Ch. 11 - Developing and Managing Products

Developing and managing products in the traditional sense is not something which Celtic typically engages in solely. There is a limited amount of product development which can be implemented with products such as match day tickets, and products such as merchandise are designed and developed largely by the club’s partners. That said, new products in these areas would undoubtedly go through the seven step new-product development process.

One area where it may be easier to appreciate how the business develops and manages new products is that of the Celtic playing staff. Each player could be considered individually as a product however, the entire playing staff and the ‘on-pitch’ performance is the single greatest product which the company has to offer. As discussed in previous blog posts, without a talented and winning squad of players, sales of all other product lines will suffer. There are some aspects of the new-product development process which could be directly applied to the acquisition of a new player and the development of the Celtic playing product:

New Product Strategy

When considering the addition of a player to the club’s squad, development of a new-product strategy is essential. Considerable thought must be given to the strengths and weaknesses of the current product offering (the players) and determine areas of improvement. The contribution a new signing may make to merchandise and ticket sales will also be an important factor (a high profile player may increase these substantially). Lastly, it must be determined whether the player is of sufficient quality to meet the goals of the business, and whether or not a particular player is available for a reasonable investment.

Brainstorming

The manager of the playing squad (Neil Lennon) is responsible for much of the clubs transfer activities. There is, however, considerable brainstorming internally before any purchase is made. Celtic have an extensive scouting network around the world which is constantly making suggestions as to which players may be interesting products to add to the team’s roster. Often club directors will have their own ideas regarding what would make a good new product for Celtic, these individuals often wish to buy players from potentially lucrative markets for the club’s merchandise (e.g. Recent signings of Korean, Mexican and Israeli players).

Screening

Upon closer inspection potentially attractive players may lack the desired quality, purchase fees and salary demands may be too high, or perhaps the player has a history of lengthy injuries which only becomes apparent after a detailed inspection.

Concept Test

Often players are invited to train and play in practice games with the current members of the Celtic team prior to any contract offer. These ‘trial’ period can last a number of weeks and give the Celtic management the opportunity to evaluate their new-product idea.

Business Analysis

With the purchase of any player there is extensive negotiation with the player’s current club to determine the cost of releasing him from his contract. Following this a satisfactory salary agreement must be reached with the player and his agent. When these figures are closely analyzed, a transfer may or may not be considered a worthwhile investment.

Disturbing and Unprecedented Developments in Scottish Football

This is supposed to be "only a game", and yet, Scottish football is descending into chaos due to the unbelievable actions of narrow minded terrorists:

Parcel bombs sent to Celtic manager Neil Lennon and others associated with the club

Ch. 16 - Integrated Marketing Communications

Despite the large number of products Celtic offers, as previously discussed in previous weeks, it is my belief that the organization has a considerably easier time maintaining integrated marketing communications (IMC) than those in other industries.

IMC is defined as the careful coordination of all promotional messages for a product or a service to assure the consistency of messages at every contact point where the company meets the consumer. Celtic’s two main products, match tickets and merchandise are offered hugely from the club itself and from limited sources within the organizations.

Tickets

Match day tickets, season tickets and corporate hospitality packages may be purchased with by calling the club directly or by purchasing through the Celtic website. Information regarding prices and product features comes directly from the headquarters of Celtic allowing all aspects of advertising and sales promotion to be consistent and clear.

A promotional video for Celtic's hospitality packages can be seen by clicking here.

Merchandise

The majority of merchandising sales are through Celtic’s stores within Scotland & Ireland or through the online superstore. The products offered from both channels are identical and any changes in product offering or price is adjusted quickly and efficiently. Perhaps one aspect where IMC may become cloudy is with merchandise offered through external retail partnerships; often prices in a non-affiliated sports store can differ considerably from prices offered by the club itself.

Public relations and publicity

 These are extremely important for the business as they attempt to grow the Celtic brand globally. Often these aspects of the promotional mix are of added importance as sports teams must regularly handle the controversy and media hype that surrounds popular sports. Over recent years Celtic has been involved in a number of public disputes with both rivals Rangers and the governing body of Scottish football, the SFA. The following link displays Celtic’s PR in response to an attempted ban of manager Neil Lennon:

http://www.scotzine.com/2011/04/sfa-cannot-legally-enforce-lennon-ban-and-back-down/

Ch. 10 - Product Concepts

As discussed over previous weeks, Celtic offers a number of products to customers. Perhaps the most important product which the business offers is the on-field team of players and their performance. A successful team easily generates income through competition prize money and the high ticket sales which are sure to follow as fans flock to see an in-form team.

The success of Celtic on-field has a large effect on the success of other aspects of the club’s product offering, particularly the area of merchandise. A winning team contributes to full cash registers. Celtic offers an extensive selection of products with both considerable product mix width and product line depth.

An example of this product line depth is the Celtic replica football shirts available. The Celtic superstore website provides no less than 18 options for purchase as displayed in the following images:

This seems like a excessive amount of options for a simple purchase but many of the products are offered for a particular age/size group that the club would be foolish to ignore. As tacky as it may be, Scottish, Irish and English infants are regularly seen sporting the clothing of their parents' favorite football team.

This particular product offering, however, barely scratches the surface of potential purchases from the online superstore. There are a further 12 categories (13 including the clearance section) and 65 sub categories of products; whilst some of these will of course be big sellers, there are others such as a Celtic branded Monopoly game that could perhaps be cut.

Delving deeper into the many products offered it is clear that whilst Celtic are looking to provide an item for all customers and occasions, some product line contraction may be a productive exercise. It is worth noting, however, that Celtic are one of the most successful clubs in Europe in terms of income generated from merchandise sales. On this basis it is difficult to criticize the many product concepts too much.

