Why Football Club’s Merchandise…
Football clubs go into merchandising for many reasons, essentially the demand has already been created and the merchandise is one way of capitalising from that demand. Football is the core focus of the organisation but other products can be branded to further make money for the organisation. The existing fan base already has a connection with the football club so the communication between the two can be narrowed down in a very effective way with the use of direct marketing and customer loyalty cards. Some Manchester United fans might not have the privilege of being able to actually attend a live game as they may live far away or not have the time or money to attend the club. Being able to purchase and wear the kit may actually give them the opportunity to fulfil their affiliation with the club. Also from the clubs perspective the more fans wearing their shirts is a form of below the belt advertising which will paint them in a good light with their sponsors and manufactures. Manchester United is classed as a ‘Passion Brand’, they carry an image that is recognised worldwide, no translation services needed. This carries very unique and beneficial attributes in terms of factors that influence the customer’s price assessment. There is a huge ‘Personal’ gain in purchasing the branded product, which in this case would be a football kit. The consumer would be willing to pay a higher price for the intangible benefits associated with the football shirt, (F.Brassington, Principles of Marketing, pg 432-435). They may idolise a certain player on the team and have a boost in self image when wearing the shirt, or the association with Manchester United may give them a sense of status and many other psychological benefits. The loyalty to the brand is actually so strong that even if a Manchester United shirt cost £40 and next to it in the shop was a Chelsea shirt for £10, the customer would not buy the Chelsea shirt as they don’t have that affiliation with that brand, there is no direct competition within the market leaving the price very inelastic, (F.Brassington, Principles of Marketing, pg 444-446).
Manchester United are developing the way in which they sell their football kit. Referring to the case study, if a football shirt costs £40 than £13 of hat would go to the retailer, so it would be in the clubs interest if they could cut out ‘the middleman’. One way they have attempted to do this is by creating a direct mail-order online. Further to the money incentive they would be saving from the retailer, this also allows Manchester United to reach a larger demographic both in the UK and internationally as demand increases. There has also been more Manchester United retail shops opening up in the UK around Europe, this gives the customer an overall brand experience which explains why they would pay a premium price in comparison to other retailers, (store.manutd.com, 2010). When Manchester United are deciding the price on their football kit, there are other external factors which have to be considered. The OFT have set a rule that a football kit needs to have a minimum lifespan of two years as consumers were complaining about the amount of kits being released, (oft.gov.uk/news, 2010). This issue is linked to the product life cycle of a football kit and the value attached. When a product reaches the decline stage in the market, the value drops in the eyes of the consumer which is reflected in the price reduction. So if Manchester United football kits, now remain on the market for two years as opposed to six months, than that kit will have more value in the eyes of the consumer as it will last longer which could be incorporated in the price. In our current times, it would also be important to consider the decline of disposable income people possess, this is one reason Manchester United have further segmented their merchandises to reach both spectrums of the pricing and class scales. There are more subtle factors that have to be considered when thinking about the internal influences. The obvious would be the costs, the objective is to make a profit which equals total revenue minus total costs. So for Manchester United there direct orders would prove beneficial in this case. The organisational objectives in the case study were to move from a working class brand/image, to a middle/business class consumer based brand. Manchester United have achieved this by simplify their kit in attempt for a bigger fashion appeal, and also campaigning with businesses around the UK for positive PR. As a result they have developed their stadium to segment ticket sales for business and VIP classes which has rapidly grown over recent years, (sportbusinesscentre.com/business/news.com, 2010). The clubs marketing objectives have been to reflect the clubs position as a successful, superior brand. This was clear in 2001 when the price of their football shirt was £8 more than their competitors. As their close competitors like Arsenal, Chelsea and Liverpool became more successful on the pitch and as a result increased their demand in the merchandise markets, the prices of football shirts were almost identical. This is because the price portrays a message to the consumer. In the football kit market where different brands are selling the same goods, price is linked with success, quality and the clubs status. This explains why clubs don’t differentiate themselves with the price of their kit.
Overall we have found that as Manchester United is a passion brand, their customers are not very price sensitive. Their consumers are more concerned about the number of kits that are released as the value of the old kit will decline when a new kit is released, leaving the fan under constant pressure to purchase the new kit. Under this conclusion we think it fair that the OFT made a ruling of a two year lifespan of new kits released. Merchandising is a very important revenue stream for a football club, and market segmentation is constantly changing and developing. On reflection, the price of a football kit is expensive, however, there is more to the football shirt that meets the eye. The personal sentiments the consumer attaches are very prominent when going through their price assessment. This is a lesson all marketers should invest to utilise as the potential customer is so much less price sensitive, giving an opportunity for huge profits.