Case Study MS270

Sport Sector

 

Case author

Professor Christoph Rasche, PhD

Learning objectives

After you completed this course module, you will be able to conceptually solve holistic management problems within a case study of the sport industry.

Topic

Thee Red Bull corporation started as a minor player in the fast moving consumer goods industry, producing a caffeine and taurine containing energy drink that challenged the orthodox business logic of dominant incumbents such as Coca-Cola, Pepsi, and Dr. Pepper. Within a few years the Austrian-based Red Bull corporation managed not only to establish a new soft drink category, but became a pacemaker, game changer, and rule breaker with respect to entrenched consumer habits. Instead of adopting and improving market and product standards by means of imitation, benchmarking, and piecemeal product differentiation, Red Bull has proven capable of positioning the Red Bull brand as a cornerstone of a radical, risk-taking, and limit-transcending lifestyle philosophy. The unspoken brand motto is "Do not respect limits, constraints, and predefined lifestyle settings, but create new ones beyond mediocre mainstream habits." What the Red Bull corporation sells is not primarily soft drinks, but extreme attitudes towards life, as can be demonstrated by its sponsoring strategy. Red Bull is strategically aiming to benefit from a positive image transfer from extreme sports to energy drinks. For this reason the Red Bull Corporation sponsors athletes, events, and sports activities with a crazy, risky and trendy image.

Workload units 2
Reading extract Sport Sector Case Study

 

Some introducing thoughts on the sports industry

As long as we can remember, even back to the ancient times in Rome, sports have been a part of the international culture. It draws crowds of people to come out and witness the athletic ability of these impressive athletes. Since then, sporting events have evolved and have become a major revenue generator for any major city. That's why so many people study the sports industry because it's such a great generator of the income.

In 2005, the sports market generated between $44 billion and $73 billion across the different markets. The market has grown since then, and it continues to grow as more people catch the sports bug. The market has been on an upward trend since this time and has experienced a great period of growth in 2014. As more men and women get involved, the market has been growing at a steady pace.

Not only is sports fueling the industry, but the industry is also growing due to other products and services related to the sports industry. Sports bars, apparel, and paraphernalia are all considered a part of the sports industry. Even sports drinks are playing a role in the growth of this market. Any person who wants to get involved in the sports marketing industry can purchase any of the related products and contribute to its growth.

In general, the sports market consists of activities involving participation in the sport. Activities involving spectator sporting events and the number of people in attendance, and activities involving the media and spectator sporting events are all ways that this market has grown. All of these contribute to the growth of the industry.

For instance, in 2002, when the industry was studied, it was found that 35.5 percent of the revenues for establishments came from admissions, which comprised $4.6 billion in 2002. Thirty-seven percent of the revenues was generated from radio and television broadcast fees, which represents about $4.8 billion of the total market.

Golf, for instance, is a popular market that's attracting a lot of viewership. In the golf sub-industry, 57 percent of the revenues were generated from membership dues or admissions. While only 24 percent was generated from the sale of food and beverages.

The Fitness and Recreation Center sub-industry managed to generate 57 percent of their revenues from membership, which was about $8.6 billion. While spectator sports teams and racetracks contributed approximately $5.2 billion. These are just a few ways that sporting events will contribute to the overall growth of the market.

In the future, the growth of the sports market will depend entirely on the visibility gained through sports marketing. There are three main types of sports marketing including the advertisement of sports associations such as the Olympics, the NFL, and the Spanish Football league. The second is the use of sporting events, teams, and individual athletes. The second type of sports marketing involves the promotion of products involved with sporting events, individual athletes, and sporting teams. The third is the promotion of the sport to increase participation.

Each marketing strategy is different and will yield different results. Grassroots Sports Marketing is one of the most common ways that the public is solicited to become involved in the sports industry. Sponsorships is another way that sports teams seek to engage other business owners to get involved in the action. For instance, Nike may agree to sponsor a golf pro and help them improve their brand image. "Street marketing of sport" involves advertising through urban elements such as billboards and other methods. The Olympic Games, Super Bowl, and the Winter Olympic Games use this type of marketing effectively.

In addition to the Olympic Games and the Super Bowl, the other major generators of revenue are the FIFA World Cup and the UEFA Champions League. The Super Bowl is a massive sporting event that uses all types of marketing to support its services. Television, radio commercials, and other forms of marketing are used to advertise the event. The sponsor commercials are almost as important as the game itself because of the revenue generated from the event.

Marketing through sport has been around since the 1980s and has been quite effective. They use everything from clothing to equipment to advertise for the game. The Spanish Football league is was able to increase its level of involvement with the use of a Spanish bank by the name of BBVA Bancomer. Turkish Airlines also had a successful marketing strategy using celebrity players and sports associations. Kobe Bryant was one of the top NBA players used to support the Turkish Airlines.

The Mexican Football Federation (FMF) had a contract with Adidas, and the campaign was quite successful. Because of its success, Adidas continued to produce and design the uniform of Mexican teams until 2018. This company thrives because they provide the sporting apparel related to the sport. The Adidas campaign proved to be quite lucrative and effective in helping the company gain more exposure.

Gillette is another product that is often tied to sporting events. Celebrities such as Tiger Woods, Roger Federer, and Thierry Henry have successfully promoted and propel Gillette to a new height. Gillette purports that successful people should use their products to help them improve their appearance in whatever they do.

Social media is another forum where people are looking to promote the sporting industry. They can use social media to promote growth of sports companies and related products. Since Facebook and Twitter receive more than 1.6 billion visits collectively, this is a great way to gain exposure for companies.

The Baylor Rewards Program promoted its athletic department using Facebook and Twitter. The Facebook and Twitter pages will keep track of the posts or tweets made by these fans. Fans have an incentive to join or post because of the prizes they may receive.

The state of the sports market is looking upward for the best. If you want to learn more about the state of the sporting market, there's plenty to be found online and in other publications. Research more to find out what you need to know to be successful in the industry.

 

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