The Dark Side of Soccer in Scotland

Often regarded as the biggest rivalry in not only world soccer, but world sport as a whole, Celtic v Rangers (collectively referred to as 'The Old Firm') is an encounter which at times seems more like a full blown war than a 90 minute long sporting fixture. Complex social issues which have dogged Irish and Scottish societies for hundreds of years are the spark which ignites these matches. Rarely is sport doused in the racism, sectarianism, prejudice and violence which engulfs Scottish football stadiums 4 times a year when these two teams go head to head; all too often the passion on the pitch spills onto the streets of Glasgow, Belfast and beyond. 

To many, this unmatched complexity is what makes The Old Firm such an engrossing spectacle and has caused the relatively small nation of Scotland to possess one of the most watched soccer matches in the world. Unquestionably, this overblown powder keg fixture is good business. People globally will tune in to witness the events unfold, these individuals may have no interest in Scottish soccer but Celtic v Rangers is quite simply considered a 'must-see'. Indeed at 7am in Manhattan (and across the U.S.A) you can find Celtic and Rangers bars packed to the rafters with supporters eagerly awaiting kick-off. In my experience there are often a number of American citizens unfamiliar with the sport who are just along for the ride.

U.S. based online magazine 'Slate' recently offered the following article in an attempt to explain the situation and history to American readers. Often I am asked by people in the United States what game they should see if there are interested in experiencing soccer; I always advise the Old Firm fixture in order to "throw yourself in at the deep end". If you want to be shocked, entertained and engrossed, it doesn't get any bigger or twisted that this.

Slate - The Scottish Play - Celtic vs. Rangers, and what happens when a sports rivalry gets completely out of hand.

Ch. 18 - Sales Promotion and Personal Selling

Personal selling

There is little in the way of true personal selling done by Celtic Football Club on the consumer facing side. As with any business, however, high value propositions that the club is involved in will undoubtedly involve a lengthy sales cycle with many deals taking months to complete. Examples of such situations could be: 

• The sale of assets such as a member playing staff, as there are often multiple parties involved in negotiations and the outcome is rarely reached quickly.

• Sponsorship deals with the likes of Nike, Coca-cola, MBMA, Powerade, Tennents lager and Scottish Leader whisky. 

• Land development projects such as the renovation and expansion of the club’s stadium, training grounds or other property investments.

Sales Promotion

A simple visit to Celtic’s retail stores in Scotland & Ireland or to the club website (www.celticfc.net) displays a huge amount of sales promotion which the business is continuously using to generate increased sales in specific areas. Areas of promotion include:

• Tickets. It is important that the stadium is as full as possible on match days. As a result many incentives are offered, particularly for games against less appealing opposition. Many tactics are used such as price cuts or free admission for a child with each adult ticket purchased. It should be noted that there is a sweepstake at each game at Celtic Park where a customer will win $15,000. The effectiveness of Celtic’s approach to maximizing ticket sales has resulted in the club having the 9^th highest average attendance in world soccer.

• Apparel & Merchandise. As new products must be continuously introduced to keep customers interested there is regularly sales promotions to encourage purchasing. At the moment for example, it is possible to purchase two Celtic DVDs for 10 and there are large price cuts on last year’s fashion and training wear as the spring 2011 lines have just been introduced.

• Corporate Hospitality. Premium packages can be purchased by fans in order to enjoy a game in the executive setting which included fine dining and access to exclusive lounges and the opportunity to meet players and staff after games. Depending on availability and demand these packages are often subject to sales promotions which are generally advertised through mailing to qualified leads and through online means.

Retail Visit - Niketown NYC

As Celtic to not have their own retail presence in North America I decided to visit the most likely retail location to purchase Celtic products. I visited the huge Nike store on East 57^th dubbed "Niketown". The store is massive, spread over numerous levels and covers all aspects of Nike’s product offering; general sporting good, men’s shoes, menswear, women’s shoes, womenswear and products specific to each particular sport. Niketown caters for enthusiasts of soccer, football, basketball, running, yoga and even the likes of snowboarding. 

Upon entering the store I was greeted by around 3 members of staff who were having a conversation amongst themselves, they looked fairly underwhelmed to see a customer enter the largely empty store late on a midweek night. After navigating various floors I found my way to the soccer section which is marked by a famous quote from legendary Liverpool manager Bill Shankly (who was Scottish), it reads:

 “Some people think football is a matter of life and death. I assure you, it's much more serious than that.” (Football in this instance, is of course ‘soccer’)

I promptly located Celtic jerseys hanging alongside other elite teams of world soccer, other Celtic products were available such as branded soccer balls and training gear. I am not currently in the market for a Celtic jersey, but as someone who plays the sport weekly I am in the market for a new pair of cleats with a purchasing limit of around $100. Disappointingly the depth of products available at this flagship Nike store was extremely poor with only 4 types of soccer cleats available for purchase (a quick visit to an online retailer offers 199 different Nike soccer cleats). I was eager to learn if there was more products in another part of a store but found it extremely difficult to find a member of staff to ask, after a long search the sales assistant advised that what they had on display was "everything". "Everything" in this instance is just 2% of an independent retailer's product selection in Nike's flagship store, which is in the center of New York City. If I was a Nike VP i would be concerned at this seemingly lazy approach to promoting what we have to offer in a particular product line.

As none of the products available met my fairly basic criteria I returned home without making a purchase. The Niketown store is impressive in its size and glitzy displays, but this appears to come at the expense of product selection and customer service. Perhaps the most disappointing aspect of my retail visit was that no hot female members of staff winked at me; to add insult to injury, upon returning home I found absolutely no ice cream in my freezer. Maybe next time.