Introduction
Manchester United Football Club or MUFC started is an English professional club. It is based on Old Trafford, Greater Manchester, which plays the Major League. It was founded in 1878 under the name Newton Heath LYR Football Club (Northcroft, 2006). It changed its name into Manchester United in 1902. It has been based in Greater Manchester since 1920 (Cass, 2007). The club won its first trophy during the Manchester Cup in 1886. The club won this title under its old name, Newton Heath LYR. It got its first league title in 1908. After one year, it won the FA Cup (Northcroft, 2006).
MUFC is considered as one of the most popular football brands internationally despite certain controversies with its ownership. It is also the biggest club in the English Premier League and maintains various titles. During the 1990s, the MUCF has become the most successful English football club (White, 2008). Since the Premier League was founded in 1992, this football team has won four of the six titles and been runner-up on the other two events (London Business School, 2013). It has won the FA Cup two times and has been runner-up for one event.
Manchester United has also been the most financially successful club. From 1992 up to 1997, the club generated an income of £249m, of which £69m was spent on its salaries while £66m was reported as profit (London Business School, 2013). The most intriguing thing about the MUCF is its ability to make money while winning on the field.
In 1999, MUFC defeated the Palmeiras and became the first British club to be crowned world champion (Cass, 2007). The year 1998-99 was the most historic in its history as it became the first English team to win The Treble - the league, the FA Cup and the Champions League all at the same season (Cass, 2007). MUFC has bested the premiership league no fewer than 15 times since their inception (Cass, 2007).
Manchester United Football Club is the third-richest football club in the world for 2011–2012 based on its income. Its latest annual income was €395.9 million. MUFC is also the second most important club in 2013 as it was estimated to be worth $3.16 billion (Rushe, 2012). It is one of the most popular football teams globally. It is attributed to its millions of fans from all over the world. The company was floated on the London Stock Exchange in 1991. It was bought by Malcolm Glazer in 2005, with a deal estimating the club’s worth at almost £800 million (Rushe, 2012). In August 2012, Manchester United was listed in the New York Stock Exchange.
Environmental Analysis
According to Kilbourn (2011), the football industry is composed of the following: clubs, staff and professionals, local businesses, fans, merchandise sale, and sponsorships and gate receipts. The club's performance and general management are influenced by macro-environmental factors like the following: tax changes, new laws, demographic changes, and government reforms and policy changes.
One major influence on the club’s performance has been its problems of debt payments which amounted to $1.5 billion (Marshal, 2013). This figure was said to have been misappropriated by the owners. The fans of Manchester United from England are said to lobby the total arrears which has not been paid by the greedy owners.
The MUFC has a positive effect on the global economy as it employs the best players from all over the world. The club is also considered as a catalyst in the European region’s development as it generates financial flows through its global supporters. They spend part of their income to attend a single match and this trickle into their purchases of club merchandises, food, drinks, among others (Rice, 2010). International fans generate foreign currencies which enhances the country’s Balance of Payments.
Technology advancements have also further expanded the patronage and interest in the MUFC due to following reasons. Initially, it allows the players to play at night. It has also facilitated various people from various parts of the world to watch football at real time. They may even watch the games at remote time (Manchester United Website, 2013). Technology has also helped the football fans to strengthen their interest with the club and the club players.
The games of the MUFC have helped people of diverse backgrounds to be united in the name of the game. They have also interacted because of football. This is because football has been ingrained as a social activity of the modern world. It has affected the society in a positive way i.e. such as the economic advantages which positively affect the regional economy. The venue of the World Cup will supply extra revenues for the host country in terms of taxes, ticket sales and any other taxable activities. This is rather an indirect effect of the game to the global society (Murphy, 2006). Manchester United has significantly added to the global society in the context of the social cultural factors. Primarily, they recruit start players from different leagues and hire them as their players. It also offers a handsome payment package to all of its employees (Murphy, 2006). More importantly, they unite people as they all support the team regardless of their racial, ethnic, religious, social and economic affinities.
SWOT Analysis
Strength
One of the major strengths of the Manchester United is its global branding. It has been a highly reputable football club and has produced football legends such as Cantona, Sir Ferguson, Keane, and Sir Bobby (Hamil, 2008). These players have become household names in Great Britain. The strength of its brand can be categorized as follows:
Domestic:
Merchandising availability at other football clubs
Established availability in all London stores
International
Seeking market opportunities in North America and Asia
Deals signed with the New York Yankees and the New Jersey Jets
Marketing contract signed with Nike
Media Partnerships
PayTV revenue with MUTV
Internet presence enhanced and e-commerce enabled
Personalized content delivered to fans
The branding is highly supported by its huge fan base. MUFC has an arsenal of fans on their side. Aside from being a mere football club, MUFC is a total entertainment center with four sections: Football, Merchandising, Catering, and Interactive Services. It offers all the necessities of a football match, starting from the hotel chains and pubs to meetings and from apparels and other merchandise to financial services such as loans, among others (Hamil, 2008).
