Customer-Based Brand Equity in the Team Sports Industry - Case Study Example

Strategic Marketing Plan of SportUNE Name Institution Strategic Marketing Plan of SportUNE Executive Summary The increasing interest in the sports has made the sector to be considered a big business. In the recent times, sporting activities have increased across cities across as more people want to engage in sports regain fitness or just as fans. The situation has provided more opportunities for companies to expand their market and even products. Therefore, this report will analyze SportUNE’s plan to expand into Sydney sport sector and its intention to introduce new products such as jerseys, balls, under armour, bib, and footwear into the market. In the discussion, the report outlines different stages of the Product Life Cycle which relates to introduction of new products into a new market. The research will also recommend various strategies can best suit the internal capability of SportUNE in its expansion plans. Such strategies include direct investment and strategic alliance as the best entry strategies, pioneer and market leader over follower as the best positioning strategies, functional organizational structure and likelihood to recommend to friends as the metric of choice. Table of Contents Strategic Marketing Plan of SportUNE 2 Executive Summary 2 Table of Contents 3 1.0 Introduction 4 2.0 Overview of Sydney’s sport Industry 5 3.0 Product Life Cycle of SportUNE’s New products 6 4.0 New Market Entry 7 4.1 Direct Investment 7 4.2 Strategic alliance 8 5.0 Pioneer or a Follower Strategy 9 6.0 Market Leader or a Follower 10 7.0 Shake-out, Mature and Declining Market strategies 11 8.0 New Economy Markets 12 9.0 Organizational Structure 13 10.0 SWOT analysis 13 11.0 Marketing metrics 14 12.0 Conclusion 15 13.0 References 15 1.0 Introduction In the 21st century, sports have become a big business across the globe. It is interesting the Sports are now playing a significant role not only on creating jobs but also contributing to country’s GDP, economic regeneration and wealth creation (Ratten & Ratten, 2011, p.614). Its constant contribution to economy has been has been boosted by then fact that it is a wide area consisting of professional leagues, health and fitness, college sports, sports medicine, marketing, sponsorship, broadcasting, retail merchandise, sports betting, sports facilities, food and beverage sector, video games and projected to one of the top 5 industries in the world by 2030. Klayman (2009) claimed that between 2010 and 2015, world sport sector grew to $145.5 billion. It is such growth that University of New England spotted besides Education and ventured into sports marketing through Sport UNE Business. The institution management believes that sports not only compliment education but it business which can be used to generate extra income. However, growth of other sport marketing companies threatens the survival of SportUNE. Therefore, this report recommends market and product expansion to Sydney so as to increase its dominance and competitive advantage. In addition this report will identify and describe Product Life Cycle phases, entry strategy, Pioneer or a Follower strategy and organizational structure which that relate to the new idea for SportUNE. 2.0 Overview of Sydney’s sport Industry The History of Sydney Australia depict that the sport passion were contributed by the earliest immigrants into that city (Macey, 2007). However, such influence and passion were restrained by situation of lack of adequate and well equipped facilities. Wade (2012) contended that the earliest sporting which dominated Sydney consist of wrestling, boxing and horse which started as early as 1810 taking place at Hyde Park. Horse racing is still popular to date with events like Golden Slipper Stakes drawing a large number of people. Later other sports including rugby, soccer, baseball, basketball, cycling, hockey, golf, swimming, tennis and badminton gained popularity among locals and foreigners (Wade, 2012). Rugby first began is hosting 9 out of 16 clubs playing in National Rugby League. Sydney is home to Western Sydney and Sydney FC which play in the A-League; the highest soccer league in Australia. Cashman (2008) asserted that in the past, Sydney has hosted matches involving National Football team of Australia. Other teams in Sydney comprise of Sydney Kings and Sydney Uni Flames which take part in Basketball league, Waratahs and Sydney Bears which compete in the Hockey League (Cashman, 2008). SportUNE started as University sport program offering facilities and sporting activities to students hence this discussion cannot be complete without discussion universities in Sydney. In its market and product expansions, SportUNE can target the public universities within Sydney such as University of Sydney, University of New South Wales, the University of Technology, Macquarie University, Australian Catholic University and the University of Western Sydney. Other private Universities also offer good market for SportUNE to expand its operations and products. Besides sports, Sydney also has other activities related to sports such as tourism. Sydney is a coastal city attracting several tourists annually (Cashman, 2008). Sport tourism in Australia is rapid growing sector as numerous tourist come to the city to watch various sporting activities. In the process, they put jerseys representing teams they support. Expanding into sports products such as selling jerseys and nets would enable SportUNE to increases its revenue. 