Manchester United Background, Pricing Strategy - Research Paper Example

Manchester United Executive Summary As sports marketing consultants contemplate and estimate regional winners' net of 30 million for the Champions League with United Manchester and Chelsea in mind, dizzying limits on marketing and money swirl in the pool of Premiership, FA Cup and the Champions League (iTV, 2007). Likewise, steady build-up of stakes among investors on Britain's "most successful soccer club" has made headlines in the sporting world (Maidment, 2004). In order to properly present the various dimensions of sports marketing in the 21st century, basic marketing themes, mixes, and techniques must all be applied. De Varona (1999) provided an interesting view in marketing sports enumerating among others the mix of myths, management, marketing, media and money with regards to women in sports. Interestingly, each was related to organising world-class sporting events that are also male dominated. To support the myth view further, an account of the Manchester United Football Club which is one of the most popular, albeit controversial representation of a sports league so that tracing its history is inevitable in this context. Pragmatism & Dimensions of Sports Marketing in 21st Century (Antecedent Profiles Resources Holistic Dimensions) In marketing products firms, need to create a successful mix of: the right product sold at the right price in the right place using the most suitable promotion (Brown, 1993). Likewise, it was proposed that in order to create the right marketing mix, businesses have to meet the following conditions: The product has to have the right features (Brown, 1993)- for example, it must look good and work well of which Manchester United have been attributed with considering the team's stellar performance on field coupled with branded products as sponsors or product logo carriers that already have maintained global recognition such as Nike, Vodafone, and AIG. Products and services of Manchester United as can be summarised from their website include among others travel and ticket for their games, MUTV, MU Mobile, MU Finance (credit cards, savings and mortgages, insurance, loans, club account) MU foundation, shopping, gaming and betting. The price must be right. Consumer will need to buy in large numbers to produce a healthy profit. Considering that Manchester United provides the right entertainment as well as elation of sports fans as needed, the products they supply, mainly sports entertainment, is accompanied with the right prices, from stadium tickets, to apparels, and even beddings and other everyday items (MU United, 2007). The goods must be in the right place at the right time. Making sure that the goods arrive when and where they are wanted is an important operation. With the website working 24/7, Manchester United cannot be said to be at the wrong time and wrong place at all. The use of technology maximised all accessibility with products and services. The target group needs to be made aware of the existence and availability of the product through promotion. Successful promotion helps a firm to spread costs over a larger output. Promotion of Manchester United, from global airing in sports televisions, streaming media provided by the internet though broadband, print and media, promotional items that are sold at the same time (MU, 2007), among others provide Manchester United all the promotional support it could churn out and the marketing executives have not stopped. Manchester United Background When the airliner carrying Manchester United players and officials crashed in 6 February 1958 resulting to the deaths of eight of the famous 'Busby Babes' Manchester United team, the British press reportedly called it's a disaster of national and international significance (Mellor, 2004). Prior to the crash, Manchester United already held high esteem in English and European football as 1957 saw the club reach the semi-finals of the European Cup at first attempt to which the Times described: "The irony of it all is that this disaster should come at a time when Manchester United have set English standards even higher in the Continent. Having just reached the semi-final of the European Cup their name has never shone more brightly. Whenever they played on the Continent and in America, they have left behind a reputation for their skill and their correct behaviour both on and off the field. They have been outstanding ambassadors for England and the debt owed to them is immeasurable," (The Times, 1958). The legacy of the Munich disaster for Manchester United affected the increasingly fluid criteria of British supporters on choosing social identities so that the process of proving allegiance to a football club, practices of consumption for many sports fans have become as commonplace as attending matches and asserting one's geographical heritage (Mellor, 2000). Likewise, Webb et al (2000) suggested that people are reminded about disasters through literary and visual forms, practices and increasing popular cultural artefacts that can be consumed by people who want to associate themselves with disasters of tragedies from the past. Consumption of new Manchester United supporters has