Sports Management in Tough Muddy Pty Ltd - Research Paper Example

Individual Consultancy Report Name: Tutor: Course: Date: Table of contents Table of contents 1 1.0 Problem definition 2 2.0 Literature review 2 2.1 Introduction 2 2.2 Sports event marketing 3 2.3 Conclusion 4 3.0 Data collection and findings 5 3.1 Melbourne Tough Mudder marketing options 5 3.2 Justification 5 3.3 Social media 6 3.3.1 Advantages 6 3.3.2 Disadvantages 6 3.4 Television ads 6 3.4.1 Advantages 6 3.4.2 Disadvantages 7 4.0 In-depth action plan 7 4.1 Action plan to implement the problem 7 4.2 Advantages and disadvantages of event tickets 8 4.2.1 Advantages 8 4.2.2 Disadvantages 9 4.2 Meeting client requirements 9 References 11 1.0 Problem definition Tough Muddy Pty Ltd is an organization tasked with planning and managing the Melbourne Tough Mudder 2015. In Melbourne, the event will be held on 17-18th October 2015. The key stakeholders are participating teams, sponsors, fans or spectators, Goldfields Local Government, Journalists, St. John Ambulance, Fair Work Australia, and Emergency Services and contractors such as Carpenters, Builders and Plumbers. Local sponsors are Coates Hire, Garmin Australia and Bosch Blue Power Tools, Soldier On and Under Armour. Tough Mudder was conceived to test the physical and mental strength of participants by going through rigorous obstacles. Although the organization is popular, there is little awareness among the fan base and a number of participants especially in Australia. This implies that the revenue collected remains low and may not sustain the organization in the long-term. Despite the enthusiasm among current participants of 20-35 years, actual marketing efforts will need to increase this number by 50 percent in the next one year. This is because the organization is facing stiff competition from other extreme sports providers who target same customer segments. Competitors are offering similar services but at a lower cost may make it difficult for the organization to gain entry into the fan base and market share. Tough Mudder Pty intends to employ aggressive marketing strategies to raise its revenue in 2015 to AUD$4.31 million to facilitate the sporting event. To do this it will have to target a fan base and participants to at least 20,000. The company will require a greater revenue base because of increasing expenditures and the desire to improve the organization brand around the world. Increase in participation will also require more space and workers such as security and support staff. 2.0 Literature review 2.1 Introduction The aim of this literature is to review various secondary sources such as journals, books, articles and magazines on sports event marketing. This review will argue that marketing strategies are critical in successful sports brands and sustainability. The review will discuss and critique various concepts, event management practices and theories that are relevant in sports marketing. 2.2 Sports event marketing A sports event concept of consumer behavior is critical in understanding sporting event management practices. Behavior influences the decisions that buyers will have to make in order to consumer a specific sporting event. The value of this concept is documented in a range of literature (Parent & Smith-Swan, 2015; Choi, 2009; Candimer and Zalluhoglu, 2012; and Salman et al., 2014). This suggests that consumer behavior concept is vital in understanding group and personal factors that influence potential and current consumers hence the need to retain them through marketing strategies. Salman et al. (2014) observes that sports enthusiasts can make impulse purchase where promoting factors to shopping enjoyment result from fun identification, in-store marketing efforts and money availability. Although Candimer and Zalluhoglu (2012) found that sport had no relationship with consumer expenditures, they did agree that the degree of participation in sport was positively related to sport related expenditures. This implies that Tough Mudder events have expenditures can be proportionally be offset by increased participation. Moreover, overall sport spectator involvements and levels of expenditures were influenced by reference groups, involvement opportunity, and fan identification (Choi et al. 2009). Consequently, it can be argued that behavior influence individuals to reach decisions of buying sport and sport related merchandize. While the decision-making process is influenced by behavior, Funk and Pritchard (2006, p.15) argues that it is the development of marketing communication that enhances customer experience and simplifies that complexity of participation. Nicholson et al. (2015) argues that sporting events should be provided with competition information screens, Wi-Fi internet connection, and television in a mixed zone depending on