3.0 Product Life Cycle of SportUNE’s New products The SportUNE Company adopts Product Life Cycle as one of the strategic plans that is critical but focuses mainly on its future visions. Its future vision is to ensure that they have identified problems that may hinder the companies’ life. Generally, the company tackles some of the planned changes by introducing some resolutions and thereby having solutions for the problems. Also it tackles its historical services by introducing sales books for comparing product sales. Having passed through several stages, the future worth for the products is calculated so as to be able to serve the purpose of the business. Kotler and Keller (2013, p.107) stated that Product Life Cycle has for stages which can guide the managers in product performance. Stage one entails launching of new products in the market by the SportUNE. Usually consumers have no information about the existence of the new product. Therefore the company ensures that they have a locally advertising group. Kotler and Armstrong (2010, p. 67) argued that the advertising group ensures that the new product is accepted in the market and by many consumers. According to Bruiyan (2011, p.748) stage two involves the companies’ growth in the new environment. Due to the rapid growth of new members which results to the expansion of the group, the SportUNE grows immensely. Bruiyan (2011, p.753) maintained that stage three involves varieties of shakeouts forcing tough competition in the market. Increased in competition are as a result of new products introduced in the market therefore forcing the organization that have the same product to reduce their prices. The final stage involves the adaptation of the company to its new changes in the environment, for instance the reduction in prices (Laurie, Doz & Sheer, 2006, p.84). Also on how Sport UNE maintains its growth dependently and how to retain its workers when its low season 4.0 New Market Entry High competition in the local markets has forced companies to look for new markets both domestically and internationally (Hill & Vincent, 2006, p.217). However, companies do not have to wait for competition to intensify but rather use market expansion as a strategy to gain competitive advantage. Hill and Vincent (2006, p.221) held that new market entry is often marred with risks which are political, economical and social in nature hence companies should evaluate all the entry strategies so as to get the best. This report recommends direct market entry and strategic alliance as the best modes for SportUNE to expand its business and product into Sydney market. 4.1 Direct Investment In this strategy, Cui and Lui (2005, p.29) argued that a company expanding into a new market can opt to set up a new outlet or acquire a company which is already in existence. Direct investment is suitable because this market and product expansion by SportUNE is taking place within local settings. The process involves transferring of resources like capital, personnel and technology. Direct investment strategy offers various advantages to the firm such as full control of operations (Spirig, 2011). AS a company which expand and introduces new product, this strategy enable it to protect its patents, trademark and knowledge about the product which the company intend to use to gain market advantage. In addition, Spirig (2011) stated that the company will also benefit from control of marketing activities, technology, distribution practice and increased profits. Ratten and Ratten (2011, p.614) argued that to avoid risks associated with the new market entry a company can use acquisition because the acquired business already have some presence and market share within them market. SportUNE can also decide to buy the strongest competitor in the market so as to reduce competition in the market. Nonetheless, direct investment has its drawback though they are few. The cost of establishing a new business is expensive and takes a longer time (Christoph, 2008). Therefore SportUNE must have enough capital and have effective project management team. 4.2 Strategic alliance In strategic alliance companies corporate through sharing of various resources like technology, knowledge, research, equity participation and joint venture so as to reduce new market entry risk and attain effectiveness. Christoph (2008) posited that strategic alliances provide a platform upon which firms can expand their geographic reach, access new markets, complement core competence and skills, and get advanced technology. Cui and Lui (2005) affirmed that one of the characteristic of strategic alliance is that is it often focuses on developing new products and even technologies as opposed to marketing the old ones. This characteristic suits the plan of SportUNE of developing and distributing new products especially selling jerseys, balls, under armour, bib, net and footwear to consumers in within Sydney. Sharing technology decreases the need to purchase technological devices. Another advantage of strategic alliance is that it reduces economic risks and enhances access to intentional markets (Christoph, 2008). Strategic alliance can make SportUNE divide political, economic and social risks. Some projects like market and product expansion can have high risks and to spread such risk the company can partner with established businesses to reduce such risks. SportUNE highly need technology to manufacture and markets its products and strategic alliance provide this opportunity for the company to share and benefit from its partners technology. 