become a key ritual that creates association to the club and to fellow Manchester United supporters as well as to the past disaster. One particular news report that captured the essence of Manchester United evokes after the disaster was one that appeared July 8 1958 in Daily Mail, reporting among other things that outsiders in Manchester during those moments were like intruders into the heart of a family. The report went on to say " a whole city was drawing together, proud, hurt and resentful of strangers in its midst [] (while) ordinary people can no longer live as their forefathers used to have for their villages and country towns [] a city draw breath as a city, live, die or sigh as a city (so that) there was hardly one person in Manchester who did not have some feeling of personal contact with the United team [] suddenly united and exclusive (Daily Mail, 1958) Mellor (2004) commented further that the discourse of unity extended to industrial, political, cultural and sporting institutions across the city. Nevertheless, the team's manager Matt Busby have also been acknowledged by the media to be instrumental to the continued acclaim for Manchester United as it was Mr. Busby who built the name out of the ruins of the last war when Old Trafford stadium was bomb, without ground and no money (The Times, 1958), and yet the finest home-grown nursery of young and virile limb, of Mr.Busby's belief in and training of the youth. By February 19th, predictions of the rebirth of "Britain's most famous club" were all over newspapers (Daily Mail, 1958 and Manchester Evening News, 1958) and materialised by May 29 1968 after Manchester United in its first European Cup appearance defeated Portuguese champions Benfica at Wembley Stadium (Manchester Evening News, 1968). "Access & Proximity" SM Potentials USP's Images & Reality (Planning and Programming Competitive Advantages & Differentiation Introduction to the Services Marketing Mix) Theoretical Framework for Marketing Biometrics Presently, sports marketing utilises the four Ps of the marketing mix of product, price, place or positioning and promotion strategies aimed at increased results usually used after thorough market research and experimentation are well established. These controllable elements of the marketing plan that help focus on uncontrollable elements such as new competitors, new legislation, change in consumer confidence, and change in consumer tastes are basic views in the development of the product itself. Product in this instance is not only tickets sold per every game of Manchester United but also the various products of caps, shirts, posters, DVDs, pins, souvenirs, promotional items trade cards, beddings, rugs, hoodies, cups, and more. Place or positioning include the distribution process or how the product gets to the customer or consumer and include middlemen or distributors. From manufacturers, products are usually shipped to various retail outlets as well as the online consumers worldwide through the use of third party couriers. Likewise, tickets are sold via networks of event marketing arms. Advance selling has been extensively used in sports events marketing and has been considered a success with the advent of the internet. Price, the only element in marketing that spells profit, plays a definitive role in the success of the product and its relevance in the market. Price is dependent on strategies adopted by firms such as in market segmentation. There are four basic criteria for market segmentation (Green and Tull, 1978): 1. Existence of segments in the market environment 2. Repeated and consistent identification of segments 3. Stability of segments over time 4. Efficient delivery through distribution and communication initiatives of each segment. Pricing Strategy Measuring value and willingness to pay are usually the basis for strategic pricing although these may be contrasting in nature. As most buyers cannot easily determine how much they are willing to pay, marketing researchers must be able to estimate WTP from revealed preference data obtained from actual market transactions or from stated preferences through surveyed data (AMA, 2006). Measuring value, on the other hand, is concerned with understanding the system of value delivery where incremental value is measured in monetary worth. This system has been challenging and expensive but failure of one sports company on this part would be the gain of another, specifically, the competitor. There are other varying approaches to pricing such as prestige pricing with emphasis to value, price range of which buyer or occupant bid on a given price against other interested prospects. Promotion Promotion. Special events such as exhibits and press conferences, advance selling, web or internet promotions, as well as advertising, sales promotion, publicity and personal selling are all in use in the promotions of biometric technologies targeting mostly businesses or firms that may want to use it for their own as well as for marketing purposes. Biometrics use currently has a defined or niche market as business enterprises or firms that use identity and access a basic operational procedure. But as the use of identity and access to products and services have been