the scope and size of the event. According to the theory of involvement staging, individuals get involved in sport through allegiance, attachment, attraction or awareness (Funk & James, 2001). Parent and Smith-Swan (2015, p.110) observe that strategic use of online communications is one of the ways in which event organizers to alter the behavior of consumers. This suggests that Tough Mudder sports marketing action should be directed to selection and evaluation of key target markets and use of marketing mix and application of information systems to create awareness. At an early stage, achieving event awareness and coordinating the program are time to occur simultaneously as the event begins (Parent & Smith-Swan, 2013). The concept of marketing communications is essential in the marketing and management of sports as it entails product promotions, sponsorship and the mass media. Broad range of literature has been provided in this respect (Abrahamson et al. 2003; Shimp, 1997, Brassington-Pettit, 2000). Marketing communication focuses on letting individuals to know how a sport product or service can yield positive outcomes to the extent that it restores balance (Shimp, 1997). Communications in sports marketing not only attracts participants and spectators to the sport but also raises revenue through investment and sponsorship. Sponsorship opportunities use the event to promote various industrial and products consumed by both participants and spectators. This implies that Tough Mudder sports events offers benefits and opportunities to individuals and organizations that fulfill their needs not found in the wider marketplace. While event marketing occurs through specific events, Abrahamson et al. (2003) agrees that sponsorship achieves awareness and other multiple opportunities. It has been observed that the widespread appeal for sports across lifestyles, areas and all ages is the reason for including sports sponsorship into the promotional mix. Brassington-Pettit (2000) supports this view in that sports and sporting events sponsorship may still be cost effective even if the actual sponsorship cost remains high. As a result, it can be argued that marketing communications through sponsorship or event marketing delivers intended messages to audience by at varying degrees. Finally, branding concept is crucial in sports event management practices as a way of giving distinctive identification. The value of this concept is documented in a variety of literature (Pedersen, 2004; Lynn & Close; and Willmott, 2003). A brand name or a physical product is the element that can be promoted in sports marketing. Wilmot (2003) notes that brand awareness can be increased through action of sponsors through opening new markets, launching new products and services. Brands not only direct behavior patterns and create imaginations among consumers, but also give an impression, image and position of the organization or event (Lynn & Close, 2011). Pedersen (2004) argues that a strong brand provides a positive demarcation of offerings from competitors and transfers the brand to new products. As a result, it can be argued that a strong Tough Mudder brand protects the organization from impact of competitors and crises. 2.3 Conclusion In conclusion, it can be seen that consumer behavior, market communications and branding affect the performance of an event or an organization. This indicates the marketing is critical to the success of Tough Mudder Pty and as a result, more aggressive marketing strategies such as new ticketing packages to target 80 percent of 20-35 year olds will be required. 3.0 Data collection and findings 3.1 Melbourne Tough Mudder marketing options Tough Mudder Pty Ltd faces challenges of reducing marginal revenues and stiff competition from rival sports providers. To overcome this challenge, a secondary search of information was undertaken to obtain three viable options to marketing. The options were new ticketing packages (online), Social Media and TV ads. 3.2 Justification These options were chosen because they represent both traditional and new media in advertising needed to market Melbourne Tough Mudder 2015. From the secondary search, television is a popular traditional advertising platform while social media is a new form of networking in a technological space (Parent & Smith-Swan, 2013). On the other hand, event tickets are an emerging advertising media can be exploited (Reese, 2012) to the benefit of the Tough Mudder event. Tough Mudder will communicate with the public while promoting sporting events in order to maximize revenue from supporters and spectators. One-off events such athletics, extreme sports and golf tournaments demand that organizers use the television, radio and press to build awareness, excitement and anticipation (Nicholson et al. 2015). This implies that