5.0 Pioneer or a Follower Strategy Kaličanin (2011) claimed that today, one of the critical decision facing leaders in the strategic management practice is the approach and time of entering new markets and developing and launching a new product and entering. In normal cases, the manager has two options which they can use to expand their market and products including a pioneer or a follower. These two strategies have their merits and demerits to the manager and company. However, Kaličanin (2011) opined that pioneers usually have higher advantages in terms of profitability, long business life and great market share which heavily rely of internal and external environment of a firm. Therefore the report advises to adopt pioneer strategy. Min, Kalwani and Robinson (2006, p.21) held that the choice is attributed to the fact that first entry into the market often rewards pioneers with the first reward is about getting the largest share of the market. Such rewards reduce with more companies getting into the market hence could heavily affect a follower in terms of competition. In addition, as Gao and Knight (2007, p.373) contended SportUNE needs to embrace a pioneer strategy because change in business environmental certainly presents opportunities to the first-movers (pioneers) which they can capitalize to dominate the market further. SportUNE has been a pioneer in offering sport facilities and activities of its kind to students and staff at University of New England. Thus, it has the capability, resources and organizational skill to capitalize on the new opportunities by marketing and selling new products and service to Sydney consumers. Gao & Knight (2007, p.376) stated that pioneers normally have higher demand for their new product in the market because they come with unique product before anyone else. The statement depicts SportUNE status because of their unique and quality service which is rare in Australian cities including Sydney. In fact sporting culture in Sydney has been hampered by lack of proper facilities. 6.0 Market Leader or a Follower As the names suggest a market leader a company which dominates the industry while a follower is one which waits to see the mistake of leader to avoid them (Gilligan & Wilson, 2009). SportUNE needs to adopt a market leader strategy when expand its market and product dues to benefits which comes with it. Mittal and Swami (2004, p.16) argued that a market leader often has a considerable share of the market and a wide range of distribution networks. The fact the SportUNE business is unique makes it a market leader in sports marketing. The current status and its intention to introduce new products into Sydney market enable it to gain competitive advantage and prolong its dominance even it’s the new market. Claiming the top spot in the market makes the company become the first choice for consumer. According to Suarez and Lanzolla (2007, p.379) the status is achieved due to the fact that a market leader has more credibility compared to a follower. Adopting a follower strategy is not good for a business because it means it has to wait for a leader’s mistake to capitalize on a situation. From a big perspective, it implies that a firm will not be innovative but will be happy to sit and competitors (Gilligan & Wilson, 2009). 7.0 Shake-out, Mature and Declining Market strategies A company’s growth can be depicted in a graph to show how its products have undergone transition to where they are. Bruiyan (2011,p.749) said that the graph can be described as the product life cycle, and it contain stages including Shake-out, Mature and declining. The company can adopt various market strategies to maintain a good moment in its operations. The new idea of expanding into a new market (Sydney) and introducing new products such as jerseys, footwear, new, under armour and balls means the company is at introduction level. However, this stage will come later after sometimes in the market and will require the company to respond in appropriate way that does not reduce their chances of competing (Kotler & Armstrong, 2010). Laurie, Doz and Sheer (2006) postulated that maturity is marked with several competitors getting into the market hence reducing sales. Since there are many alternatives in the market consumers will have a choice to purchase at SportUNE or at the competitors shop. In this process, SportUNE must defend its market share. The report advises the managers to continue enhancing their products to differentiate it from the competitors. In addition, SportUNE can lower their prices to attract more customers. Declining phase is marked by saturation of the market (Laurie, Doz & Sheer, 2006). Meaning most customers have purchased the company’s product and are have new demands for other products. If this is the case for SportUNE then developing new products will help the company increase the demands for its products. The company can also switch to inexpensive manufacturing methods such as outsourcing of product of Jerseys for survival purpose. Bruiyan (2011, p. 56) Posited that Shake-out follows decline and is characterized by confusion in the market because of stiff competition which gets rid of the weaker market players, and living just large competitive firms. The condition calls for SportUNE to embrace effective marketing which can ensure it acquires large customer base which will turn into large profits. Attaining market leadership features will ensures SportUNE survive shake-out (Kaličanin, 2011). 8.0 New Economy Markets New markets present various challenges to new company. One of such risks is and associated with economic issues such as slow growth, tax, interest rates, exchange rates, population growth, economic growth and technology. On the other hand, in some markets these challenges have become opportunities which companies ought to devise strategies on how to cope with (Bosworth & Triplett, 2007). For instance, new economy market is now typified with high growth where firms now focus on research and development, and technology for their own growth and that of general economy. Cali, Ellis and te Velde (2008) claimed that Firms operating new economy are heavily involved in the internet and biotech industries SportUNE is one of such companies which can find it easy to cope. This is because the company focuses on product development and technology which are its strategies for competitive advantage and growth. Just like other companies which produces sporting product such as Nike, Puma, Umbro, Adidas and Under Armour, SportUNE uses website and social media to market its product and service to a wide market (Chadwick, 2007b, p.115). As the new economy move from manufacturing based to service-based, companies has been forced to concentrate on service delivery. As the company introduces new products, their customer service and focus on technology will determine success. 