5 Market segmentation and target marketing in sport
Learning Objectives
- To gain a comprehensive understanding of market segmentation and its practical application in the sports industry.
- To develop the ability to critically evaluate the rationale behind the selection of a target market and the methods used to achieve it. This includes understanding the factors that influence target market selection, such as consumer needs, preferences, and behaviours.
- To understand the different approaches to targeting a market, including concentrated marketing, undifferentiated marketing, and differentiated marketing. This includes an appreciation of the benefits and limitations of each approach, and the ability to evaluate the most appropriate approach for a given business or marketing situation.
Introduction
This week is all about understanding the key concepts of identifying and reaching your desired audience (whatever that looks like!) through tailored marketing strategies. We’ll cover the basics of market segmentation, including how to break down consumer segments based on common characteristics and behaviours, and how to use these segments to inform your marketing efforts. We’ll also delve into the different approaches to targeting a market, including concentrated marketing, undifferentiated marketing, and differentiated marketing, and explore the pros and cons of each approach.
What is market segmentation?
Market segmentation is the process of dividing a market of sport consumers into smaller groups of consumers with similar characteristics, needs or behaviour. The goal of sport consumer segmentation is to identify high yield segments – that is, those segments that are likely to be the most profitable or that have growth potential – and then target them effectively with the appropriate products, services or marketing campaigns.
There are many ways to segment sport consumers, such as:
- Demographic segmentation: This involves dividing sport consumers into groups based on characteristics such as age, gender, income, and education[1].
- Geographic segmentation: This involves dividing sport consumers into groups based on where they live, such as by region, city or neighbourhood[2].
- Behavioural segmentation: This involves dividing sport consumers into groups based on their behaviour, such as how often they watch sports, how often they purchase sport-related products or services, or what types of sports they are interested in[3].
- Psychographic segmentation: This involves dividing sport consumers into groups based on their lifestyle, values, personality, and interests[4].
- Loyalty segmentation: This involves dividing sport consumers into groups based on their loyalty to a team, league or brand[5].
- Benefit segmentation: This involves dividing sport consumers into groups based on the benefits they seek from consuming sports, such as entertainment, socialization, or self-improvement[6].
Once a market is segmented, the sport organisation can develop specific marketing strategies and programs to target these segments, which will increase the chances of success. Let’s have a listen to Jeffrey Burner[7] about market segmentation to provide further details into this important aspect of sports marketing.
Understanding market segmentation in sport is important because it allows sport organisations to identify specific groups of consumers with similar needs and characteristics, and tailor their marketing strategies and tactics to effectively reach and engage those groups. By segmenting the market, sport organisations can more effectively target their advertising, promotions, and other marketing efforts, which can ultimately lead to increased sales and revenue. Additionally, market segmentation can also help sport organisations to better understand their customers and develop more personalised and effective products and services that meet the specific needs and preferences of different segments of the market.
Case Study: Market Segmentation for an E-Sports Streaming Platform
Case Study: Market Segmentation for an E-Sports Streaming Platform
Background Information: Oz-E-Sports Inc. (please a round of applause for this pun!) is a new e-sports streaming platform that is set to launch in Australia in the winter sports seasons. The company wants to establish itself as a major player in the e-sports streaming industry by providing high-quality content and user-friendly features. However, the e-sports streaming market is highly competitive, and the company wants to ensure that its marketing efforts are targeted to the right audience.
What is the problem? Oz-E-Sports Stream Inc. wants to segment its market in order to identify the most profitable segments and target its marketing efforts accordingly.
What can they do? Oz-E-Sports Inc. decides to conduct market research to gather information about the e-sports streaming market. This will include gathering information on potential users of their platform including;
- Demographics: Age, gender, income, education, etc.
- Geographic: Location, region, etc.
- Behavioural: Frequency of e-sports watching, types of games watched, etc.
- Psychographic: Lifestyle, values, personality, interests, etc.
