A Brief Discussion on Macro-Environmental Forces in Sports Marketing

Sports brands (Nike, Gatorade, etc.) and properties (NFL, Manchester United, etc.) must solve for a nearly never-ending array of variables.  Some – like the market’s desired behaviors and post-behavioral dissonance – can be controlled to a degree; however, macro-environmental factors like demographic and natural forces simply cannot.  Macro-environmental forces can be (and always ought to be) understood, though, and success here can result in a well-reasoned and practical marketing plan.

According to Professor Jeff Bail at Northwestern University, there are 7 primary macro-environmental forces a marketing director should understand before composing marketing strategies.  They are: demographic forces, economic forces, natural forces, technological forces, political forces, cultural forces, and competitive forces.  In addition to these untouchable variables, there is also what Professor Bail refers to as “Ambush Marketing.”  For example, Coors is already airing commercials that highlight the fact that they are the official sponsor of the Super Bowl.  Much to their dismay, however, Budweiser rules the minutes between feeds from the greatest sports spectacle in the United States.  Even though Coors spent millions to be the official sponsor, Budweiser always seems to dodge the “Silver Bullet” and is the loudest gun in the advertising world come the day of the Super Bowl.  Remember all of those great marketing icons born in St. Louis?  You know, the 1990’s “Bud-weis-er Frogs” on TV and the “Bud Bowl” bottles in Bud-red and Bud Light-silver who compete for glory on TV and for your dollars at supermarket displays and are coached by the two long-necks that sport hats resembling those worn by Tom Landy and “Bear” Bryant.  Now, can you remember anything remotely similar belonging to Coors?  Exactly.  That is “Ambush Marketing” and it is another factor you simply cannot control… that is, unless the sponsorship agreement takes this into account.  That is easier said than done, though.  Coors may be the official sponsor, but Budweiser showcases their brand during the commercial breaks.

First, we’ll take a look at demographic forces.  The brand or property has no control over the audience’s demographics, so it ought to understand the audience in order to be successful.  It should seek sponsors that the audience likes and accepts.  For instance, according to Professor Bail, Baby Boomers (38-56 year-olds) formed the majority of the audience who watched sporting events in the first decade of the 21st century and have the most disposable income among all age groups.  While TV and radio are their preferred media, Generation Y – consisting mostly of today’s grade school and college students – watches much less TV than Baby Boomers since they are avid internet users.  On average, Generation Y watches about 6 hours of TV per week less than Baby Boomers.  Sports marketers must begin to plan for the emergence of Generation Y, for the younger generation makes ample use of newer technologies like social media, “smart” phones, and the internet.  Such preparation requires an understanding of the macro-environmental forces that can make or break a brand or property.

Economic forces also lie beyond the reach of the sports marketer’s influence.  Because of the economic downturn that brought an unremarkable end to the decade, companies like Buick backed out of their sponsorship deals with properties like the PGA.  The association is faced with a tremendous challenge to find willing sponsors for their events this year, but they are not alone.  Sports like tennis and horse racing have also seen better days.  The sponsor is not always the sole cause of a property’s misfortune, as evidenced by the Yankees’ decision to keep prices to some of the better seats in the new stadium extremely high this past season.  In spite of their World Series run, large sections of Yankee Stadium remained empty; in this case, the property caused its own problems by simply not addressing the economic forces that affect its bottom line and its fans’ bankrolls.

Marathons are always at the mercy of environmental forces.  The Chicago Marathon was shortened a couple of years ago because of an overwhelmingly hot summer and a shortage of water for the runners.  One died and dozens were treated for heat stroke and other related illnesses; marketers and the administration did not have contingency plans in place and the marketing staff still feels the repercussions of their oversight.  In class, it was discussed that this may have had a detrimental effect on Chicago’s Olympic bid.  When calamities like this befall a sporting event, the sponsor suffers as well since the public may believe that the former also acted as organizer.  When agreements are hammered out, a potential sponsor should bear the possibility of such an outcome in mind and devise contingency plans to avoid a public relations catastrophe and its fallout.

Technological forces are not difficult to define, for if you own a computer, you understand that obsolescence gets expensive and is an unfortunate side-effect of technological innovation.  It also poses new opportunities for marketers and tests their creativity.  How can a brand or property monetize social media?  What does Twitter mean to sports marketers?  Can the internet completely redefine the game-watching experience for the fan who enjoys the game or race in the comfort of her own home?  These are just some of the questions sports marketers ask themselves as they compose the year’s marketing plans and strategies.

