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SITUATION ANALYSIS - Issue Bronwen Douglas from ESPN 1st yr

By Anthony Morales,2014-05-16 21:19
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1 Oct 2005The final step of the analysis will be conducted through a swot analysis. The B3 event consists of two main products, one being the core

    3

    B

    The Bikes, Blades and Boards Tour

    Tourism, Sport & Leisure Marketing 4320 A

    October 1, 2005

    Prepared For: Professor D. Zwick

    Prepared By: Alessandra Caruana

    Natasa Cvetkovic

    Milana Dozortsev

    Kevin Fong

    Doron Grinberg

    Erick Heikkila

    Case #1 - B?: The Bikes, Blades and Boards Tour

PROBLEM

     Bronwen Douglass, a first year executive at ESPN, the world’s largest cable network and a subsidiary of ABC Inc., previously worked for Advantage International, a major sports

    marketing firm. Ms. Douglass has been given her first major responsibility for ESPN. She must

    create a target list of potential sponsors for the B? Tour. The B? Tour is an “aggressive” sports

    competition for professional BMX stunt bikers, in-line skaters and skateboarders. It was created

    to capitalize on the wave of interest and participation in the emerging sports of aggressive in-line

    skating, stunt biking, & skateboarding and to build upon ESPN’s X-games brand equity, which

    serves to bundle market the image of youth and enthusiasm to ESPN viewers, sponsors, and

    advertisers. Although smaller than the X-Games, the B? Tour caters to the same target audience

    of “alternative” males, aged thirteen to eighteen. As entrance to the actual venue is free and the

    tour is only televised on ESPN, it is imperative that Ms. Douglass secures enough sponsorship

    for the event.

    Ms. Douglass must create a sponsorship proposal that is distinguished from thousands of other sponsorship proposals and must decide on a beverage company that will be best suited for

    the sponsor-event match. In addition, Ms. Douglass must be able to quantify the results and show

    the potential sponsor how sponsoring this event will help them not only increase their revenues,

    but also increase their brand awareness in their core market.

     In order to get the best sponsor-event match and have a better chance of the sponsor

    actually agreeing to the proposed deal, Ms. Douglass must find the beverage company whose

    target market, goals and image are closest to that of the B? Tour. Ms. Douglass, therefore must

choose from the following brands: Pepsi, Coke, Evian, Perrier, and Gatorade as to whose

    sponsorship participation would lead to a win-win partnership.

SITUATION ANALYSIS

     In order to evaluate each alternative available, it is imperative to conduct an analysis of

    3 the BTour event. The evaluation will be based on the fundamental marketing principles namely the four P’s. As well, a detailed evaluation of the segmentation, targeting and positioning of each

    potential sponsor will be discussed. The final step of the analysis will be conducted through a

    swot analysis.

    3The B event consists of two main products, one being the core product of extreme sport, i.e. extreme in-line skating, biking and skateboarding, and the potential product is the extreme

    gaming lifestyle. The aim is to capitalize on the growing extreme sports market through events.

    The methods of distribution are television via ESPN/ESPN2 as well as through sponsor

    affiliations and their methods of distribution.

    ESPN is investing in the event through airtime and prize money, yet the event itself is free

    and accessible by all viewers and participants. Currently any promotions that are conducted will

    be on-site creative components and will likely be affiliated with the main sponsor.

    SWOT Analysis:

    Strengths:

    3The strengths of B include the following:

    3? B is broadcasted through ESPN which is a leader in sports broadcasting and televising

    extreme sports

    3? B has the ability to build off of the existing brand equity of the X-Games which was

    created by ESPN2

? There is a current shift towards extreme gaming and a growing trend in the in-line skating

    (23 million in-line skaters), BMX biking (28% growth in the first quarter of 1997) and

    skateboarding field

    ? The target audience and the growing extreme sports market presents a profitable

    opportunity for potential even sponsors, which in effect presents a beneficial relationship

    3for B

    3? B obtained cooperation from sports associations such as the ASA (Aggressive skating

    association, The Bicycle Stunt Series etc. These association help gain credibility for the

    event.