Based on the research, the company segments the market into the following groups:
- Segment 1: Casual e-sports viewers (ages 18-24, mostly male, low income, and live in Western Sydney, )
- Segment 2: Hardcore e-sports viewers (ages 25-35, mostly male, high income, and live in Sydney City)
- Segment 3: [Emerging market] Female e-sports viewers (ages 18-35, mostly female, varying income levels, and live in both Western Sydney and Sydney City)
We have discussed just a few examples of the many factors that can affect sport consumption behaviour. It’s important to note that the significance and impact of these factors may vary depending on the individual, the context, and the specific product or service being consumed. That’s why in class this week we will look at the different types of sport consumers and factors that may influence their consumption of sport gear and apply it to the following case study.
So once we have decided on a way to segment our customers – what next? The answer is: to target your market segment!!
What is target marketing?
Target marketing is when the marketing is focused on a specific group of consumers that have been identified through market segmentation. This is done by making the marketing mix appeal to that specific group of people. Target marketing in sport consumers is the process of identifying specific segments of sport consumers that are likely to be the most profitable or have growth potential, and then tailoring marketing efforts to effectively reach and appeal to those segments[8].
For example, a sport organisation might conduct market research and identify that a specific segment of sport consumers are young, affluent, and highly engaged with social media. To target this segment, the organisation might develop a marketing strategy that emphasises the use of social media platforms to reach and engage with these consumers. This could include creating engaging and shareable content, running social media advertising campaigns, and leveraging influencers and ambassadors who are popular among this target segment.
Active Sport Tourists: Millennials vs Baby Boomers
A study by Ruth IJspeert and Gilda Hernandez-Maskivker (2020)[9] found differences between the millennial and baby boomer active sport tourists in terms of social-economic characteristics, with baby boomers being mostly male, having a higher education level, and a higher income, while millennials were more female, had a higher education level, and a lower income.
Additionally, differences were found in motivations for active sport tourism, with millennials being more motivated by thrill and sensation, overcoming challenges, and adrenalin, while baby boomers were more motivated by health-related activities. These differences are important for tourism practitioners to take into consideration when creating marketing strategies and offering products that match the needs of these different segments.
It’s important to note that targeting specific segments of sport consumers requires a deep understanding of their characteristics, needs, and behaviour. Market research and data analysis are crucial tools that can help sport organizations identify and understand these segments, and develop effective marketing strategies to target them​ In simple terms, market segmentation is about finding groups of consumers in a market, and target marketing is about using specific strategies to reach those groups.
Classroom Case Study: Targeting Sport Consumers in Parramatta
Background: Peter Wynn Score (a sports retail company) is a small business that specialises in selling sport-related products such as equipment, clothing, and accessories. The company has been in business for several years, but has struggled to generate significant profits. The company is located in Parramatta with a population of around 250,000 people, and has a limited budget for marketing and advertising.
What is the problem? Peter Wynn Score wants to increase its sales and profits by targeting sport consumers more effectively. However, the company does not have a clear understanding of who its target consumers are, or how to reach them.
What can they do? Peter Wynn Score conducts market research to gain a better understanding of its target consumers. The research includes a survey, as well as focus group with consumers who have purchased sport-related products from the company in the past.
The survey results show that the majority of sport consumers are from Parramatta and that they are male, between the ages of 18 and 35, and have an average income of around $70,000 per year. The research also shows that the most popular sports in Parramatta are rugby league, football, and basketball.
The focus group interviews reveal that this group of sport consumers in Parramatta value convenience, quality, and good customer service when purchasing sport-related products. They also prefer to shop at stores that have a wide selection of products and knowledgeable staff.
Solution?
Let’s discuss this in class!
Choosing the right strategy
Any sports organisation must now carefully consider its approach to targeting its market and determine the most appropriate marketing strategy to use. Choosing the right marketing approach is crucial for the success of the organisation, as it can directly impact its ability to reach and engage its target audience. The options available include concentrated marketing, undifferentiated marketing, and differentiated marketing, each with its own unique approach and benefits[10]. The organisation must assess its target market and determine the strategy that will best meet its needs and effectively communicate its value proposition to its target audience.