Political, cultural, and competitive factors are almost self-explanatory.  While political forces deal mostly with rules and  regulations (i.e. when tobacco companies were forbidden by the feds from advertising at sports venues and during broadcasts, marketing departments at properties like NASCAR quickly sought new sponsors such as Sprint to keep their sport alive) and cultural factors regard the population’s beliefs and norms, competitive factors involve studying the competition’s strengths, weaknesses, and behaviors.  Nike has done an excellent job of understanding its competitors and stands firmly at the center of the sporting goods universe.  When they realized that Adidas is a major player in soccer, Nike purchased Umbro and entered the soccer market by associating its brand with an established name by simply purchasing it.  Now, Nike (Umbro) and Adidas are in an all-out war on the soccer field.

All in all, these are the 7 macro-environmental forces that keep sports marketers awake in the waning hours of the night.  If you feel that I have missed a point or two here, please feel free to add to the discussion.  After all, we are learning from each other here.

Well, I hope you enjoyed the holiday season and that the new year brings you and your loved ones good health, happiness, and success.  As always, thank you for reading and participating.  I am looking forward to what the new year brings… I have a good feeling about it!

Cam Suarez-Bitar.

Special thanks go to Professor Jeff Bail, who teaches Fundamentals of Sports Marketing and helped create the Master of Sports Administration program at Northwestern.  The points I made above all derive from notes I took during his class.  Professor Bail is the chief marketing officer at North American Events Group, a Chicago-based firm focused on the acquisition, consultative planning, and growth of endurance and lifestyle events and properties in the United States and Canada.  More information on Jeff Bail is available at: http://www.scs.northwestern.edu/grad/courses/grad_biography.cfm?Instructor_Id=117  Among other prestigious posts, he also held senior management positions at Kaleidoscope and IMG.  His relationship with Northwestern University spans about 10 years.

    • Kevin Flood
    • January 11th, 2010

    Perhaps less of an academic concern, but I’d say there’s an eighth element for sports marketing people: pick the winners.

    • That, my friend, is an art form. =) Arguably, Mark McCormack and Roone Arledge were the sports marketing industry’s Van Gogh and Rembrandt!

    • Kevin Flood
    • January 11th, 2010

    Respectfully disagree; both McCormack and Arledge have seen the fruits of their labor beyond anything VanGogh or Rembrandt could have dreamed.

    Boras could have helped both, I’m sure.

    • It is a shame that neither Van Gogh or Rembrandt saw just how far their art went, especially the former. At least Rembrandt experienced certain fame and recognition in Europe during his lieftime. Van Gogh, however, felt rejected even through his last day. I see what you mean.

      McCormack and Arledge changed sports marketing and media as Van Gogh and Rembrandt revolutionized the art world. Each is an icon in their respective field, but you’re right, McCormack and Arledge at least saw a good bit of what their efforts did for modern sports and knew that their ideas would survive them. The Dutch masters I alluded to, as you mentioned, simply could not imagine just how much their work would be appreciated in the future.

      While McCormack and Arledge were no strangers to luxury, Van Gogh and Rembrandt starved for most of their lives. However, each changed and redefined the standard of excellence in their respective crafts. Modern sports would miss McCormack and Arledge had they decided to pursue other careers just as the art world would be very different had neither Rembrandt or Van Gogh ever become artists. It really is a shame the two Dutch artists were not appreciated as much in their day as much as they are now.

    • Erin Dorothy
    • January 11th, 2010

    Thank you for such a clear description of the seven macro environmental forces in sports marketing. Your article explained a lot about how sponsorships are chosen and why.

    Your loyal reader,
    Erin Dorothy

    • sispskexace
    • March 4th, 2010

    The response level to local and national disasters is awesome but it’s a real shame that so many people take advantage of the negative situations.

    I mean everytime there is an earthquake, a flood, an oil spill – there’s always a group of heartless people who rip off tax payers.

    This is in response to reading that 4 of Oprah Winfreys “angels” got busted ripping off the system. Shame on them!

    • Dear sispskexace,

      You’re absolutely right. It’s a sad shame when people find ways to defraud and deceive those who lend a hand. Thank you for that article.

      Thanks for voicing your opinion with us.

      –Cam Suarez-Bitar.

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