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NBA Market Selection

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Research paper detailing NBA team's market selection

Research paper detailing NBA team's market selection

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  • 1. Bryan Davidson NBA Market Selection In professional sports, teams must be able to make market selection decisions inorder to segment the different markets that they may appeal to, choose their targetedconsumers within those markets, and position their product (team) against theircompetition. Each team must figure out their own unique way to appeal to their markets,and establish their own target fan base in order to sell their product. The teams in theNational Basketball Association, such as the Phoenix Suns, New Jersey Nets, and theChicago Bulls, do a great job at making their market decisions in ways that fit theirindividual products. These teams, being from the east coast, mid-west, and west coast, allhave major similarities and differences in the way they segment, target, and positionthemselves and their markets, helping them to be three of the most successful teams (interms of revenue, popularity, and ticket sales) in the entire league. The Phoenix Suns were founded in 1968, and were the first professional franchiseto be located in the state of Arizona. In the team’s first four seasons in the NBA, theymade the playoffs only one time, but finally had their first winning campaign during the1975-1976 season; shocking the world by making it to the NBA Finals. Although theylost in six games, the trip to the Finals was the start of the team’s success that has lasteduntil present day. The Suns have the fourth-best all-time winning percentage in the NBA,winning 56% of their games, and making two appearances in the NBA Finals. In fact, theSuns have the most overall wins in NBA history for a team that has never won an NBAchampionship (Phoenix Suns 2011). However, even with no titles, the Suns are still oneof the most popular & successful teams in the league, thanks to their award winningmarketing team. It is the Phoenix Suns’ sales and marketing team’s goal to “Set the standard by
  • 2. Davidson Final Paperwhich excellence is measured throughout the sports industry” (Forro p. 3). The Suns’sales and service culture is recognized as one of the leaders in sports industry. They haveset up a program known as S.T.A.R.S., which focuses on sales techniques, sales culture,and new business programs that help them close deals. Like most NBA teams, gaterevenue is the most lucrative form of revenue for the Suns. That is why their sales staffmakes over “100 cold sales calls a day, host personal in-center client tours, establishrelationships with perspective clients through face-to-face meetings, and promote theSuns product in every way imaginable” (Forro p. 5). The Suns staff prides themselves oncatering to their client’s specific needs, while always looking for ways to add value to theoverall fan experience when they attend a game. However, it is how the Suns havesegmented, positioned, and targeted the market that truly makes them stand out from theircompetition. In 2004, the Phoenix Suns had a team makeover, bringing in players such as SteveNash and Quinten Richardson, and head coach Mike D’Antoni. Along side Amar’eStoudemire, Joe Johnson, Shawn Marion, and Leandro Barbosa, the Suns jumped out to aquick start, heading towards one of the most successful seasons in team history (PhoenixSuns 2011). During the offseason when the team made all of the transactions that theydid, it was critical that the Suns’ sales and marketing teams let the Phoenix communityknow what was going on. They had to reposition themselves in the marketplace, establisha new target market, and segment the different potential markets in order to see the typeof success off the court (ticket sales, sponsorship, merchandise sales) that they felt theywere going to have on the court (Forro 2011). The Suns were coming off one of theirworst seasons in team history, and knew that they had a lot of work to do to prove to thefans that they were ‘for real’ this time around. 2
  • 3. Davidson Final Paper In order to start their campaign that a new era in Phoenix Suns basketball hadarrived, it was critical for the Suns’ marketing team to segment the Arizona market. Theyneeded to identify the different groups of consumers within the saturated sportsmarketplace (Suns, Arizona Cardinals, Arizona Diamondbacks, Phoenix Coyotes, ASU,University of Arizona) based on their common needs and demands. To do this, the Sunssales team created numerous surveys and questionnaires that they gave out at localPhoenix area ‘hot spots,’ as well as at Diamondback games, both main college campuses,and through online email blasts. These surveys were designed to get substantialdemographic, socioeconomic, psychographic, geographic, behavioral, and benefit data,helping the Suns to see what type of people had interest in coming to Suns games, whohad come in the past, and who new potential fans may be (Donavan 2006). After handingout the surveys, and getting a substantial amount of feedback (45% of people filled themout) the Suns were able to compile the data, and establish who exactly they needed totarget. After assessing and segmenting the Arizona sports marketplace (differentiatingthe potential fans based on their demographics, behaviors, and likelihood to attend Sunsgames) the Suns’ next step was to choose a particular segment(s) that would allow themto most efficiently and effectively attain their marketing goal of increasing the excitementand ‘hype’ for the new era of Phoenix Suns basketball. The first major target market thatthe Suns established was families with children. The suburbs of the regional communitythat is near downtown Phoenix consist of an enormous population of young families. Theresults of the Suns’ surveys showed that these families had a great deal of interest incoming to Suns home games, but felt that they would attend even more games if “Thestadium catered more to our children’s needs” (Donavan 3). The Suns’ second target 3