MUFC has achieved this excellent football brand name through heavy advertisement in internet and all other media (Andrews, 2004). Its massive advertisement generates the club’s sponsors. In short, MUFC has the most excellent marketing, global brand presence and high superior quality merchandising. It has been tied up with sponsors such as Audi, Nike, AON, AIG, Sharp, Vodafone, Airtel, Turkish Airlines, Thomas Cook, etc. (Kanterman, 2013).
Another major strength is the well established distribution channels of MUFC which allow it to deliver new products introduced into the market. It utilizes these channels to get feedback from the market concerning their products and performances. As such, Manchester United's present deal is actually a 13-year contract estimated at $35.9 million annually, totaling into $466.62 million prior to profit sharing (Kanterman, 2013). In the last five years, for instance, the MUFC shirt sales averaged to 1.4 million. This has been exclusively tied with Madrid, reflecting a yearly contract value per shirt sold at $25.64 through the period (Kanterman, 2013). Inherently, the strength of its sales performance rests on its strong fan base with avid fans buying almost every new merchandise from their company.
Other strengths include its strong brand loyalty. As MUFC has a wide fan base (estimated at 659 million), ticket sales is also one of its strong points. In a 2007 Premier League Survey, its fans have been the largest fans, who have been supporting the team for about 25 years (Slater, 2010). This means that they have attended most of the team’s matches at all times. Most of the time, there is usually a waiting list for passes for every match. Hence, its ticket sales are continually increasing. The expanded arena also strengthens this. Old Trafford stadium has a capacity of over 75,000 (James, 2008). MUFC is also one of the richest sports teams internationally.
Weaknesses
As gathered from the football company’s website, it shows that the club’s major weakness is its products and product variations. It is obvious that the football company has been introducing many diverse products at varied occasions. All these different products have been introduced to the mature football market. Thus, MUFC has offered jersey to credit cards which shows that the company has exploited the available income stream internally. This action must be analyzed and studied as urgently as possible since the football company needs to contextualize and evaluate its products. It must be able to alter the use of effective instruments such as the Boston Matrix, which will help it determine if the products are performing well in the global football market.
Another weakness is that some of the company’s products or merchandise is already at the mature stage of its product life cycle. Hence, the company should develop new products which can revitalize its sales and keep up with its financial performance.
Another major flaw is that the football company has been so financially hounded and it also operates on a very high level. A doubt is cast within the MUFC management that it will lose its origin. This will badly affect its customer base as fans will be devastated by the turn of events. The MUFC was bought by the Glazer Family in May, 2005 with £800m investment with massive debts (Solar Navigator, 2011). After the family’s takeover, MUFC is under so much debt and got further into debts.
Opportunities
One of the promising prospects for the Manchester United is to enter the U.S. market. In the near future, the football company will structure its club by entering into coalition with the New York Yankees, another globally successful football team. This will help the company to ensure that exclusive distribution channels are developed in the U.S. By this, the MUFC will be in a better position to expand their merchandises in a new market (Rushe, 2012).
There is also a great opportunity in the stadium. If this is expended, it will bring in more fans which translate to more ticket sales and generate more revenue through non-match day’s activities. As of present, there are local branches of its Manchester United Supporters Club which are the most excellent way of solidifying the supporters. With more than 200 officially recognized branches of this fans club in no less than 24 different countries, it has the widest prospects of bringing in more ticket sales and merchandise sales.
There is also a great opportunity in the fact that the football competition is not well balanced. The MUCF has a well established product lines and marketing channels which are very advantageous to the company. Another great opportunity is the football team’s ability to reach other football areas of the world such as the North American and Far Eastern Region. Their rivals have little or no contact at all with these possible markets. The company dominates the football markets in these destinations and it has a different approach to each of its market segment/areas.
Threats
Manchester United is threatened by the further improving big teams such as the Manchester City and Arsenal. These teams are serious competitors of the MUFC. Also, the football company is also faced by internal threats. For one, there is a usual change of leadership in the management of the company. As such, there is discontinuity in the operations and performance of the MUFC which in turn affects the sale of the company’s merchandise. Also, another threat is the lack of finances for financially supporting academies and junior football. These institutions help the club ensure a smooth succession in the future players.