9.0 Organizational Structure According to Jacobides (2007) organization is vital for a firm’s success. In expanding into a new market and launching new products, SportUNE needs to move from flat organization to function because of more duties and departments. A functional structure is one which is made of activities like the task allocation, organization and supervision. This structure divides the organization into departments such as accounting, marketing, human resources and production and defined task (Ngai & Pissarides, 2007, p.432). In that way it will enable smooth run of SportUNE as it grows to a larger company. When tasks and duties are divided into functions and various tasks allocated to a department, there will be no role conflict. In fact, it promotes specialization and professionalism. Jacobides (2007, p.462) claimed that a company that applies functional structure often bring in place teamwork so as to increase pace of projects. SportUNE intention to expand into Sydney and get new products into the market is a complex task which requires teamwork, thus making functional structure an ideal one. 10.0 SWOT analysis Sports have been found to offer several opportunities to people, company and economy of the country (Suarez & Lanzolla, 2007, p.383). However, companies which operate sports business are increasing hence intensifying the competition. Therefore, SportUNE must review its internal environment to match the external one so as to sustain competition and change. SportUNE boasts of its strengths as a market leader in Sport’s facilities and activities in University of New England and whole of Australia. Kotler & Keller (2013, p.234) state that effective business practices needs maximizing the strength of the firm, while reducing weakness and capitalizing on its opportunities. Today opportunities are many in Sydney sport sector as more teams needs jerseys, tracksuits, facilities and marketing. Expanding into this business segment will not only offer competitive advantage to SportUNE but also more revenues. 11.0 Marketing metrics Patterson (2009) claimed that marketing metrics is an important aspect for managers in their marketing endeavors as they scramble for the largest share in the market. Marketing metrics help managers measure their marketing performance in the industry. Marketing metrics mean the measure used to gauge companies customer satisfaction performance (Mosahab, Mahamad & Ramayah, 2011, p.76). As a company which introduces new products into the Sydney sports market, there are several marketing metrics it can use to gauge its performance including customer expectations versus perception, likelihood to recommend to friends and customer experience versus ideal experience among others (Beard, 2013). SportUNE high use likelihood to recommend to friends as the metric of choice to measure effectiveness of its products. This metrics shows the perception of how your clients are happy with service the company provides. Theories drawn from researches support the reality that if the clients are keen to put their repute to recommend your business, product and service, then it implies they satisfied and trust your customer service. Net promoter score can also be used to conduct this rating of satisfaction (Beard, 2013). Laura (2009) claimed that customers who have experienced good customer service at the facility have recommended them to their friends. 12.0 Conclusion Sport is global business activity which has become entrepreneurial of its kind. Sport business and marketing has been on the rise due to numerous opportunities which its offers. Research claimed that today, sport sector is worth nearly $142 billion (Klayman, 2009). With such opportunities, new products are introduced in the market frequently to take advantage of the market. This report has described and discussed the different stages of Product Life Cycle the new product of SportUNE goes through in the market to become a success. In addition it has analyzed various ways a company can enter new market with minimal risks. The mode and strategy of entry solely rest with the manager and if done inappropriately. At the moment SportUNE has remain dominant in offering sport facilities and activities’ a situation which has improved its brand. However, with competition, this report advises the management to always adopt product development and diversification to maintain its position and market share in the market. 13.0 References Bauer, H.H., Sauer, N.E., & Schmitt, P. (2005). Customer-based brand equity in the team sport industry. European Journal of Marketing, 39 (5/6), 496-513. Beard, R. (2013).Customer Satisfaction Metrics: 6 Metrics You Need To Be Tracking. Retrieved 23rd September 2015 from http://blog.clientheartbeat.com/customer-satisfaction-metrics-6-metrics-you-need-to-be-tracking/ Bosworth, B. P., & Triplett, J.E. (2007). Services Productivity in the United States: Griliches’ Services Volume Revisited, eds.” In Hard-to-Measure Goods and Services: Essays in Honor of Zvi Griliches. , ed. Ernst R. Berndt and C. R. University of Chicago Press. Bruiyan, N. (2011). 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