Sports and Entertainment Marketing

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School

McMaster University *

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1H03

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Economics

Date

Jan 9, 2024

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docx

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Uploaded by JusticeFire4851

Sports and Entertainment Marketing Question #1 Explain the definition of Economics in your own words. What is the difference between Micro and Macro Economics? How would you connect Sports and Entertainment Marketing to Economics? Answer #1 Economics is a social science dealing with how people satisfy seemingly unlimited wants and needs with scarce resources. Macroeconomics focuses on the overall behaviour of the economy. It focuses on how the actions of individual people as well as firms combine to produce an effect on the economy as a whole. On the other hand, Microeconomics focuses on how decisions are made by individuals and firms. It focuses on how individuals, like you and I as well as firms, make decisions and the consequences of those decisions. The main difference is that Microeconomics is concerned with the price of a specific good or service, while Microeconomics is concerned with the overall price level that effects the economy and how it differs from previous years. Sports and entertainment marketing are a huge industry offering numerous products and services. Busy individuals and families must carefully choose which sports and entertainment activities and events they will enjoy with their limited time and financial resources. This could be considered as Microeconomics since it’s based on personal individual decisions that influence the economy. Marketers of sports and entertainment products and services must assess consumer demand, the competition, and the financial valuation of the goods and services they offer. Even though this may not be the overall economy of the country, this could be the overall economy of the market, which could be seen as a part of Macroeconomics.

Question #3 Explain elasticity of demand and supply in fixation of price. Please provide an example from the field of either sports or entertainment. Answer #3 Elasticity of demand refers to the demand of an item being sensitive to the change in the price of the item, in regard to quantity. For example, every seller under imperfect competition which refers to any economic market that does not meet the rigorous assumptions of a hypothetical perfectly competitive market, and monopoly has to consider the elasticity of demand for his product when he fixes the price or contemplates to change the price. The seller has to take into consideration the extent of response in demand due to change in price of a certain product as the revenue realized by him depends on the quantity demanded in the market. Moreover, to calculate the price elasticity of demand the percentage change in the quantity demanded of a good or service is divided by the percentage change in the price. After calculations an elastic demand or elastic supply is one in which the elasticity is greater than one, indicating a high responsiveness to changes in price. An inelastic demand or inelastic supply is one in which elasticity is less than one, indicating low responsiveness to price changes. Lastly, unitary elasticities indicate proportional responsiveness of either demand or supply. Elastic demand tends to be non-necessary goods, or goods that can be easily substituted for by other goods. When the price of these good go up, consumers will either decide they don’t really need the goods and won’t buy it or find a cheaper substitute for it. For example, before Covid-19 every Tuesday the movie ticket would be half of its original price, even though it was a weekday, we could experience a huge crowd at the theatre compared to other normal weekdays. This shows that the demand for movie tickets in relation to price is elastic, meaning when price decreases, the demand increases. In addition to that, not everyone is affected by the change in price for a movie ticket since some consumers might consider it as a minor change therefore in my opinion movie tickets can be both elastic and inelastic when looked at from different perspectives. Furthermore, goods with very inelastic

demand tend to be goods with no easy substitute, or essential goods that consumers cannot do without. For these goods, even when the price increases, demand stays relatively steady, because consumers have no other options, and feel that they still need to buy the same amount of goods. For example, the demand for Nike products is price inelastic because the increase in price will have little to minor changes on the quantity demanded. As the consumer, you may have to go to the Nike company or a partnered company that carries the brand. Assuming you can only buy their brand through specific stores, the price will remain high or be increased regardless of demand. If a large change in price is accompanied by a small amount of change in quantity demanded, the product is inelastic. On the other hand, the price elasticity of supply is the percentage change in quantity supplied divided by the percentage change in price. Nike also does a very good job in tricking it’s customers, for example Nike keeps stock artificially low to hype up shoe release, which makes its products inelastic because it creates hype, and everyone wants them. To be more specific one of my relatives bought a pair of Air Jordan Retro XI “Concords” in 2011 and it was for $192.59. Only a year later those shoes sold on eBay for $300, accruing maybe another $100 in value. This shows that as the hype increases, so does the demand; making the value of the product go up as well. Furthermore, the price elasticity of supply is the measure of the responsiveness in quantity supplied to a change in price for a specific good. As I mentioned before, the elasticity of supply also depends on its price and divides it up into 3 categories: elastic, inelastic and unitary. Inelastic supply is a change in price that causes a smaller proportional change in quantity supply. Elastic supply is a change in price that causes a bigger proportional change in supply. There are a few factors that affect the production of a product, and those factors make the supply inelastic. Elastic supply means firms can easily increase supply in response to a change in price. For example, one of the supply factors include number of sellers or workers, if a sports car factory is operating at 70% capacity, then it can easily increase supply and produce more sports cars in response to changes in price.