trendier in the past decades using membership to some sort, biometrics market is expanding to other larger possible markets to include even small enterprises (Shugan and Xie, 2005). Advance selling has been mentioned as a tool in marketing that eliminates overwhelming of arbitrage (Shugan, 2004) and lowering of transaction costs so that web-based transactions, SSL encryption, smart cards and broadband communications allows complex and secure advance sales transactions from remote locations via web technology. In fact, Shugan and Xie (2005) suggested that "Improving technology may make advance selling possible in many new categories including dry cleaning, dining, videos, film exhibition and products with network externalities," of which biometrics may perfectly fit in. After carefully laying down the marketing foundation of the Manchester United though historical, chronological as well as all the relevant ingredients to making a "brand", a continuing tradition added myth and mysticism to the mix. Professional sport is generally accepted as s major international business particularly involving players, coaches, administrators, medical staff, sponsors and billions of fans in global scale (O'Reilly and Nadeau, 2006). Manchester United today has established a global reputation from the ashes of Munich with a steady growth banking on its players. Aside from already well-known and established players, one of the most notable had been David Beckham who has captured not only sports fans' attention but basically every household around the world. Prior to his departure for Madrid Real, David Beckham was arguably, the most high profile association football player in the world, securing global media interest in all aspects of his life. However, contradiction and inconsistencies were prevalent within the narratives that accompany the conflicting images of Beckham where media discourse has been adjusted to position him as both hero and villain. Harris and Clayton (2007) proposed that the inconstant nature of the nationalistic and masculine discourses applied to Beckham and the diversity of roles played by him in upholding and distorting ideologies in sport made Beckham become a cultural icon and a symbol of national identity and masculinised sporting pride (Harris and Clayton, 2007). Generating revenue has been connected as a necessity to enable success so that Holbrook (1996) suggested that financial viability is directly related to a team's performance in the field but other studies indicate that a myriad of factors contribute to the ability of professional teams to generate revenue. As suggested by Ferguson et al (1991) and earlier by Jones (1969), leagues function and behave as business entities enabling consideration of marketing theories as legitimate ways to provide understanding in professional sport. Cousens and Slack (2005) proposed that the contemporary era of professional sport have each of the leagues' head offices represent a Property or Enterprise division responsible for the sale of "league-wide licenses, sponsorships, and broadcasting rights." The study further commented that all four leagues --- the National Hockey League, National Basketball Association, National Football League and the Major League Baseball --- "enacted global marketing strategies that include the Olympic Games participation, the launch of an overseas league, international television contracts, or the staging of matches or tournaments abroad. The leaders of the four league recognised the entertainment value of their sport and its leveraging opportunities with corporate clients and broadcasters." Likewise, Manchester United also leads sponsorship packages that include top lucrative names Vodafone, which is three seasons into a four-year $50 million sponsorship by 2004, PepsiCo and Anheuser-Busch that pay the club up to $1.8 million per year for four years as well as Nike (Maidment, 2004). Nevertheless, Reilly and Knight (2007) suggested that Knowledge Management (KM), or the ability to effectively use, share and create knowledge to facilitate individual, team, and organisational learning is important in all sports organisations. In addition, the theory encompasses a broad range of tools, technologies, and managerial practices intended to produce bottom line benefits by making better use of an organisation's intellectual capital and it has become an increasingly important consideration given the challenges of managing vast amounts of information among national sport organizations (Reilly and Knight, 2007). The Sports Consumer Heterogeneity & Market Maturity (Sports Consumer Paradoxes Complexities - Dynamics & Trends) Access and proximity with regards to Manchester United are basically applicable for football fans but this is usually translated through numerous promotional channels and media options that enable consumption by billions of people in hundreds of languages adding a more competitive nature of professional sport. As teams fight for their share of the consumer dollar or pound for that matter, marketers combine sport with a variety of other entertainment options, as well as bundle products and services in a profitable manner intensifying the climate. Professional teams and their management