pp. 439–52.

Martineau, P. (1958) ‘The Personality of the retail store’, Harvard Business Review, 36, pp. 47–55.

Maslow, A.H. (1943) ‘A theory of human motivation’, Psychological Review, July, pp. 370–96.

Maslow, A.H. (1968) Toward a Psychology of Being (2nd edn), Van Nostrand, New York.

Maslow, A.H. (1970) Motivation and personality, Harper and Row, New York Sullivan, M. (2003) ‘Consumer attitudes towards sport marketing’, unpublished paper.

Bibliography 153

Overview

This chapter provides an introduction to the use of financial management techniques within sports organisations, broadly defined to include all organisations involved in the provision of participant and spectator sports. The chapter begins with a definition of the subject matter of sports finance leading on to the notion of sports organisations as engaged in the creation of value. The concept of financial value as the present value of expected future cash flows is introduced. The structure of financial statements is explained with the emphasis on how to use company accounts to analyse the financial performance of sports organisations. Attention then focuses on two particular valu-ation problems: how sports organisvalu-ations should use DCF analysis to value potential investment projects; and how corporate valuation techniques can be applied to deter-mine the value of sports businesses. This is followed by an examination of the factors influencing the optimal mix of long-term financing for sports businesses. This leads on to a discussion of how stock markets determine the values of publicly-traded sports

Upon completion of this chapter the reader should be able to:

■ interpret the behaviour of sports organisations as value creators;

■ understand the relevance of the study of financial management for sports organisations;

■ calculate financial value as the present value of expected future cash flows;

■ use company accounts to analyse the financial performance of sports organisations;

■ apply discounted cash flow (DCF) analysis to investment decisions in sports organisations;

■ estimate the corporate value of sports businesses;

■ determine the appropriate mix of debt and equity for the long-term financing of sports businesses;

■ understand the key drivers of share prices of publicly-traded sports businesses.