Here are some examples of each[11];
Concentrated marketing can be seen in a small surf brand targeting the niche market of surfers in the Byron Bay region of Australia. The brand focuses on providing high-quality surf gear specifically for this group.
Undifferentiated marketing is demonstrated by a large supermarket chain offering a generic range of sports equipment for all types of sports, appealing to a wide range of customers.
Differentiated marketing can be illustrated by a sports nutrition company offering different products for specific sports, such as protein bars for bodybuilders, hydration drinks for runners, and recovery shakes for soccer players. The company segments its target market based on the nutritional needs of each sport, resulting in more specialised and effective marketing.
Now you have a go?
To wrap up this week
Market segmentation and target marketing are essential components of a marketing strategy. Market segmentation divides the market into specific groups based on common characteristics and behaviours, allowing for more effective targeting. Target marketing involves selecting a particular segment to focus marketing efforts on, with the goal of effectively reaching and engaging the target audience. By using these techniques, a business can tailor its marketing efforts to reach its desired customer base and achieve its marketing objectives.
We then explored the three strategies (concentrated, undifferentiated and differentiated). It is important to note that each approach has its own advantages and disadvantages, and the choice of which approach to use will depend on the business’s goals, resources, and target market. By understanding the relationship between these concepts, businesses can make informed decisions on how to effectively target and reach their desired customers.
Media Attributions
- Adapted from Brochado, A, Cristovao Verissimo, JM & de Oliveira, JCL 2022, 'Memorable tourism experiences, perceived value dimensions and behavioral intentions: A demographic segmentation approach, Tourism Review, vol. 77, no. 6, pp. 1472-86. ↵
- Adapted from Funk, DC, Alexandris, K & McDonald, H 2022, 'Sport consumer research and segmentation', in Sport Consumer Behaviour, Routledge, London, pp. 49-71. ↵
- Adapted from Funk, DC, Alexandris, K & McDonald, H 2022, 'Sport consumer research and segmentation', in Sport Consumer Behaviour, Routledge, London, pp. 49-71. ↵
- Funk, DC, Alexandris, K & McDonald, H 2022, 'Sport consumer research and segmentation', in Sport Consumer Behaviour, Routledge, London, pp. 49-71. ↵
- Adapted from Funk, DC, Alexandris, K & McDonald, H 2022, 'Sport consumer research and segmentation', in Sport Consumer Behaviour, Routledge, London, pp. 49-71. ↵
- Adapted from Funk, DC, Alexandris, K & McDonald, H 2022, 'Sport consumer research and segmentation', in Sport Consumer Behaviour, Routledge, London, pp. 49-71. ↵
- Burner, J 2020, Sports Marketing Unit 3 Module 2- Market Segments, 9 September, online video, <https://www.youtube.com/watch?v=Rnz1o_Pys9Y>. ↵
- Reihani, E & Khatibzadeh, M 2021, 'Marketing mix in sport tourism context', Journal of New Studies in Sport Management, vol. 2, no. 3, pp. 247-55. ↵
- IJspeert, R & Hernandez-Maskivker, G 2020, 'Active sport tourists: Millennials vs baby boomers', Journal of Tourism, Heritage & Services Marketing (JTHSM), vol. 6, no. 2, pp. 12-20. ↵
- Adapted from Hofacker, M 2022, 'What is differentiated marketing, concentrated, and undifferentiated marketing?', 21 November, ReferralRock, <https://referralrock.com/blog/differentiated-concentrated-undifferentiated-marketing/>. ↵
- Adapted from Hofacker, M 2022, 'What is differentiated marketing, concentrated, and undifferentiated marketing?', 21 November, ReferralRock, <https://referralrock.com/blog/differentiated-concentrated-undifferentiated-marketing/>. ↵
