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Copy of Copy of Real Madrid

Case Study May 2012
by

Bo Peng

on 23 July 2013

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Transcript of Copy of Copy of Real Madrid

REAL MADRID
A Case Study
Company Background
Situation Analysis
Customer-Based Brand Equity Model
PESTLE ANALYSIS
Marketing Strategy
Key Markets:
Long Term Strategy
OUTLINE OF ACTIVITIES
Long-Term Strategic Directions
Risks
PRESENTATION OVERVIEW
INTERNAL + EXTERNAL FACTORS
STRENGTHS
WEAKNESSES
OPPORTUNITIES
THREATS
Introduction to Real Madrid
Situation Analysis
Company Background
Brand strategy
Internal + External Factors
Model for developing Brand Equity
Strategic Analysis
Short and long term action plans
Risk Evaluation
Costs + Revenue
Real Madrid: Quick Facts
Having recently turned 100, Real Madrid is one of the world's most established clubs
Owned & operated by shareholders since its inception
Estimated 93 million fans worldwide
Biggest Rivals: Barcelona (Spain)
Manchester United (UK)
2001: FIFA names RM the "best soccer team of the 20th Century"
David Beckham: Superstar
Globally recognised brand
Strong partner relationships
Brand loyalty is high
Large Following - 93 million
Top-performing team
Owns many of the world's greatest players
Healthy financial position
High cost to keep
performance/outcome
Dependence on pitch
superstar players
Expanding the Real Madrid brand internationally: Asia + America
Internet and new technologies to turn "fans into customers" globally
Setting up youth academies internationally to get players involved from a young age
Global merchandising/retail network
Sell players before they become free agents
Losing players to other clubs
Potential debt caused over-spending on players
Managing the financial impact of match outcomes
Overexposure and excessive commercialisation of the Real Madrid brand
P
E
S
T
L
E
olitical Factors
New club president
New club management
conomic Factors
Endorsement Deals
Sponsorship
Keeping a solid fan base
Players off-pitch behaviour
Use of online Real Madrid Store
New media technologies
Selling the TV rights
Locations of the international shops
Language barriers
ocial Factors
echnological factors
egal Factors
nvironmental Factors
What:
Establish a stronger presence in the lucrative Asian market
How:
Brand Equity, focusing on:
Brand awareness
Brand association
Brand loyalty
E X T E N S I O N
Sell TV rights
Sell merchandise in major retail outlets
Launch a local version of HALA Madrid Magazine
Local media and PR
Continue football tour of Asia
Engage local schools/clubs
S E
X
E
T
O N
I
N
E X T E N S I O N
Japan
China
Hong Kong
Malaysia
Males 14-35y.o, Females 14-24y.o
Why:
Market with maximum opportunity for growth
The latest in a string of high-profile signings
Sponsorship opportunities: both RM + Beckham individually sponsored by
Opportunity to work with big sponsors such as
to create enduring brand association around
Beckham and Real Madrid (Haig 2004, p.161)
"Los Galacticos" - Zidane, Raul, Ronaldo, Beckham etc command enormous brand and marketing power
+ brand equity/on-pitch power
Locked into visual rights contract: internet game transmission not possible
Marketing presents the biggest area for growth into the future
Merchandising + International Marketing have proven the fastest growing revenue streams in recent years
Economic impact of professional soccer in Spain exceeds $9.6 billion per year (1.7% of GDP)
21st Century: Arrival of new Club president has brought a strategic shift to Real Madrid
Changing perceptions: Real Madrid should behave like, and view itself as, a business brand
Since 21st C. RM has had a new emphasis on Brand Equity
High brand awareness + positive brand image = higher probability of brand choice, greater loyalty & less vulnerability (Kapferer 2001)
Kevin Keller (2001)
Keller's 4 steps towards customer based brand equity offers us a measurable framework to promote RM & ensure long-term loyalty
Losing 'Los Galacticos' to other clubs


Other Clubs muscling in on Asian market




Unpredictability of game undermines brand equity
Foster in-team loyalty + team goals. Promoting of RM brand as being of equal value to players

Early-movers advantage will enable us to intensify community PR campaign: "Fans for life."
Utilizing the initial draw power of soccer superstars i.e. Beckham