  • 4. Davidson Final Papermarket that they established was “empty nesters that make over $200,000 a year”(Donavan p. 2-3). These potential customers require special treatment before, during, andafter games, and the Suns felt that by catering to their needs, it would enhance revenuesgreatly. During this time, the team decided to renovate their stadium, spending “$70million to include playground areas, a courtside club, and retail stores” (Donavan p. 2).These ‘upgrades’ catered specifically to the Suns’ two main target markets, in hopes thatthey would provide more incentives to attend games. The new amenities that the Suns’stadium now offered provided families the opportunity to use the playgrounds and shopsbefore, during, and after games, helping to enhance their children’s game day experience.Also, the courtside club and enhanced luxury boxes catered to the high-income, upper-class fans so that they could utilize Suns games for networking opportunities and luxuryaccommodations. Lastly, the Suns marketing staff also utilized a color-geographic grid ofthe Phoenix region, depicting where the target markets live. This allows them “To sendpromotional campaigns directly to the niche markets” (Donavan p. 3). The target marketsthat the Suns were able to establish back in 2004 are still prominent today, helping tomake the Suns one of the most successful NBA teams in terms of ticket sales & gameattendance. Once the Suns were able to segment and target specific groups of fans in thePhoenix sports marketplace, it was critical that they positioned their brand and image inthe minds of their new and old consumers. In 2007, the Suns acquired center ShaquilleO’Neal in a blockbuster trade. The deal ended up not only changing the team’s presenceon the court, but off the court as well. Shaq’s aura instantly made the Suns once again the 4
  • 5. Davidson Final Paper‘hot spot’ of Phoenix, quickly increasing attendance back to what it was when the newera of Suns basketball started. Shaq also was able to help blow up the Suns’ social mediaefforts, which had been building for years. He joined Twitter, and instantly had thousandsof followers. Suns players and front office executives quickly followed in his footsteps,making the Suns one of the most dominant forces on the Internet. As Amy Martin put it,“Shaq’s Twitter embrace dramatically increased the focus on social media in all cornersof the Suns organization” (Baer 2009). The Suns addition to Twitter was only the start oftheir new positioning and marketing blitz that the team is still continuing to conduct. Following the Twitter phase, the Suns truly became a digital team. The team’swebsite features more than 20 different bloggers, including players and front office staff,and granted fans access to a podcast, a widget, and a Web toolbar. The team also createdits own Facebook page (individual players have their own as well), a YouTube channel,and launched a Suns Locker Room virtual tour that gives their targeted fans more of abehind the scenes look at their favorite players. The biggest move that the Suns havemade was creating Planet Orange, which is “The Suns virtual online community that isfocused on user-generated content, with forums, aggregators that combine posts from fanblogs & Twitter, photo streams, and contests” (Baer 2009). The Suns are the only NBAteam with this type of online community, which has helped them to position themselvesas the most innovative professional sports team in the mind of their consumers. Since the Suns’ main target market is family with children, they decided that theyneeded to take advantage of their Internet presence. Since 2008, they have created anannual Tweet-Up Night where “Suns fans on Twitter can come to a game for a 33%discount on tickets, sitting in special Twittervile seats, a Suns Twitter T-Shirt, and a 5
  • 6. Davidson Final Papersouvenir bag” (Baer 2009). The point of these activities is to create a meaningfulexperience for Suns fans where they can spread the word to other fans, helping toincrease awareness of the team. Tweet-Ups were great ways for the Suns to “Grow theteam’s social media presence overall, sell tickets, and integrate sponsors” (Martin 2011).These fan interaction activities have helped the Suns to ‘humanize their brand,’ grantingtheir fans the opportunity to have personal connections with the team. These connectionshave lead fans to have the perception that the Suns are a fan-first organization that iswilling to do whatever it takes to make those fans happy. Currently however, the Suns have not had the success that they had the past fewseasons. With this underachievement has come a new team marketing approach. Itappears that “Instead of