An upcoming threat is the massive merchandising deal of the Chelsea Football Club. This would mean a significant increase in the competition between Manchester’s merchandise and other football teams’ products. It is also a thing that Manchester United is presently nearing its 13 year old contract with Nike. Chelsea has just closed a new deal with Adidas, which is worth $46.2 million annually over 10 years (Rushe, 2012).
Target Markets/Consumer Behavior in the Industry
Manchester United’s overall market share of the football market is about 10% (Northcroft, 2006). The strong support of its fans, whose loyalty is derived from the club’s history and reputation, enables the company to collect resources to maintain its quality team. One of the major reasons which enable the football company to grow that much was the cultural background of Great Britain, which is inherently a football nation. Its target markets and consumer base is highly utilized by the company to market its merchandises and prize draws.
Its target market is somehow limited by their catchment area, in geographic terms. As such, some avid fans will travel far and wide to realistically watch their team play. However, the major segment will realistically be the consumers or fans, which live within 90 minutes of the stadium (Rice, 2010). As it is, there are enough people within the immediate vicinity of the stadium who can fill the ground 50 times over.
Even with the increasing cost of attendance, football grounds are as full as they have ever been and football match day revenues have doubled in several years. However, broadcast rights fees are soon expected to account for a majority share of income and younger consumers appear not to be inheriting the club ties that older fans were born into.
According to Mintel's research, football's appeal to brands depends in its continued ability to reach mass mainstream audiences instead of the value of its core audience, which is mainly apathetic towards sponsors and their merchandise (James, 2008). Football is not very much affected by recession by the multi-year nature of its media and the commercial contracts. It is also insulated by the fact that up to half of all the seats are purchased before a ball is kicked through the season’s ticket sales (James, 2008).
Previous Marketing Mix Strategies
The football company’s success in maintaining a solid marketing mix has greatly helped its branding as the world’s highly recognized professional sports teams. Manchester United has persistently provided an excellent line of merchandise in a very successful football team. Its success on the field and outside the field has aided the company in maintaining its marketability. The continued marketing of quality products has resulted in high volumes of merchandise sales, which in turn further develop the brand with fans who patronize everything such as replica jerseys, apparels, key chains, and mugs (Georgia CTAE Resource Network Unit Plan Resource, n.d.).
The key to the loyal support of its fans has been the successful development of its price points. The football company has positioned itself as a premium product, one which commands a higher ticket price. The fundamental principle of the law of supply and demand has certainly impressed itself effectively into the pricing strategies as with the company’s selling out the majority of its home games. Its membership limits its access to its seats.
The place is also very significant to the company’s marketing strategies. Adding to Manchester United’s appeal is the stadium wherein they perform. With a historic tradition highly competed by very few sports stadiums, Old Trafford Stadium is a gem for the company. It plays host to over 200,000 foreign visitors annually for tours alone. The company’s website highlights the details about the stadium. It likewise highlights an online video lounge, player interviews, team news, and several other attractions which attract more traffic. With thousands of site visitors, MUCF has the best opportunity to make its products, such as tickets and merchandise, ready to consumers. Fans also have an opportunity to see live games on television on MUTV, a television channel committed to Manchester United. MUTV is owned by the franchise. It enables the team to manage its broadcasting rights. Also, fans can listen on the radio and Internet live stream.
Another major element of the company’s marketing mix includes all of its products. This includes its excellent football team which excellently plays and wins several cups. Merchandise mix also steams up its merchandise sales. These range from shirts, key rings, to various memorabilia. The company’s product also links to television rights and to its own television channel (Hamil, 2008). Its products are sold all over the world via the company’s website and various other sales outlets.
Being a global brand, MUCF also engages in various joint promotional activities. To illustrate, it partners with a mobile phone company, Vodafone (Hamil, 2008). Manchester United has positioned itself at the more high level market. Hence, it can charge premium prices as its season tickets relatively cost higher making it more expensive for its fans to watch home league games (Hamil, 2008).
Manchester United has also established a powerful brand name related to performance and great tradition. It is usually easy to identify the MUCF because of its colors (red and white) and its logo. Hence, the team can use its brand name more effectively in selling one core product “football” via various products (jerseys, credit cards and so on) (Hamil, 2008).
MUCF also engages in varied promotional opportunities, including various sponsor partnerships. The general, worldwide appeal of its franchise gives exceptional marketing opportunities for sponsors. The company has successfully transformed these sponsorships into special promotions for fans. These include the Manchester United credit card (MasterCard) offer and insurance discounts (Hamil, 2008). The football club also has serious sponsors in Nike, Vodaphone, and a mobile company popular in Europe, PepsiCo, and Anheuser-Busch (Hamil, 2008).