    Weaknesses:

    3The weaknesses of B include the following:

    3? B Tour is a one day sporting event with a complementary entrance fee, therefore funds

    for this event must be attained through sponsorship

    3? Finding sponsors may be a difficult task since B is a one day event and sponsors may not

    be inclined to invest

    Opportunities:

    3The following are a list of opportunities and threats for the B Tour:

    3? Due to the growing extreme sports market, B has the opportunity to exploit the

    opportunity by hosting multiple yearly events by gaining brand awareness and increasing

    brand equity among the target segment

    3? Since B is a one day event, sponsorship costs may be minimal in comparison to week long events such as X-Games therefore potential sponsors may be more willing to invest

    in this event

    3? B is able to build off the brand equity experienced by the X-games and create new

    3demand for the B brand tour

    3? B also has the opportunity to co-brand the event with other extreme sports producers

    such as apparel companies that target the alternative males segment

    Threats:

    ? Due to the event size, it may be difficult to convince sponsors to invest in the one day

    event

    3? Since the X-Games already exist, it may be difficult to differentiate B

    3Please refer to Appendix A for a network model of B.

    ALTERNATIVES & EVALUATION

     As mentioned previously, Ms. Douglass is considering five main choices for the beverage

    sponsor position. Each choice should be investigated and researched in order to gain a clear

    understanding of each brand’s goals and future objectives. Therefore the method for evaluation

    of the following alternatives will be based on STP: Segmentation, Targeting and Positioning of

    the potential sponsors company that would provide the best mutually beneficial sponsor-event

    relationship.

    Coca-Cola

    Segmentation: Traditional

    Target: Universal/Mass Market

    Positioning: Leader in Cola beverages

    Coca-Cola is the main sport beverage sponsor, with a worldwide market share of 42%.

    The company sponsors many events with major team sports such as baseball, basketball, and

    hockey. They are currently looking into the bottled water market, as well as an opportunity to

    test the market’s response among certain demographic groups. The B? tour could provide the

perfect opportunity for many people to do random “taste-tests” and provide Coca-Cola with

    feedback on their new product. However, historically Coca-Cola has not been eager to enter the

    extreme sports market as they do not feel it’s a large enough market for them to promote their products in. It has been Coca-Cola’s practise to allow Pepsi-Cola to dominate this market as opposed to spending millions of dollars battling their rivals in a market that they consider quite

    3 event does not fit the traditional market segment nor is it trying to targeting insignificant. The B

    a mass market, rather a specific one. Therefore the overall goals of both organizations are not in

    line with each other.

    Pepsi Cola

Segmentation: Youthful generation

    Target: Universal market young and young at heart

    Positioning:

     Pepsi-Cola, Coca-Cola’s main rival and sponsor of the Winter and Summer X-Games,

    would seem like the obvious choice for the official sponsor of the B? Tour. Their creativity in

    marketing works extremely well with the alternative set and they try to position themselves as

    the producer of drinks for people who are youthful and energetic, which is a great match for the

    B? Tour. In addition, Pepsi-Cola is launching new bottled water, Aquafina, with the goal of it

    becoming the top-selling bottled water in the United States. By having the option of giving out

    samples of their new product at the tour site, Pepsi would be able to increase the brand awareness

    of their new product, which would thus assist them in reaching their goal of market expansion.

    Although Pepsi-Cola, with annual global media spending close to 1.4 billion dollars, could easily

    afford to sponsor the B? Tour, the company may hesitate since they already invest heavily in the

    X-treme Sport market with no other valid competitors. Pepsi already has a sponsorship deal with

    the X-Games, and thus may be unlikely to open new contracts, with a smaller tour such as B?.

Gatorade

    Segmentation: The active sports athlete

    Target: Male Athletes

    Positioning: Leader of sport drink market

     Gatorade, considered as “the original sports drink”, was first created for the athletes at the

    University of Florida in the late 1960’s and then made available to the general public in the early

    1970’s. Although Gatorade has sponsored more traditional sports such as hockey and football,

    with the emerging trend of extreme sports becoming more mainstream, B? would fit Gatorade’s

    marketing strategies. In addition, since Gatorade has done little in the past with extreme events,

    the B? tour provides a great opportunity for them to penetrate and yield high growth in the

    market. It is within this same market, where one of Gatorade’s main competitors, All-Sport

    whose parent company is Pepsi Co., is currently dominating. Since they have just lost their

    sponsorship with the NHL, Gatorade has extra capital to invest in new profitable avenues that

    could lead to a dominating market presence in the future. However, the one key issue that Ms.

    Douglass must be aware of is that Gatorade has been historically associated with traditional

    sports. Therefore, they may be unwilling or unlikely to take a risk differentiating from their

    traditional base, thus Ms. Douglass must be ready to prove to Gatorade that a partnership with

    the B? would be a profitable and progressive step for the company.