selling fans on the promise of success and hope next season, theSuns are running out a flashy campaign recounting the glories of yesteryear” (Denny2011). The Suns did not have the type of gate revenue success this past season that theyhad in the past, and are trying to figure out new ways to reposition themselves in theminds of their target markets. They believe that this type of campaign, promoting thelegacy of the franchise as a whole, will help to reestablish their core fan base, whilehelping to inspire hope for future success. These are critical times for the Suns, wherethey need to reassess the marketplace, and see who truly their target fans are. As you willsee, they are heading in a different direction then both the New Jersey Nets and ChicagoBulls; a direction that could be deadly for the team’s overall profitability. Just like the Suns, the New Jersey Nets franchise has had a long tradition ofsuccess and Hall of Fame players. The team has existed in New Jersey since it’s foundingin 1967, except for playing some of its ABA years on Long Island. Although originally a 6
  • 7. Davidson Final Papermember of the American Basketball Association, where they were known as the NewJersey Americans, the franchise has been known by its current Nets nickname for the past34 years. The Nets, the only professional basketball team in New Jersey, were asuccessful ABA franchise winning two championships in a three-year span during the1970s (1974 and 1976). Since that time, the team had struggled for the remainder of the20th century, winning zero division titles between 1975 and 2001. Finally, with the arrivalof all-star point guard great Jason Kidd, the Nets got back on the right track, winning fourdivision titles from 2002-2006. The first two division titles during that span, 2002 and2003, included consecutive trips to the NBA Finals, in which they lost both series asunderdogs to the Los Angeles Lakers and San Antonio Spurs. During the next fewseasons the Nets prolifically struggled, not attaining an above .500 record since 2006. The Nets have been woeful as of late, including a 12-70 record during the2009-2010 season. This mark is tied for the fourth worst record for a regular season inNBA history. The team made many changes to try and prove to fans that these days werein the past. The Nets hired former Dallas Mavericks head coach Avery Johnson in 2010to guide them out of the dismal days. Additionally, the front office was overhauled,hiring former Philadelphia 76ers general manager Billy King as their own GM, andgaining a new outspoken Russian billionaire owner, Mikhail Prokhorov. Prokhorov haschanged the culture of the franchise during his one year as the owner, and has evenguaranteed a playoff appearance next season. During the team’s abysmal 12-70 season,the Nets lowered their cost per ticket to $10 per seat to try and give fans more incentivesto come to games. Even with this lowered cost, the team struggled to get highattendance, rarely filling more than 60% of the 18,500-seat capacity Prudential Center(Corazza 2010). However, during the past year, the Nets front office personnel and 7
  • 8. Davidson Final Paperstrategies have changed tremendously to adapt to their fans’ needs. Most of Nets marketing focus is internal. The team’s first overall goal andobjective is “to increase the market share and to offer superior customer service” (Varlaro2011). Even with the Nets’ struggling income due to low game-night attendance, theteam has decided to hire more ticket sales representatives to try and increase personalconnections with customers. The Nets’ main marketing goal is “to increase ticket sales by5%, generate 500 more ticket season holders and to increase awareness” (Varlaro 2011).The team plans to achieve these goals by examining flexibility, commitment, peopleparticipation, and suitability. The Nets want to focus on getting more involved with thecommunity, both in Newark, NJ, and Brooklyn, NY where they will be moving to withinthe next three years. The Nets believe that by strengthening their public relations throughcommunity relations, they will also be able to increase their market share. The franchiseintends to host charities with proceeds going toward Brooklyn schools. They want to alsobe more financially profitable by offering discounts that combine ticket sales and teammerchandise. These tactics offer more incentives for fans to come to a game, than just thetalent of play on the court itself. The Nets are also trying to improve their image by playing to the marketstrengths, and by frequently wearing their old ABA jerseys. Prokhorov, the Nets’ owner,wants to also try and prove that he is one of the locals. He rides the train to work everyday, and often sits in the nosebleed section at the Prudential Center in order to furtherunderstand how the average customer feels. The Nets’ marketing team also wants toincrease attendance through higher sponsorship exposure. This includes having morefrequent game day themes (e.g. family night), and more entertaining events at the 8