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Question #4 Differentiate between different types of economy? Describe the advantages and disadvantages of each type. Which one do you think is better for sports and entertainment marketing? Answer #4  There are three different types of economies, and they include mixed economy, free market or market economy and command economy. Firstly, mixed economies are an economy consisting of both free market and command economies, some decisions are made by market forces while some decisions are made by the government or some central authority. Advantages of mixed economies: 1. A mixed economy distributes goods and services to where they need to be. For example, you go hunting, purchase a fishing license, and go to the grocery store each week. Those activities are possible because the structure of this approach ensures that goods and services are where they’re needed for each community. 2. Supply and demand get measured through pricing instead of regulation - Instead of creating one price for each item someone requires, the structure of the mixed economy allows for competition. The state might regulate an industry, but it is up to the individual players to be innovative. This competitive drive encourages a system of supply and demand that impacts pricing. When there are low levels of products or services in high demand, then the price to acquire them goes up. If the opposite occurs, then the price goes down. 3. Mixed economies promote control equality - The private sector is responsible for the activities which produce goods and services in most mixed economies. Microsoft makes computers for customers around the world under government

regulations instead of being at a state-run facility. That means the public sector is responsible for the infrastructure that makes private production possible. The government handles roads, bridges, utilities, and entitlements. It gives people and businesses the foundation they need to pursue whatever goals or dreams they have. Disadvantages of mixed economies: 1. It can leave the less competitive members of society without support – The mixed economy can take on all of the disadvantages that other approaches generate since it is a mix of capitalism and socialism. That means its primary problem involves the members of society who cannot reach the same levels of innovation or competition. When the marketplace has too much freedom, then these at-risk individuals and companies might find themselves without any support from the government. This disadvantage creates a system where the wealthy get more, and the poor get less. As people gain more power over others, they work to consolidate their positions so that they don’t lose them. It creates a wealth curve where the Middle Class struggles to exist. 2. A mixed economy often produces high taxation responsibilities - The state is responsible for public-sector services that make the marketplace accessible to consumers and producers. That means it needs financial support that comes from the two entities. The most common method of achieving this result is through taxation. The mixed economy will tax companies and individuals at different levels, with more government involvement often dictating a higher level of responsibility in this area. Social services and infrastructure needs are benefits that everyone enjoys, but a high tax rate can also become a disadvantage. People need to see the benefits of this kind of investment. If they believe that the state is wasting their money, then there is less motivation to find employment. Canada is a mixed economy and my relatives have experienced this type of situation before.

My uncle was a part-time employee due to the increased salary and the deduction of taxes that wasn’t a lot. He eventually had to switch to full-time for the benefits, but he has instantly noticed a lower salary and way too many tax deductions. This is a disadvantage of the mixed economy and even though it helps you in the future, for example with pension plans, Canada needs to change their employment policy, the salary as well as tax deductions so that people like my uncle aren’t afraid to switch from part to full time.  In a free-market economy resources and production systems are owned by individuals and the allocation of resources, what, how and for whom, is left to the forces of supply (production) and demand (consumers) operating in a relatively free market. Advantages of free-market economy: 1. Consumer Sovereignty - In a free market, producers are incentivized to produce what consumers want at a reasonable and affordable price. In general, consumers have more choices for what goods and services to purchase. This choice is called Consumer Sovereignty . 2. Absence of Bureaucracy - Because free markets reduce cost and minimize red tape, they lead to more innovation via research and development. Entrepreneurs do not have to wait for the government to tell them what to make. They study demand , research trends, and meet their customers’ needs through innovation. This independence also encourages competition amongst firms to improve their products and services. 3. Optimal Allocation of Resources - Resources (aka factors of production ) in the market are better distributed and allocated. Since consumers are willing to pay for a certain quantity of a product, producers are willing to pay to acquire the raw materials required to produce that product. Otherwise, producers are likely to

