Enhancing Marketing Efficiency: The Importance of Segmentation in the Sport Industry

January 27, 2012

We had something going almost every day, for in our three and a half years in Cleveland every day was Mardi Gras and every fan was king…We gave a lot of gifts to other fans, too.  Among other things, we had 20,000 Princess Aloha orchids – all beautifully packaged – flown in from Hawaii in a special temperature-controlled plane.  They were presented to the first 20,000 women to come through the turnstiles.

(Veeck on Innovative Promotions)

1. Introduction to Segmentation – You cannot reach the level of success that Bill Veeck experienced in marketing without a solid grasp on the concept of segmentation.  In the sport industry, segmentation has been defined as the process of dividing a large, heterogeneous (lack of uniformity) market into smaller groups of more homogeneous groups with similar wants, needs, and/or demands.  In simple terms, this involves the ability to identify specific groups (e.g., college-aged students) of people with unique characteristics  (e.g., limited disposable income; interest in socializing) that coaches can target to be far more efficient in their marketing efforts.  While there are a variety of benefits realized through this process, the primary reason to focus on segmentation is because it gives marketers an opportunity to effectively deliver their product in a manner that is attractive to key groups of stakeholders.

2. The Need for Segmentation – Most of you are probably aware that the entertainment industry is more competitive than ever.  As a result, this creates additional pressure for sport marketers to develop an innovative product that is specifically designed for their key groups of consumers.  With this in mind, it is extremely important for sport organizations to identify segmentation strategies that will allow them to enhance the efficiency in their development and delivery strategies.

NCAA Olympic Sport Constraints: Program elimination continues to be a real threat for coaches in non-revenue, Olympic sports at the intercollegiate level.  Unfortunately, this is largely influenced by the “arms race” and the extensive spending on men’s basketball and men’s football in NCAA athletic departments.  When you combine this with the current economic recession, you have a recipe that is extremely dangerous for the sustainability of non-revenue, Olympic sport programs.  Thus, in addition to these unique challenges, the complexity of the entertainment industry demands that sport entities invest in marketing strategies that are designed specifically for identified groups of consumers.

3.  Condensed “How To” Segmentation Guide – There are several segmentation strategies that sport organizations use when attempting to market their product to key groups of individuals.  However, I am going to focus on three that have the potential to provide sport marketers with the foundation to understand basic segmentation strategies.  In addition, these concepts will also help coaches to enhance their marketing efforts moving forward.  These three segmentation strategies are based on the following areas: (a) Demographics, (b) Interests, and (c) Sustainability.  Each of these will be introduced below and discussed more in-depth in future entries.

(a) Demographics: The most common method of segmentation in the sport industry occurs when sport marketers make strategic decisions based on demographic information.  This is by far the easiest method to understand because you simply target groups of individuals based on background information like the following: age, gender, ethnicity, and geographic location.  For example, college age students (18-24) are often a primary target market for non-revenue programs because of their obvious interest in sports associated with the university.  However, it is also important to note that this group also has common interests that you may be able to capitalize on in your efforts.  As a group with limited income and a high interest in socializing with others, you can create online entertainment and ticket packages to meet the wants and needs of these individuals.

(b) Interests: The reality is that not all segmentation occurs when focusing on demographic information. In fact, from a non-revenue sport standpoint, it is entirely possible that some of the most effective segmentation decisions occur when focusing on the interests of potential groups of consumers.  For example, there are often individuals of all ages and income levels in the surrounding areas that have an active interest in the sport of wrestling. Because of this, coaches should certainly consider these types of individuals when developing their marketing plans.  However, these groups can be broken down more specifically based on demographic information to position the product effectively (e.g., youth wrestlers 5-14, high school wrestlers 14-18, former wrestlers 18-24).  In this case, each of these groups has unique interests that you need to respond to in order to maximize your marketing efforts.

(c) Sustainability: This method of segmentation is one that is not common in the sport industry.  In fact, I would say that it may be unique to non-revenue sport programs looking to improve their chances of longevity within an NCAA athletic department. The reality is that there are groups of individuals that are critical to ensuring that your program is safe moving forward.  As you might of guessed, this involves athletic administrators who decide how much support that your program is provided.  Because of this, you should consider targeting groups that can support the mission of your athletic department and institution.  While some of the previous strategies (Demographics and Interests) may indirectly overlap here, this deals more with the specific groups that are critical for you to enhance your sustainability. Thus, it makes sense that your senior administrative staff is one of your primary segments (see entry on “Marketing to Your True Target Market“) .

4. Key Segmentation Criteria – Before you make a final decision on the key segments that you will target in your marketing plan, it is important that you consider some criteria so you are efficient with your actions. Before you use your time and energy, you should always answer the following four questions.  If you can say yes to each of these questions, then move forward with a plan to market to the specific segment.

Accessibility: Will you be able to easily reach the group? For a segment to be worth your time, you must be able to reach them with your messages.  More importantly, you must be able to do this in a manner that makes sense for your organization.  In my mind, this probably means reaching them with no a reasonable cost to your budget.  

Substantiality: Is group significant enough to go after? I feel confident saying that most programs have enough to do that they do not want to waste their time.  To ensure that you don’t do this, consider whether the potential group is significant enough to support the time and energy you will invest in attracting them.

Responsiveness: Will group respond to your efforts? It is important to consider whether the potential group will be interested in the product that you are offering. Equally important, you must really think about whether they will respond to the marketing messages that you are planning on sending.  If they will not, then you should not waste your time.  If they would say yes to your product and no to your message, then it is time to come up with a new delivery strategy 🙂

Retention: Can you build them into a loyal follower? The ultimate goal of each coach should be to turn individuals into engaged fans of their program.  If your time is valuable, then you need to ask the question of whether or not your potential group can be retained as repeat customers.  

5. Take Home Points –  There is very little doubt that much of Bill Veeck’s success in promotions (and marketing) came from the ability to segment in his surrounding marketplace.  I believe that this is something that will hold true for sport marketers (and coaches) as well.  If you want to build your organization, you must spend the time to strategically position your product for key groups of individuals.  In addition, once these groups have been identified, there needs to be an emphasis on continually findings ways to improve your marketing so you retain and build your fan base.  The segmentation series will be designed to help coaches in this area.

“Excellence is the ability to improve the quality of what it is that you have to offer on a daily basis” (Rick Pitino)

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About ELSMarketing

ELSM is a company that specializes in the development and implementation of innovative marketing plans for sport organizations, businesses, and programs. By focusing on the client’s goals and expectations, we strive to develop strategies that will build the brand of the entity in a way that will ensure future success. The bottom line is that we are committed to working with entities who are looking to take themselves to the next level from a marketing standpoint. While there are a variety of strategies that we implement to achieve this, it starts with the values we have in place for our company. Here at ELSM, “Innovation is the Expectation!”
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One Response to Enhancing Marketing Efficiency: The Importance of Segmentation in the Sport Industry

  1. Pingback: Back to the Basics (Part II): Core Commandments in Sport Marketing | elitelevelsportmarketing (ELSM)

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