  • 9. Davidson Final PaperPrudential Center (e.g. concerts, carnivals, other sporting events). The team wants tobecome more involved with the community by giving back to & working with local highschools, colleges, and community youth organizations as well. This would truly allowthem to reach out to their different markets, and help segment those fans that truly wantto attend games. After reassessing the market place, the Nets have proclaimed three main targetmarkets that they believe will be the best candidates to promote and market their team to.The first main target audience that the Nets have established is families with childrenbetween the ages of 8-17, who are predominantly upper-middle class to middle classCaucasians, and males & females between the ages of 21-45, who are college educatedCaucasian or African-American individuals. The team’s second target audience is middleclass males and females between the ages of 26-39, who have purchased teammemorabilia and attended a few games. The Nets’ last main target audience is lowerclass males and females between the ages of 18-45, who are Latinos and Asians withtheir GEDs (Varlaro 2011). Prokhorov and the Nets believe that if they are able toproperly reach out to these target markets, it will open up opportunities for the team toenhance its attendance, and establish new fans who might not have been consumers everbefore or who used to be fans before the team’s recent struggles. In terms of positioning, the Nets want to use marketing tactics to positionthemselves through the market niche of their opponents. For instance, when the Nets hostthe Celtics or Heat, they promote the game as the Nets vs. “the big three,” and when theyhost teams such as the Lakers, Knicks, or Thunder, they promote the game as the Netsteam vs. Kobe Bryant, or Amar’e Stoudemire & Carmelo Anthony, or Kevin Durant. 9
  • 10. Davidson Final PaperAdditionally, as mentioned above, the Nets want to find ways to increase branding byusing their retro ABA jerseys more often, helping to tap into the team’s glory days(Varlaro 2011). They also want to increase promotions through print and electronicadvertising, social media, email, television, music & radio, and the internet, in order toappeal to their target markets, and stay up to date with the changing times of society’sways of communication. Currently, the Nets are only one year into fully utilizing their new strategies, andthe results of their marketing plans are still somewhat unknown. However, this seasonmarked major steps in the right direction with the addition of All-Star guard DeronWilliams, and having a record of 24-58, a large improvement from the year before.Although they have not had the type of success that the Suns have had as of late, thefuture for the Nets looks extremely bright. In terms of talent, the team is one or twopieces away from becoming a contender again in the Eastern Conference, and it is up tothe Nets’ front office to make sure that their target markets know just how bright theteam’s future really is (New Jersey Nets 2011). During their next few seasons, both inNew Jersey and Brooklyn, the Nets will still have to prove their worth to fans, in order tobecome more profitable. The Nets’ struggles on the court during the past five seasonshave been evident in all areas of the franchise. Now the Nets must fully utilize & buy intothe new marketing strategies that they have established. Although they are not where theChicago Bulls are just yet, the opportunities are truly endless for the Nets, and fans havehigh hopes for seeing the success of the past become evident in the present and future. Similarly to both the Suns and the Nets, the Chicago Bulls are one of the mostsuccessful franchises in the NBA. Since being founded in 1966, the Bulls have gone on to 10
  • 11. Davidson Final Paperwin six NBA championships behind the legendary play of Michael Jordan and thecoaching of Phil Jackson. The Bulls won two three-peat to get their six championships,and are the only team in NBA history to have a season with 70 wins or more (going72-10 during the 1995-1996 season). Never loosing an NBA Finals appearance, the Bullshelped to regain interest in the NBA, and quickly became one of the most popular teamsin the league. Unfortunately, since Jordan’s departure, the team has not had nearly thetype of success that they once had. They had numerous of non-playoff seasons, with adiminishing amount of ticket sales. Finally in 2008, the Bulls regained their ‘luck’ andwon the Draft Lottery, landing them the best player in the country at that time DerrickRose (Chicago Bulls 2011). With Rose, the Bulls are now back in the playoffs and is oneof the most exciting teams in the NBA. The new changes has also lead the Bulls’marketing team to create new ways to reach out to the team’s targeted markets, helping tobring the team back to the Jordan years. After Michael Jordan retired, the Chicago Bulls franchise went through anextensive rebuilding process. Within this rebuilding process the Bulls had five verydismal years; recording a franchise worst record of 15-67 during one of the seasons.They also went through a few different coaches, and often found themselves picking inthe NBA Draft Lottery year after year. During this time, ticket sales were also averaginga $2,000-$3,000 dip per night. The Bulls tried to use marketing strategies that werestrongly rooted in tradition and what the Chicago Bulls were. Finally, during the2004-2005 season, the Bulls returned to the playoffs. They were able to do this with theyoung nucleus of Ben Gordon, Luol Deng, and Kirk Hinrich. During his rookiecampaign, Gordon became the first rookie to ever win the 6th Man of the Year award, andBulls fans once again had hope in their team (Chicago Bulls 2011). However, the team 11