television ads can bring the required awareness to spectators and participants. Nearly, people of all ages watch television and are exposed to various events and games. Social media such as Facebook, YouTube and Twitter are common networking sites that appeals to the young generation. It is one of the potential platforms to market the event with minimal cost. Social media messages can reach millions of audience around the world within the shortest time. This makes social media a preferred channel when targeting global audience. On the other hand, tickets not only raise revenue but also brand the organization and communicate the specific details of the event. This option was chosen as a marketing strategy to raise revenue and create awareness among the participants and spectators regards the Melbourne 2015 Tough Mudder games. It is evident that sports marketers often exploit all communication avenues to reach the target audience such as word-of-mouth, promotions and social media. Moreover, television communicates financial consideration, success of the team and hedonic needs such as excitement. On the other hand, social media depicts the feelings and thoughts of both participants and fans. Funk et al (2007) suggests that communicating the benefits of the sport product and its specific attributes requires advertising and selling techniques. Melbourne Tough Mudder 2015 can still adopt these options but the benefits of online tickets are greater than costs as compared to using the television and social media. Creating the realization that the sport object exists is by enticing an individual to search and trial by increasing the level of awareness through traditional forms of marketing. Parent and Smith-Swan (2013, p.109) argue that large events can run on inflexible and tight budgets and cause limitations to both communications and promotional mix. In such cases, the event organizers will often be left with other avenues to exploit such as online social networking, sponsor leveraging and unpaid media visibility. 3.3 Social media 3.3.1 Advantages Social media has the power to connect people without the need for long-distance calling. It is able to connect people informally to ask questions, share links, post news and discuss ideas. The channel provides for open communication that leads to enhanced delivery and discovery of information (Funk et al. 2007). Social media is not only an effective recruitment tool as it targets a wide audience but also minimizes use of advertising to improve client base and business reputation (Pedersen, 2011). Moreover, it directs people to specific websites, delivers communications, implements marketing campaigns and expands market research. 3.3.2 Disadvantages Social media is not only a poor replacement for face-to-face contact, but also has limited regulations and rules for communication makes people to abuse the platform. Besides, it is vulnerable to identify (ID) theft as hackers launch span and commit fraud and is difficult to measure commitment especially among sports fans. Sometimes, people can fall prey to online scams that look genuine (Parent & Smith-Swan, 2013). Unchecked social media may result in potential loss in productivity as people become busy updating profiles. 3.4 Television ads 3.4.1 Advantages Television is flexible and convenient as it is popular and message reaches national and international viewers (Parent & Smith-Swan, 2013. The ads can be emotional and memorable when different text, video and audio are combined and it can have strong and persuasive messages due to interaction of motion, drama, sight, sound and color. Very substantial channel to convey an advertisement as TV ads are appealing with a lot of glitz and glamour linked to production of TV commercials (Nicholson et al. 2015). Since it is easy to reach target audience such as youth, professionals, insomniacs and sports fans through ads on sports channels, the mass coverage can easily reach millions of viewers in Australia and the world. 3.4.2 Disadvantages Television poses the difficulty of measuring the extent of viewership and has limited length of ad clutter and exposure due to minimum amount of airtime. Consumers find ways of avoiding commercials as they deem the ads as intrusive. Unless intrusive enough to draw attention, viewers may not see a commercial being aired (Reese, 2012). They can block ads in the current technological innovations such as TiVo and V-chip. Television cost supersedes internet, newspaper, magazine and radio. Quality commercials range in AUD$220,000 to $1.5 million. A 30 second slot of airtime cost can cost $AUD250, 000 - $450,000. These prohibitive costs may make ads fleet and brief. There is huge competition not only from other ads but also from the viewer environment. Lack of station loyalty will make viewers to change channels more