Adopting a relationship marketing paradigm: the case of the National Basketball Association. (Research Paper).

Abstract: This paper explores the adoption of a relationship marketing paradigm by the National Basketball Association. A contextualist framework was used to explore the context, content and processes of this change that evolved over a 17-year time period. Personal interviews were conducted with leaders of this league and over 80 documents were reviewed and content analyzed. The results of this study provide insights into relationship marketing and organizational change for sport managers.

Keywords: Relationship marketing, Organizational change, National Basketball Association

Executive Summary

A transformation in the business landscape of professional sport in North America has resulted in the widespread adoption of relationship marketing practices. The relationship marketing paradigm in sport is based upon the principle of attracting and maintaining long-term relationships with commercial and industrial buyers, corporate sponsors and fans. In order to identify factors that have affected the adoption of relationship marketing as the dominant paradigm in professional sport organizations, Pettigrew's (1987) contextualist framework was used. This perspective advocates that, when seeking to understand organizational transformations, an examination of the firm's environment (both the inner and outer context), the aspects of firms that are being changed (content), and the actions, reactions and interactions of interested parties (processes) are important.

Using the National Basketball Association (NBA) as a case study of a sport organization that has adopted relationship marketing as a dominant business level strategy, we examine the role played by these factors in the change process. The results of this investigation indicated that external contextual shifts such as the rise of pay TV, technological change, the globalization of world markets, and the growing entertainment economy all contributed to the paradigm shift. In addition, contextual changes within the organization that were influential included the specialization of staff, the restructuring of the organization, the identification of partners, and the adoption of a partnership philosophy by the league. Factors related to the content of the NBA's change from one marketing paradigm to another included the firm's commitment to quality, the emergence of marketing as a dominant function within the organization, and the evolving criteria employed to measure customer satisfaction. Finally, processual factors facilitating the adoption of relationship marketing within the NBA were the recruitment of a new visionary leader and the articulation of a partnership driven vision of the firm. In making a shift to a relationship marketing approach, managers must be aware of the organizational implications of partnering, of employee competencies, of partner readiness, and of a clearly articulated vision of the firm, and how these play a role in achieving a successful transition.

North American professional sport organizations changed dramatically over the last two decades. The nature of this change has been influenced by factors such as the globalization of world markets, the proliferation of television coverage of sporting events, shifts in technology (e.g. increasingly rapid communication, diffusion of sports information via the Internet and satellite television), and finally, the emergence of the entertainment economy marked by increased employment in the leisure and recreation industries and the introduction of new technology driven by entertainment products (Mandel, et al., 1994). These shifts have created opportunities for and necessitated the formation of proximal relations among sport organizations and between sport organizations and corporate partners. A consequence of these linkages has been the adoption of relationship marketing practices by professional sport leagues and individual franchises. Relationship marketing is the term employed to encapsulate a shift in marketing toward practices that emphasize flexibility, specialization and relationship management instead of market transactions (Webster, 1992). This type of marketing is underpinned by ongoing relationships that depend on negotiation as a principal basis for conducting business (Webster, 1992).

There exists an abundance of examples of relationship marketing practices in professional sport organizations. For instance, the San Diego Padres baseball team experienced unprecedented success with its initiative to reward valued customers. A program, comparable to a frequent flyer program, enabled fans to accumulate points by purchasing the franchise's products; these points were subsequently redeemed for rewards. The National Football League (NFL) also employed relationship marketing practices to strengthen its links with corporate sponsors, such as McDonald's. The fast food chain's "Kick Off" promotion used the league's footage for advertising and promoting its relationship with the NFL. At the retail level, customers can win NFL Game Day trading cards, enter contests for trips to the Super Bowl and Pro Bowl, win season tickets to any NFL team, or a player's salary for a day. McDonald's and the Miller beer company have similar agreements with the National Basketball Association (NBA), and Anheuser-Busch i s focusing on its relationship with Major League Baseball (MLB).