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produce too much of a good that no one wants. In the same way, it also encourages firms to be more efficient as they seek to produce at the lowest price possible to maximize their profit. Disadvantages of free-market economy 1. Poor Quality – Since profit maximization is the biggest motivation for firms, they may try to reduce their costs unethically. In many cases, the drive for profit maximization actually incentivizes unethical behavior. Examples of harmful effects of unethical cost reduction measures include polluting the environment or exploiting (overworking, under-paying, preventing workers from unionizing etc.) workers. Government intervention is necessary to limit these harms. 2. Merit Goods – Goods and services that are not profitable will not be produced or run. Rural communities will suffer as a result. Examples include transportation and postal services, as well as rural hospitals, which are necessary despite the fact that they may not be profitable to run. In such cases, the government must provide these goods and services so that people do not go with their basic needs unmet.  Command Economy is a market where the government or some central authority decides where to allocate resources. Advantages of command economy 1. The government can influence the distribution of income 2. The government can determine which goods are supplied Disadvantages of command economy

1. In order to function well, requires an enormous amount of information which is difficult to obtain. 2. No real incentive for individuals to be innovative. Goods are of poor quality since there is a lack of profit motive. 3. May NOT lead to allocative efficiency or productive efficiency due to lack of competition and profit motives. 4. Corruption - the government has the ability to abuse its absolute power. 5. The economy does not respond as well to supply and demand, firms are simply told to produce a certain number of goods or services.  In my opinion a mixed economy would be best for sports and entertainment marketing and this is because it includes aspects of both command and free market economy. This will allow the industry to be balanced, I also believe mixed economy has the power to equally distribute available resources, services, and goods across a geographic region or country. Question #5 Describe briefly the four P’s of marketing and explain how it can be useful guide for marketing sports goods. Answer #5 Neil Borden popularized the idea of the marketing mix and the concepts that would later be known primarily as the four P’s in the 1950s. Borden was an advertising professor at Harvard University. His 1964 article titled "The Concept of the Marketing Mix" demonstrated the ways that companies could use advertising tactics to engage their consumers. Decades later, the concepts that Borden popularized are still being used by companies to advertise their goods and services. The four P’s of marketing include:

1. Product – Product refers to a good or service that a company offers to customers. Ideally, a product should fulfill an existing consumer demand. Or a product may be so compelling that consumers believe they need to have it and it creates a new demand. To be successful, marketers need to understand the life cycle of a product, and business executives need to have a plan for dealing with products at every stage of their life cycle. The type of product also partially dictates how much businesses can charge for it, where they should place it, and how they should promote it in the marketplace. Attributes of an organization or offering within this segment include delivery system design, technology, quality, services provided and their availability. 2. Price – Price is the cost consumers pay for a product. Marketers must link the price to the product's real and perceived value, but they also must consider supply costs, seasonal discounts, and competitors' prices. In some cases, business executives may raise the price to give the product the appearance of being a luxury. Alternatively, they may lower the price so more consumers can try the product. Marketers also need to determine when and if discounting is appropriate. A discount can sometimes draw in more customers, but it can also give the impression that the product is less exclusive or less of a luxury compared to when it is was priced higher. For example, if a shirt is worth $30, consumers would instantly assume that it’s made from a better material, or the company is well- known compared to a short that’s $6 which would be seen as an average shirt. Moreover, the price determines the demand for a product, as I mentioned before some products are a necessity and consumers need it no matter what, therefore businesses could increase the price of their bread, milk or eggs and they won’t experience a big different in their quantity demanded. Compared to an increase in the price of a certain candy, which would definitely result in a lower quantity demanded. This is another tactic businesses can use to maximize their revenue.