often. Moreover, viewers may not see the commercial unless the message is repeated after an interval of time 4.0 In-depth action plan The third and the chosen option to market are new event tickets. These tickets are placed on a smaller scale but targets specific markets and audiences directly. Tough Mudder Melbourne 2015 will pay to place the promotional coupon on ticket stubs. This is done in the hope that the spectators and fans will notice the small ads and lead to revenue and brand loyalty. These ticket ads are involving at all stages such as distribution and printing, campaign planning, and design and artwork (Hoye et al. 2015). They can be place in the sport event tickets, entertainment joints, public transportation, planes and car services. 4.1 Action plan to implement the problem What: Melbourne Tough Mudder 2015 intends to raise revenue in 2015 of AUD$4.5million from the sporting event. To do this, it will distribute new ticket packages to target a fan base and participants of 20,000 from the current 10,000. The target market for these tickets are aged 20-35 years of which majority is professional employees. Their incomes are in the range $10,000-18,000p.a and love extreme sports and hiking. The estimated population is 200,000. How: New ticket packages will be created specifically for Melbourne Tough Mudder 2015. The planning and design will be done by the Tough Mudder staff. Immediately after, some ad printing company in Melbourne will be hired to print tickets which will be issued 2 months prior to the start of the event. In addition, a promotion code will be created in the Facebook page so that a customer will use the code to get a winning prize of the ticket. The ads will be ready by 28th August 2015 for distribution from 1st September. Since many staff does not know how to operate the promotion codes in the Facebook website, there will be a two weeks training on how to use the software. The training session will be conducted on 15-29th of August 2015. The new tickets will have automatic entry into a draw of which winners will grab some prizes. Winning prizes include Flat screen TVs, Smartphones and skates. Each event ticket will cost $219 online. Expected revenue = 15,000 attendees × $219 = $3,285,000. This will run alongside the other promotional tickets of $199 and $209 (with registration protection) for headband, free beer, finisher T-shirt and free photography. Expected revenue = 5,000 attendees × $205 (average) = $1,025,000. Total revenue expected = $4,310,000 These tickets will be distributed online, resorts, airports, railway stations and car parks in Victoria during in September 2015. Besides, when one buys 5 tickets at once, they will get one ticket free. When: 1st September -10th October 2015 Who: Melbourne Tough Mudder 2015 staff and management Where: Melbourne Why: First, the company faces stiff competition with other extreme sports providers and must act to edge out strong competitors. Second, it intends to increase its revenue base from the growing fan base and participating teams. Purchases, especially of event tickets, under Freudian theory are a reflection of consumer personality in terms of ego, super ego and identity (Parent & Smith-Swan, 2013, p.112). Tough Mudder events taps into a value system by promoting positive values such as friendship and respects, a key to Tough Mudder experience. 4.2 Advantages and disadvantages of event tickets 4.2.1 Advantages Melbourne Tough Mudder 2015 will be able to account for each ticket sale and revenue to the organization. The ad on the ticket will also bolster the promotion undertaken by the company as each spectator will visually see the advertisement. The organization will never lose access of the audience as the level of attendance keeps going up (Parent & Smith-Swan, 2013. Given that it involves winning prizes such as TV sets and smartphones, it is beneficial to the consumer. When one buys the ticket, they enter into a promotion and opportunity to get a discount. It is also easy to hit on the target audience online. Tickets can be distributed online at minimal cost. 4.2.2 Disadvantages After being used at the check in or gate, the ticket may lose importance given that consumers will only need the ticket before entering the Tough Mudder event. The ticket may easily be lost alongside the advertisement as consumers care less of the ticket. Winners of prizes must be present at the venue to receive the prize (Reese, 2012). Only a handful of people will benefit from the prizes. The channel is vulnerable to hackers and fraudsters. 