    Perrier

    Segmentation: mature

    Target: Yuppies upscale consumers who purchase premium goods and services

    Positioning: Premium Sparkling water company

     Perrier, owned by The Perrier Group, appears to be the choice that Ms. Douglass is most

    excited about. Perrier is looking to promote its new national brand of water, Valvert, a brand that

    they hope will compete head to head with Evian. Ms. Douglass feels that this would be a key

    aspect to focus on in the sponsorship proposal, since the B? tour would be able to provide Perrier with a means of gaining exposure for their product, increasing brand awareness and paving the wave for growth in the US market. Perrier also has previous experience sponsoring popular sports, such as the French Open. However, as is the case with Evian, the target market of Perrier, Valvert and B? are not congruent. Perrier targets an older, higher-class market and does not consider youths as the key purchasers of its products. As well, Perrier would not be a good choice since they may still have lingering negative perceptions over their product recall in the early 90’s, when there were public concerns regarding the discovery of traces of highly toxic benzene in their bottles.

    Evian

    Segmentation: Urban fitness market

    Target: Yuppies

    Positioning: Premium bottled water

     Evian, owned by Great Brands of Europe, a subsidiary of Group Danone, would be a fairly interesting, yet risky choice. Evian spends 10 million dollars a year in advertising, as they try to position themselves as the number one choice in the “high end” water market. Evian has attempted to increase their brand awareness by sponsoring tennis, volleyball and cycling tournaments, which usually tailor to a high-class, white market. Although in the past Evian has not been targeting a youth market, there is great opportunity for expansion. However, it has been Evian’s position to target solely to the “urban fitness/yuppie” market, which would not be a good fit with the B? target audience, who are much younger and more rebellious. Even Evian’s new

    Volvic brand of water tailors more to an older market that enjoys outdoor activities such as hiking, and other non-extreme sports.

RECOMMENDATIONS

    After looking at what each Beverage Company and brand has to offer, Ms. Douglass should decide to target Gatorade as the principal beverage sponsor of the B? tour. It is highly

    important that Ms. Douglass not let her personal preference for Perrier cloud her judgement of

    which sponsor would provide the best match for the B? Tour. Gatorade is seen as the “original

    sports drink” and targets mostly youths. This would be a great fit with the target market of the B?

    tour. Although Gatorade, as previously mentioned, sponsors more mainstream sports, the fact

    that extreme sports have become more conventional in the past few years, gives Gatorade the

    opportunity to penetrate a market that is expanding, while still maintaining their core market.

    Another reason why Gatorade should be Ms. Douglass’ first choice, is the fact that since they

    have just lost their sponsorship deal with the NHL, they have the extra capital to invest in a new

    market that they have not previously put a lot of emphasis on in the past. Since the B? Tour is a

    comparatively smaller event, this would be the perfect opportunity for Gatorade to test whether

    there is a good fit between themselves and the extreme market, without having to invest a large

    amount as required by the X-Games. Please see Appendix B for a further description on the

    Gatorade company. Perrier, while a less obvious choice, has the most to gain from the B?

    association. However, there is a very large risk for Perrier, since they have never positioned

    themselves in the youth market before, thus allowing for huge disappointment if the target

    market does not respond positively. This move can also prove to have detrimental effects on

    current brand, causing brand dilution.

CONTINGENCY PLAN

     In order for the B? event to be successful, beverage sponsorship must be attained.

    Therefore, a contingency plan must be established, in the chance that Gatorade does not want to

    sponsor the B? Tour. The next best option, for Ms. Douglass would be to approach Pepsi Co.,

    specifically their All-Sport brand, to be the official sponsor of the B? Tour. This would a good

    second option since Pepsi Co. not only dominates the extreme sports market with Mountain Dew

    (sponsoring the Summer X-Games), but also because Pepsi Co.’s target market is youth oriented; a great fit with the B? Tour. Pepsi Co. as previously discussed, also has the budget to accept the

    proposed sponsorship deal and its creative communications are a good match for the

    “alternative” youth market that the B? tour is tailored towards. Having All-Sport sponsor the tour

    would also give Pepsi Co. the opportunity to increase its brand awareness and possibly establish

    itself as “the sports drink” choice of the “alternative” youth.

    IMPLEMENTATION STRATEGY

     The ultimate cost of a project of this calibre, is if Ms. Douglass selects the wrong sponsor

    3and loses valuable time and money that would have gone into the preparation of the B tour.

    Therefore, before making her choice, Ms. Douglass has to carefully consider all possible

    alternatives.

    After choosing which company to approach, Ms. Douglass should prepare a sponsorship

    package that will give the sponsors enough background information on the tour. Each package

    should be tailored for the specific sponsor, so that they would fully understand why it would be

    beneficial to sponsor the tour and what sponsorship options are available for the sponsor in order

    to select the appropriate marketing mix (television commercials, billboards, etc) that would

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