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Using market segmentation to increase returns

This is an excerpt from Canadian Sport Marketing 3rd Edition With HKPropel Access by Norm O'Reilly,Benoit Seguin,Gashaw Abeza & Michael L. Naraine.

A sport marketer undertakes segmentation only when it makes financial sense. That is when a greater return is worth the cost in time, ­human resources, and financial resources committed to do the segmentation. Thus, deciding to sell tee-­shirts to parents of a youth soccer team to raise funds for a tournament would not justify segmentation ­because the revenues would not offset the research costs involved, whereas selling tickets for the World Under-17 Soccer Championships in Toronto would justify segmentation ­because the market and potential revenues are significantly higher.

Practically speaking, market segmentation involves the aggregation of potential customers into groups, or market segments, that have similar needs or wants and ­will respond similarly to marketing action, thus helping the organ­ization achieve its objectives.

The segmentation pro­cess typically yields one of three scenarios.

• In the “one product, multiple market segments” scenario, the same product is marketed in dif­fer­ent ways to dif­fer­ent market segments. A non-­port example is the Harry Potter books, which are marketed in a completely dif­fer­ent fashion to two segments—­youth and adults—­through dif­fer­ent promotional strategies. A sporting example would be Toronto Blue Jays ticket sales: The same seat is marketed in very dif­fer­ent ways to a number of very dif­fer­ent markets—­single game (e.g., online, mass-­market promotions), corporate (e.g., phone sales to build relationships), season tickets (e.g., preseason promotions targeted to a previous season-­ticket holders), and group (e.g., reduced pricing for volume purchases).
• The “multiple product, multiple segments” scenario involves dif­fer­ent products for dif­fer­ent segments. Marketers in general typically cite the example of Gap Jeans, which offers dif­fer­ent brands of jeans to dif­fer­ent markets through its three brand stores, Gap, Banana Republic, and Old Navy. In sport, a good example is when Maple Leaf Sports and Entertainment of Toronto targets dif­fer­ent sport market segments through its four professional sport franchises: Toronto Maple Leafs, Toronto Raptors, Toronto Argos, and Toronto FC.
• In the “segment of one” scenario, the organ­ization uses technology (e.g., online ordering, databases) or custom products (e.g., custom jewellery, custom home products) to develop marketing programs specific to each customer. In the example of Dell Computers, customers can build a custom computer with the specific options they want rather than select from a ­limited number of offerings, unlike most of Dell’s competitors. A sport example would be a triathlon coach who customizes training programs for individual athletes.
  
  

In sport, like other industries, segmentation is a pro­cess: It is dynamic, as ­people’s needs, wants, ­drivers, makeup, and interests change over time. This chapter pre­sents a pro­cess for effective segmentation and describes how to use it.

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