Another marketing strategy which Manchester United employs is the conversion of its fans into business customers. The football club also enhances customer value by implementing CRM tools. As such, it has linked with the technology sponsors such as Dimension Data.
Other important strategies include: searching for its own routes to market for media rights; delivering branded services to customers through MU TV, MU Now, etc.; having a good mix of home-grown and imported players; grooming in-house players such as Wes Brown and John O'Shea; and obtaining foreign players in case of requirement (including Rio Ferdinand and Louis Saha) (Hamil, 2008).
Most of the MUCF’s income is obtained from weekly match attendance. Other income streams include sponsorship, promotional activity, the support of wealthy local businessmen and winnings in Cup competition. Its business operations include the following:
•Football team
•Cable network (MUTV)
•Financial/banking institution
•Merchandise souvenier shops
•Museum
•Conference and catering
•Popular free-email service
MUCF also strategically partners with its loyal sponsors such as Budweiser. To increase its global brand awareness and carve more revenues, Manchester United utilizes 4 channels: outlet stores; broadcasting; preseason games; and Internet
. In other markets, the football company implements certain strategies. Its prospective partnership with New York Yankees will increase brand awareness and develop a Manchester United pre-season tour of North America in close partnership with the Yankees.
MUCF is not just a football club but also a well organized business (Clayton, 2002). It caters to various customers through its global brand. It employs varied marketing strategies depending on geographies and market base. It also generates greater income from its outlet stores, broadcasting, and other services such as credit cards, pre season games, and Internet. MUCF has also a strong p
artnership with leading companies in different market fields.
Strategic Recommendation
Manchester United Football Club is one of the highly successful clubs in the football history all over the world. It maintains an average attendance higher than any other team in Great Britain and the company is highly brand conscious. MUCF uses its name as a brand and its basic marketing strategy is based on promoting the brand covering all its other activities beside football (mainly merchandise and ticket sales). The football company should try to focus on its downstream activities like global marketing strategies.
Being the leading team in the football industry, MUCF tries to sustain its position by focusing on its target markets and the needs of its customers and fans. The football company has further improved on their product via research. Their improvements have led to company success and further team support. Together with its financial stability (amidst various debts), strength of the senior management team (amidst constant turn over) and proven ability to serve different marketing and sales channels, Manchester United is well on the way of developing and implementing a winning strategy in the field of football.
Most business monopolies become successful. Yet, the critical thing to learn about the MUCF is its ability to thrive in a very competitive environment. The football industry is a useful illustration for this marketing analysis since the competitive process can be shown clearly. In the case of Manchester United, it seems fairly obvious that its striking character is an effect of its “brand image,” something which its rivals are not able to achieve, so far.
A major strategic recommendation is by maintaining the best executives and managers in the company (Wallace, 2007). This will ensure that there is always a proper turn over and that the financial and operational aspects of the football company is well taken care of. The integrity of the owners and the transparency and credibility and competence of its managers will further push the branding of the company. At present, the company cannot be fully considered as having a sound management and decision making board. It is best to say that the company should recruit excellent managers than ever before.
As to date, its board of directors has also tried to employ the best players to represent the Manchester United football Club. This is very strategic. The performance and reputation of the team is no less than enhanced by the team’s football game performance. The fans, which are the core strategy and asset of the football company, have to be well satisfied with the players’ performance.
The company can still increase its ticket prices as it has proven itself unaffected by the economic developments in the region (and even worldwide). Hence, it can still increase the prices of its season tickets. The increase in revenue streams must be wisely used to refinance its income. It cannot be relied upon that the team has a wide loyalty base among its global supporters and that it has a well oiled marketing channels and merchandise offerings. The company should be able to show that it can get out of its financial controversies and start off with a fresh financial slate and a better management. After all, its loyal fans are highly affected by the debt issue of the company. It is best to show that the sound management of its finances is also a hallmark of the football company, not just its winning field performances.
Manchester United is presently in a very tight fit since it is the richest and most valuable club in any sport and the highly attended English football team. Nonetheless, the MUCF has to be cautious. They need to re study their market base and be focused on their geographic markets. Other important recommendations include the following: 1.) further brand awareness; 2.) ppartnerships with Scandinavian Clubs; 3.) good outcomes; 4.) improved media image.
Other recommendations are as follows: 1.) rreduction of the company players’ fixed salaries; 2.) change in leadership; 3.) income from property assets; 4.) increased funds for transfers players; 5.) enthusiasm or motivation of team players; 6.) conversion of more fans into customers; 7.) more sponsorships; 8.) development of
cross promotional programmes; and 9.) sharing of sporting knowledge
. All these recoomendations will further boost the global brand of the Manchester United Football Club.
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