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3. Place – When a company makes decisions regarding place, they are trying to determine where they should sell a product and how to deliver the product to the market. The goal of business executives is always to get their products in front of the consumers that are the most likely to buy them. In some cases, this may refer to placing a product in certain stores, but it also refers to the product's placement on a specific store's display. In some cases, placement may refer to the act of including a product on television shows, in films, or on web pages in order to garner attention for the product. For example, when you go to a check-out at the grocery store, there are always candies, gum, chocolate and little items that the owners know the customer would grab. These items are most likely in the aisle as well, but people wouldn’t really go in the chocolate aisle if they don’t have to, but they would have to come to the check-out no matter what. Grocery-store owners put these items near the check-out because it generates revenue and is a great business tactic. 4. Promotion – Includes advertising, public relations, and promotional strategy. The goal of promoting a product is to reveal to consumers why they need it and why they should pay a certain price for it. Marketers tend to tie promotion and placement elements together so they can reach their core audiences. For example, In the digital age, the "place" and "promotion" factors are as much online as they are offline. Specifically, where a product appears on a company's web page or social media, as well as which types of search functions trigger corresponding, targeted ads for the product. For example, when you look at workout videos on YouTube, there are always ads before, after or middle of the video. I have noticed that these ads are related to the video you are watching, for instance when I put a workout video, the ads are related to either a workout session that they recommend, or healthy foods that you can get by Hello Fresh. This is beneficial because if an individual watches a certain video it means that they have an interest

around that topic and an ad related to that topic will catch the viewers’ attention. In my opinion these are some business tactics that help the business be more successful. In my opinion these are a very beneficial guide for any type of business because it gives an idea to the owners as to how they can maximize their profit which is every owner’s goal. In terms of sports marketing, I personally think promotion and place are the most important P’s out of the 4. I say this because promotion and place tell people what is going on, for instance without CP24 or Instagram telling us there would be a basketball game between Toronto Raptors and Los Angeles Lakers, most people won’t be aware or follow the game. Therefore, promotion either online, on billboards, creating ads or simply announcing it on the radio will make people aware of what’s going on and therefore attract them towards watching your game which would increase revenue. More people would mean more tickets, or if they are watching from home, the channel would get the money so either way promotion would increase revenue. Secondly, I also believe place is very important, owner’s need to be very careful because place determines the revenue. For example, I have a sports center near my house and in an extremely residential area, pre Covid-19 that place would be packed. They had activities like ice skating, swimming, basketball and kids living in this area joined all of those activities as an extracurricular. In my opinion, the business blew up because it was close to a lot of the houses, and parents found the transportation easier and safer. Once again in my opinion the place of any business is something owner’s really having to think about for their business to blow away.

Question #7 Identify specific examples of entertainment marketing and how it helps to boost our economy. Answer #7 Entertainment marketing is the process of using marketing strategies to generate interest for an upcoming entertainment event, such as a movie release, theatre production, TV show, or attraction opening. Basically, if the event is meant to be “entertaining" to the public, then its promotion probably falls under the umbrella of entertainment marketing. Popular entertainment marketing strategies include celebrity endorsements, strategic brand partnerships, and product placement. These tactics permeate pop culture events and contribute to their rise through our society. Some entertainment marketing examples include: 1. In a truly impressive feat of snacking, Oreo and Game of Thrones partnered together to recreate the GoT intro – constructed entirely by Oreos. The production required a total of 2,750 Oreos to create. The efforts not only promoted the final season of Game of Thrones , but it also launched Oreo’s limited-edition cookies, which featured custom embossments of each of the three remaining houses competing for the throne – Stark, Lannister, and Targaryen – and the night king. The partnership also tapped into social media marketing strategies, allowing fans to pledge their loyalty to specific houses using social tags #FortheThrone and #GameofCookies. 2. Nothing says strategic brand partnership like supporting a good cause. HBO partnered with American Red Cross to promote the final season while also boosting blood donations. With the social tag Bleed #FortheThrone, the