as well as all organisations involved in the sports arena ponder new opportunities and find ways to address new challenges that were previously absent to make it their business models (Apostolopoulou, 2002). Branding, however, proved problematic for Manchester United as a study of Sonmez and Yang (2006) pointed out elaborate and detailed legal piracy that could also occur for such an exclusive brand. His research showed how some companies have exploited governmental protection for infringed logos and names (Please see Appendix) while legally allowed within certain territories. Peters (1997) also noted the then merchandising director's comments that the logo and control of its usage are vital to the interests of the club suggesting that all companies should consider their brand image and take responsibility for any necessary adjustments and ensure the reality matches the image. Segmentation, Targeting & Positioning (Multi Dimensional Profiling Boomers - Gen X & Y - Values & Potentials) MU branded products are produced and packaged in developing countries such as Turkey, Thailand and China due to low production costs. Certain amount of products are brought back to the British market, the rest has been distributed and marketed to other international markets as well as the local market. The question here is whether MU is reaping the full benefits of the support it gets from the international fans especially amongst the Chinese population of 1,300 million when promoting its associated products. In a study emphasising the importance of branding and the dangers in misunderstanding the consumer's attitude towards brands (Strategic Direction, 2005), it was found that the days are long gone when brands were merely names given to products that consumers could tell them apart from others compared to the recent age when the brand is often more important than the product itself. It was surmised that brand recognition, brand awareness, brand extension are all issues which play their own particular, but all-important, roles in today's businesses. Pricing - Consumer Manipulation & Dissonance (Visibility - Techniques - Product) MU has been doing business in China since 1993 in the form of licensing to authorize Chinese companies to manufacture a wide range of MU branded products to export the associated products to different MU Mega Stores around the world (Sonmez and Yang, 2005) . There are Mega Stores in developing countries such as Thailand, Singapore and Malaysia. As building an MU Mega Store in China is also being considered. Other business activities include selling of club merchandise, finding sponsors, collaborating with other businesses such as telecommunications and banking or credit card, establishing own media tools such as TV, radio, magazines. Sports Branding & Globalisation Personality - Profile Richardson (2000) pointed out that the most fundamental issue in sports study is the extent to which competitive balance among the teams is affected by institutional arrangements so that Cousens and Slacks (2005) joined that all four leagues for three decades had their strategies and actions becoming uniform. Institutional arrangements however were noted by O'Reilly and Nadeau (2006) still slightly different from league to league. For Manchester United's Director of Marketing Peter Draper, "When you look at Manchester United, we've got 50 million fans worldwide. Currently, 90 percent of our business comes out of the UK, but 80 percent of the fan base is abroad. There's clearly an opportunity for us there. In the future, there is commercial worth in developing our fan base in the US and Asia and the revenues will clearly benefit as a result. If you like, our job on the commercial side is to find the petrol that drives the engine for the team," (quoted by Jarvis, 2004). As Manchester United Football Club continually embarks on growth, Britannia Building Society has launched a collection of financial services products in partnership with Manchester United Football Club exclusively for Manchester City Supporters. Rowley (2005) regarded the brand alliances particularly interesting as both parties have membership clubs which reward customers for loyalty. Niche Marketing "What sponsors what to be associated with is a rare commodity - and that means the Champions League." (iTV, 2007). Jarvis (2004) outlined that Manchester United's club begun as far back as 1878 and rallied to be a football club describing themselves as a business. "Manchester United was one of the first clubs to position itself in those terms, actively seeking to exploit the commercial potential of its brand with its vast and varied fan base. It was also the first football club to become a publicly listed company. For the twelve months ending July 31, 2003, the club reported a turnover of GB 173 million (US$ 308M)," (Jarvis, 2004). It has also been acknowledged elsewhere that Manchester United has positioned itself at the upmarket premier end of the market and charge premium prices evidenced by the high cost of a season ticket to watch home league games. Johns (1994) explored that Continuous Quality Improvement (CQI) makes Manchester United cited as a model for team building , with commitment from top management