Academic journal article Journal of Contemporary Athletics

Quantifying the Use of Relationship Marketing Tactics in the National Basketball Association

Academic journal article Journal of Contemporary Athletics

Quantifying the Use of Relationship Marketing Tactics in the National Basketball Association

Article excerpt

The National Basketball Association (NBA), like all other professional sports, must be continually diligent to improve fan perceptions and generate revenues to survive and thrive in the highly competitive sports industry (Cousens, Babiak, & Slack, 2001; Mawson & Coan, 1994). Fan perceptions are important because fans are the ones spending money on merchandise, concessions, and tickets (Giannoulakis & Drayer, 2009). Because the sport marketing landscape is constantly changing, marketers in the NBA need to adopt and assess new marketing tactics to increase sales (Dick & Sack, 2003; Dick & Turner, 2007). While the NBA, as a league, has adopted a new marketing strategy known as relationship marketing (Cousens et al., 2001), there is a relative dearth of research into the use of relationship marketing strategy and its effectiveness for NBA franchises. Relationship marketing is a customer-focused strategy including all marketing activities directed toward establishing and maintaining successful relational exchanges with consumers (Kim, Trail, & Ko, 2011; Williams & Chinn, 2010) that focuses on retaining customers to increase profitability (Bühler & Nufer, 2010; Payne & Frow, 2000).

Sport is a highly developed business and must adopt cutting-edge business philosophies to be successful (Ferrand & McCarthy, 2009), including in the way it markets its product. As Introduction

a multi-billion dollar industry, sport relies on relationships with customers, which provide competitive advantages for organizations that can learn to successfully manage those relationships, to sustain it (Bühler & Nufer, 2010). Because of this, marketing in sport requires more than traditional methods meant to merely drive transactions.

Marketing in sport has traditionally been seen as transactional, where the exchange of money for a service or product is the main emphasis (Ferrand & McCarthy, 2009). Because of shifts in consumer profiles and business goals, many service businesses characterized by intangibility, inseparability, variability, perishability, and the inability to own the service find traditional marketing concepts lacking (Egan, 2004). Relationship marketing offers strategy more fitting to the needs of a service-focused businesses. Because sport businesses share many characteristics with services marketing, marketers should shift to relationship marketing strategy in sport (Ferrand & McCarthy, 2009).

Researchers have specifically proposed sport as an ideal industry to apply relationship marketing. Bühler and Nufer (2010) suggest relationship marketing works best in "competitive, saturated markets with few key providers of supplies, where switching costs are high and when there is a consumer's ongoing need and desire for a certain product or service" (p 21). Egan (2004) identified sport as an industry where relational bonds are more evident and customers' commitment exists without need for monetary reward. For example, customers may be loyal and committed because they are passionate about sport, have a family history of attending games, or are socially linked to the team. A sport organization focused on fan needs has a greater opportunity to capitalize on customer loyalty, which is greater than loyalty in other industries (Bühler & Nufer, 2010), to improve the service and game experience.

Relationship marketing is based on the assumption customers should be a part of a mutually beneficial relationship as it is less expensive and more important to develop and retain existing customers than it is to attract new ones (Bühler & Nufer, 2010; Egan, 2004). Studies have found, across a wide-range of services businesses, a 5% increase in retention translates to a 20-85% increase in profitability (Bühler & Nufer, 2010; Payne & Frow, 2000). More and more companies have acknowledged it makes good sense to keep existing customers satisfied instead of putting large amounts of resources toward acquiring new ones (Egan, 2004). …

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