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campaign promised that those who donated blood would be entered to win a life- size iron throne – attracting GoT fans from all over. 3. Similar to Oreo’s limited-edition cookies, Mountain Dew released a limited- edition can that featured all the names on Arya’s kill list – but only when the can is cold. Mountain Dew made it difficult for fans to get their hands on these cans, thus making the immediate demand for them even greater. In order to grab one, fans had to post on Twitter using the tags #ACanHasNoName and #FortheThrone, stating what they would sacrifice for it. Eight hundred limited edition cans were given away via this method. The only other way to get your hands on one involved living in New York or Los Angeles and going on a little scavenger hunt to find a “master of coin” and an “iron vending machine.” This created more demand for the product, attracting consumers as well as revenue. All of these tactics really worked which means they generated a greater revenue which itself helps the economy. All the companies partnered up with Game of Thrones to promote the movie, and if these entertainment marketing actually worked, that means the movie was seen everywhere and was popular because of the amount of promotion it did. HBO earned at least $500 million per season of GoT and probably even more, I believe if the promotion wasn’t done right, this would not have happened. If a movie creates a lot of profit, they contribute to the economy, for example the U.S. media and entertainment industry contributes more than $717 billion to the economy and represents a third of the global media and entertainment industry. Moreover, the companies who partnered up with Game of Thrones also created more revenue than usual, which would also be contributed to the economy.

Question #8 For each of the following media listed below, give an example of sports and entertainment marketing and the target for it. (any 5) a. Television - identify the show b. YouTube c. Magazine – name the magazine d. Radio – identify the station e. Facebook f. Transit advertising g. Home delivered flyers h. Newspaper Answer #8 b) YouTube - Nike Dream Crazier. It’s another example from Nike and their Dream Crazier campaign which is the continuation of their iconic Just Do It campaign. In this promo, Serena Williams tells an emotional story of what it’s like being a woman in the sports industry. Williams takes the stereotypes and offensive statements about women in sports and turns them into an empowering message for young female athletes everywhere. Throughout the video, you’ll see moments from sports history where female athletes pushed the boundaries, embraced their “crazy” and owned it. They tried to empower female athletes, telling them to not listen to others when they push you down rather follow your own heart since the only boundaries you need to have are the ones you made. d) Radio – There is a radio here in Canada and its station is 1650, and on that they give news from Pakistan and India. My family and I like to listen to it to know what are going on back home, but that station is most common for its entertainment news. For example, news about the recent movies coming out, or a movie that excelled at the Box Office, and this type of news really help us get an understanding of what’s really going on in the

entertainment industry. It also gives my family and I an idea of what potential good movies we can watch. At times specific shows on the radio and the movie partners up and tells us about the movie and what happens in it, once again to inform the public as well as encourage them to watch it. e) Facebook – Facebook came out with a new option, where they have created an option for podcast. If you have an account you can easily upload a podcast, and if your podcast is already very popular you can get sponsorships by big brands that will give you money if you advertise them. My mom recently listened to a podcast that was sponsored by Adidas and it was very creative. The podcaster chose to talk about sports that day and slid in how she thinks Adidas is an excellent brand. This didn’t make the sponsorship obvious and also got the message through the public. She was targeting the public and encouraging them to buy products from those brands since they are long-lasting and fashionable. In my opinion podcasts are a new and smarter way to advertise your product or business, especially recently when almost everyone is listening to podcasts in Covid- 19 as a source of entertainment. f) Transit advertising – There have been many times when I transport in a bus and see multiple ads on it. They range from movie advertisement to people who can help buy you a house, and in my opinion they work. I say this because this one time I was travelling on a bus and saw an ad of the movie Beauty and the Beast and despite it being a very popular film, I wasn’t aware of it. Due to the bus ad, I was able to find out about the movie and later going to the theatre with my family to watch the movie. There were probably 100s of people like me who found out about the movie through that bus advertisement or other types of ads that the directors used to promote their movie. Of course, their target was to inform the public about a new movie coming out, and encouraging them to watch the movie, and they clearly met their target because I went with my family to watch the movie.

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g) Home delivered flyers – Usually flyers are used for promoting a specific product or encouraging children/ adults to join something. There have been many times when I got flyers at my house which talked about summer or sports camp that they encourage kids to join for a summer activity. This in my opinion is a great way to promote your business, because if the flyer is made well, and captures the targeted audience, it would most-likely make them interested. For example, the summer 3 years ago, my parents got a swimming flyer and it talked about how they are planning classes for the summer, at a place that was very close to our house and the price was also very reasonable. All of these factors caught my parents’ eye, and they enrolled my sister and I in those classes which an amazing experience. That was exactly their target, to attract the customer and tell them factors to which they can’t say no and enroll their children in the program. Therefore, I believe this is another amazing marketing strategy if done right and can help blow up your business by attracting people towards it through the flyer.

Sports and Entertainment Marketing

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