as a recurring theme. In addition, CQI according to Johns, meant keeping fresh, investing new concepts and new methods of quality systems requiring total commitment from the entire organization and putting trust in the workforce. E-Commerce/Retailing/New Paradigms Manchester United books, shirts, programmes, keyrings and many other items are sold and promoted through its website as international brand Nike in 2002 displaced the U.K.'s Umbro as United's uniforms sponsor and merchandising partner in a deal worth more than $500 million over 13 years. The Nike uniform-replica merchandising business pays the club a royalty for use of the brand and is developing merchandise to sell through its global network of outlets to those estimated 50 million fans around the world (Maidment, 2004). For many companies, Manchester United is not just a football club in a northwest England city, but as a global sports franchise. The club reportedly has a playing side with revenue from ticket sales, a media side to manage broadcasting and Internet rights to its matches and stars, and a merchandising and commercial side, which collectively aim to turn fans of the first into customers of the second two in their bid for brand extension (Maidment, 2004). Conclusion: In consideration of the above discussion, it can be concluded that Manchester United did in fact built its strength on history, albeit disastrous one, and grow steadily as a brand icon representing undying devotion as well as admiration for both the players as well as the spirit they represent. This has been used properly by its branding as sports become a global consumer matter where logos and names must be seen in as mundane everyday things as caps, key rings, shirts, among others. In fact, it has become to pass that logo and brands seem more of basic necessities, such as the fact that China's traders go as low as erasing half the name bearing the Manchester United logo just for the heck of using the logo. It is no longer a matter of marketing a legacy, which was the foundation of Manchester United's solid fanbase, but a matter of seeing the familiar in the ordinary daily routine. References: Apostolopoulou, A. (2002). "Brand extensions by US professional sport teams: motivations and keys to success." Sport Marketing Quarterly 11 (4) 205-214. Brown, S. (1993). "Post-Modern Marketing." European Journal of Marketing. Cousens, L. and Slack, T. (2005). "Field-level change: the case of North American major league professional sport." Journal of Sport Management 19 (1) 13-42. Daily Mail, 8 Feb., 1958 De Varona, Donna (2003). "M's in Football: Myths, Management, Marketing, Media and Money. A Reprise." Soccer, Women, and Sexual Liberation 8 (10) Sept. 25 Gawronski, VT. and Olson, RS (2001). "Tapping Collective Memory of Disaster: Getting 'Inside' the 1985 Mexico City Earthquakes." International Journal of Mass Emergencies and Disasters 19 (3), 297. Harris, John and Clayton, Ben (2007). "David Beckham and the changing (re)presentations of English identity." International Journal of Sport Management and Marketing 2 (3) 208-221. iTV (2007). "Winning CL is worth 30M." April 19 from http://www.itv-football.co.uk/CL_Story/0,14272,6109_2070158,00.html Jarvis, Mark (1994). "Manchester United saves the game." Brand Channel, May 10. , from www.brandchannel.com/features_profile.asppr_id=179 John, Peters. ((1997). "Branded." The TQM Magazine 9 (5) 320-321. Johns, Alison (1994). "Manchester United - A Model Example of CQI in Action." The TQM Magazine 6 (5), 34-34. Maidment, Paul. (2004). "The Risch Battle for Manchester United." Sports, Forbes, Feb. 13. From www.forbes.com/2004/02/13/cx_pm_0213manu.html Manchester Evening News (1968). May 30.Mellor, Gavin (2000). "The Genesis of Manchester United as a National and International Super-Club, 1958-68." Soccer and Society 1 (2), 151-166. Mellor, Gavin (2004). "The Flowers of Manchester: The Munich Dissater and the Discursive Creation of Manchester United Football Club." Soccer and Society 5 (2) Summer, 265-284. Reilly, Norman and John Nadeau (2006) "Revenue generation in professional sport: a diagnostic analysis." International Journal of Sport Management and Marketing 1 (4) 311-329. Reilly, Norman and Peter Knight (2007). "Knowledge management best practices in national sport organisations." International Journal of Sport Management and Marketing 2 (3) 264-280. Rowley, Jennifer (2005). "Brand and Club Alliances: Manchester United and Britannia Building Society." Management Research News 28 (8), 55-60. Strategic Direction. (2005). "Can Habitat and Chelsea score with their names: UK icons' uphill struggle for bigger market share." SD 21 (2) 27-29. Sonmez, Mahmut and Deli Yang (2005). "Manchester United versus China: A counterfeiting and trademark match." Managing Leisure 10 (1). The Times, February 8, 1958. Webb, GR, Watchtendorf, T and Eyre, A (2000). "Bringing Cutlture Back In: Exploring the Cultural Dimensions of Disaster." International Journal of Mass Emergencies and Disasters 19 (3) 7. Appendix: Source: O'Reilly and Nadeau, 2006 Fig. 1. MU badge [Medium View] [Enlarged View] Source: Sonmez and Yang (2005). Approved trademarks by the Trademark Office in China. Source: MU Trademark Office Read More