  • 12. Davidson Final Papercontinued to struggle, not making the playoffs during the 2007-2008 season, forcing themto once again have a lottery pick in the Draft, which ultimately landed them DerrickRose. The Derrick Rose and New Bulls Basketball Era officially began in 2008. Duringthis time, the Bulls have made the playoffs three straight years, and are currently theNumber One seed in the Eastern Conference playoffs, with the best record in the NBA.During this New Bulls Era, the team’s marketing group is trying to reach the same typeof audience as the other NBA teams. However, the Bulls are doing it in their own uniqueway. The majority of the other NBA teams are targeting a younger audience, throughgrassroots, youth leagues, or interactivity throughout the community. One way the Bullsare trying to reach their target market is through technology. Earlier in April, the Bullsbegan a program with SMS messaging that is able to personalize the experience for theteam’s consumers and fans. With this program, fans are able to text the word SCORE toBULLS, and be able to receive real time updates and scores via their cell phone (NBA’sChicago Bulls 2011). The Bulls plan is to continue to use these types of innovativemarketing approaches in order to truly engage the fans, and grant them the opportunity tointeract with the team as a whole. The Bulls have also been able to connect to a different type of audience throughBullsTV. With BullsTV, fans are able to see their favorite players in action, both on andoff the court. The TV programing provides exclusive interviews, practice videos, and anoverall behind the scenes look into the Bulls players’ daily lives. This program hashelped to enhance team, sponsorship, and advertising revenue each year since it has beenin existence, and the viewership of the different programs has also grown exponentially 12
  • 13. Davidson Final Paper(NBA’s Chicago Bulls 2011). Although there has only been a short period of time sincethe new Bulls marketing strategies have been put into place, there has already beentremendous feedback. With the recent success of the Chicago Bulls, an already loyal fanbase, and these new marketing strategies, the Bulls are headed straight to the top of theNBA in terms of attendance and profitability. Like the Nets, the future is extremely brightfor the Chicago Bulls, with endless possibilities for further success to be seen. Although the Phoenix Suns, New Jersey Nets, and Chicago Bulls all havedifferent personnel, goals, and on the court success, the teams are all able to use similarmarketing strategies within their communities, in order to segment the market place,establish specific target markets, and position their brands within the minds ofconsumers. All three teams have been able to assess their specific market places in orderto determine who to target. While they do not all share the same exact target markets (alltarget the youth in one way or another), they all have tapped into the social media andtechnology craze in one way or another, helping to better reach out to those targetedconsumers. Also, all three teams have tried to use their teams past historical success inorder to market the future (reliving the past, usage of retro jerseys, etc.). Even though theSuns, Nets, and Bulls may be headed in different directions on the court, all three teamshave successfully used their marketing abilities to keep their product relevant within theirspecific marketplaces, allowing for enhanced revenue opportunities. If the teams are ableto continue this trend, and also establish consistency with their on the court product, thenall three teams will be relevant within the elite class of the NBA for a long time to come. Bibliography 13
  • 14. Davidson Final PaperBaer, Jay. "A Social Media Slam Dunk." Convince & Convert. 22 Jan. 2009.<http://www.convinceandconvert.com/integrated-marketing-and-media/a-social-media-slam-dunk/>.“Chicago Bulls.” Wikepida. 23 April 2011. Wikimedia Foundation, Inc.http://en.wikipedia.org/wiki/Chicago_bullsCorazza, Ryan. “Nets bag marketing opportunities.” ESPN. 3 April 2010.http://sports.espn.go.com/espn/thelife/news/story?id=5048596Denny, Brad. “Phoenix Suns: New Marketing Campaign a Harbinger of Sorrow for2001-2012?” The Bleacher Report. 14 March 2011.http://bleacherreport.com/articles/633902-phoenix-suns-new-marketing-campaign-a-harbinger-of-sorrow-for-2011-2012Donavan, Todd. "Sport Marketing." Cenegage Learning (2006): 1-10.Forro, Nick. "Where All Stars Happen." 2009-2010 Phoenix Suns New Business Team &S.T.A.R.S. Program. 2009: 1-10. 14
  • 15. Davidson Final PaperMartin, Amy. “Social media success requires more than just showing up.” SportsBusiness Journal. 18 April 2001.“NBA’s Chicago Bulls use personalized SMS marketing.” Deercreek Consultants. 4April 2011. http://deercreekconsultants.net/nba%E2%80%99s-chicago-bulls-use-personalized-sms-marketing“New Jersey Nets.” Wikipedia. 22 April 2011. Wikimedia Foundation, inc.http://en.wikipedia.org/wiki/New_jersey_Nets"Phoenix Suns." Wikipedia. 22 Apr. 2011. Wikimedia Foundation, Inc.<http://en.wikipedia.org/wiki/Phoenix_suns>.Shank, Matthew D. Sports Marketing: A Strategic Perspective. New Jersey: PearsonEducation, Inc, 2009.Varlaro, Giorgio. “Strategic Marketing Plan: New Jersey Nets.” Scribd. 2011.http://www.scribd.com/doc/49644703/Strategic-Marketing-Plan-New-Jersey-Nets 15

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