Minimise risk of failure to perform by continuing to secure top talent. Strong brand equity offsets competitive marketing actions and instead engenders long-term brand loyalty (Keller 1993)
Target Locations: all of Asia
Target Audience: Males 14-35, Females 14-45 (Barletta 2003)
Outline of Activities:
Buy in top Asian players
Develop a football academy
Work with government to improve school sports curriculum
Promote and develop online sales in Asia
Form local business partnerships
Strategic Partnerships:
1. Building brand associations
a) Help process/retrieve information
Partnerships create advertising exposure + perceived brand quality opportunities
b) Differentiate/market position
Extending the brand into a football academy
c) Reason to buy
Affiliating with Asian football stars/talent
d) Create positive feelings/attitudes
working with governments
e) Basis for extensions
Developing local versions of online store
2. Strengthen Brand Loyalty
a) Treat the consumer right
provide cultural training for foreign-based employees about how to communicate effectively in each country
b) Stay close to the customer
Work with local government
c) Measure & manage customer satisfaction
Conduct surveys to effectively evaluate our strategies
d) Create switching costs:
Offer a cheaper yearly subscription to club members when they buy a 3-year subscription up front
e) Provide extra incentives
Accredit points to online purchases + the proposed football academy
(Aaker 1991)
Over its 100+ year history RM has established itself as one of the most iconic soccer clubs around the world
One of the most successful franchises of all time, that by its very nature attracts star talent
29 time Spanish national champions
9 time European Cupa/UEFA Champions league winners
Real Madrid on track to become the highest earning Soccer Club through business partnerships and strong-performing revenue streams
Catherine Alexander
Alexander Fleming
Chloe Li
Stephanie Maxwell
¡GRACIAS POR SU ATTENCION!
References:
Aaker, D (1991), "Managing Brand Equity; Capitalising on the value of a brand name", The Free Press, NY.

Barletta, M (2003), "Marketing to women: How to understand, reach and increase your share in the world's largest segment, Dearborn, Chicago.

Haig, M (2004), "Brand Royalty: How the world's top 100 brands thrive and survive" Kogan Page Limited, London.

Kapferer, J (2001), "Re(inventing) the brand: Can top brands survive the new market realities?" Kogan Page Limited, London.

Keller, K (2001), "Building Customer-based Brand Equity: A Blueprint for Creating Strong Brands" Marketing Science Institute, Issue 107.

Kunkel, t et. al. (2009) "Consumer based brand associations for Professional Football Leagues", ANZMAC 2009 Conference Proceedings, Melbourne, Australia.

Marketing profs (2011), "Radio Ads Boost Brand Affinity, Positive WOM", Marketing Profs, viewed 2 May 2012 <http://www.marketingprofs.com/charts/2011/6360/radio-ads-boost-brand-affinity-positive-wom>

Vincent, J, Hill and Lee (2009), "The multiple brand personalities of David Beckham: A case study of the Beckham Brand, Sport Marketing Quarterly, 18(3): 173-180)
(Aaker 2001)
(Barnetta 2003)
(Aaker 2001, Kunkel et al. 2009, Vincent et. al 2008)
Television rights still significant revenue stream, though little growth opportunity
Patricia Villaroel
Costs + Revenue
EXPENDITURE
Staff: $410 million
Cost of SHORT TERM Marketing Strategy:
Campaign to sell TV rights: $2 million
Distribution costs for retail merchandise: $250,000
HALA Madrid-Asia Magazine Launch: $200,000
PR: $200,000 - $250,000
Football Tour Asia: $2 million (held biannually)
Subtotal: $3.65 - $3.9 million
Cost of LONG TERM Marketing Strategy:
Asian talent acquisition: $4 - 10 million
Football Academy: $15 million over 5 years
Online store development: $200,000
School curriculum Initiative: $2 million
Subtotal: $4.22 - $5.44 million per year ($21.2 - $27.2 million over 5 years
Total: $7.87 - $9.34 million (per year)
Revenue
TV Rights: $100 million
Merchandise: $150 million
Football Tour of Asia: $70 million
HALA Madrid - Asia Magazine: $20 million
Online Store: $10 million
Asian Partnerships:
HSBC: $60 million
Reliance Industries: $100 million
Air China: $10 million
Nippon Life Insurance: $25 million
Capitaland: $80 million
Shangri La Hotels Asia: $20 million
PLUS
50% of Player endorsements: $100 million
Existing sponsorships $80 million
TOTAL: $295 million
Less marketing budget: $8 - $10 million
BALANCE
$285
MILLION
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