4.2 Meeting client requirements The event ticket ads and sales are two descriptions in one item. The event ticketing strategy will not only raise AUD4.5 million required but will also leverage the Tough Mudder brand. The pricing of tickets will be sold for $219 online and $209 and/or $199 for the physical paper distributed in resorts, airports, railway stations and car parks. For the physical tickets, Melbourne Tough Mudder 2015 will hire event ticket printers from Melbourne and negotiation will be based on price. Online event tickets: To sell tickets online, a support team with Tough Mudder will be trained for two weeks. They will be tasked with making the event relevant to time, audience and price tags to reflect the value. They will also be in charge of promotional code in the Facebook page for this event. The refund policy will be similar to those of physical tickets as attendees will be able to save potential disputes. The company will be able to sell more tickets through its website. The online page will have simple design enhancements to spice up the event page and increase ticket sales. Besides, the tickets will descriptions of all the details required as well as event description such as; outline refunds, parking, and others. A text description will be the first step in which it will exploit the text editor tools. While it may act as a news centre, Nicholson et al. (2015) observes that event organizers can communicate results, flash quotes, previews, color stories and historical results. Similarly, online tickets can have short text to communicate the upcoming Melbourne Tough Mudder 2015 event. For long text descriptions, the ads will bear nice sub-headings, other media, additional images and text formatting to keep potential buyers interested. Payment options and different payment processing will be sought. The organizing team will set up pay out details based on balanced financial commitments and running costs of Melbourne Tough Mudder 2015. All the information from the attendees will be collected and custom questions from the organization will be created so as to know the attendees and future Tough Mudder events. An event description toolbar will be used to customize descriptions. A test order will then be made. Selling the Melbourne Tough Mudder tickets online will revolutionalize the event success by making everyone to stay connected, buy tickets and find the company online. With online registration and ticketing, the event will showcase personality and build trust with potential attendees. Online tickets will reduce the cost and maximize revenue for Melbourne Tough Mudder 2015. The attendees who buy online tickets will be entered into some random numbers in order to win various prizes. This option is innovation, cost efficient and ensures that the organization attains the target amount or revenue of AUD$3.285 million. References Abrahamson, J.T., Forsgren, T. & Lundgren, H. (2003). Sports sponsorship as a marketing communication tool. Division of Industrial Marketing, Lulea University. Candemir, A. & Zalluhoglu, A.E. (2012). Factors affecting the sport related consumer expenditures, Ege Academic Review, 12(2): 29-39. Choi, Y.S., Martin, J.J., Park, M. & Yoh, T. (2009). Motivational factors influencing sport spectator involvement at NCAA Division II Basketball games. Wayne State University. Funk , D.C. , & James , J.D. (2001). The Psychological Continuum Model (PCM): A conceptual framework for understanding an individual’s psychological connection to sport. Sport Management Review. 4(2): 119-150. Funk , D.C., & Pritchard , M. (2006). Responses to publicity in sports: Commitment’s moderation of message effects. Journal of Business Research. 59(1): 613-621. Funk , D.C., Toohey , K., & Bruun , T. (2007). International sport event participation: Prior sport involvement; destination image; and travel motives. European Sport Management Quarterly. 7(2): 227-248. Hoye, R., Smith, A.C., Nicholson, M. & Stewart, B. (2015). Sport Management: Principles and Application. Routledge. Lynn, R. K. & Close, A.G. (2011). Consumer Behavior Knowledge for Effective Sports and Event Marketing. New York: Routledge. Nicholson, M. Kerr, A. & Sherwood. M. (2015). Sport and the Media: Managing the Nexus, 2nd Edition. London: Routledge. Parent, M.M. & Smith-Swan, S. (2013). Managing Major Sports Events: Theory and Practice. Routledge. Pedersen, L.H. (2011). Why is branding so important? Sports marketing and management, FIBA Assist Magazine, October 2004. p.47-48. Reese, J.T. (2012). Ticket Operations and Sales management in sport, Fitness Information Technology. Salman, M., Khan, S. & Saif, M.A. (2014). Factors influencing impulse buying of sports team merchandize in developing country: An empirical investigation, Pakistan Journal of Commercial Sciences. 8(1): 185-200. Shimp , T.A. (1997). Advertising, Promotion and Supplemental Aspects of Integrated Marketing Communications (4th Ed). Forth Worth, TX: Dryden Press. Willmott, M. (2003). Citizen brands: Corporate citizenship, trust and branding. Journal of Brand Management. 10(4/5): 362-369. Read More