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INTRODUCTION
The
globalisation, pushed by the social, economic and technological changes, has
changed the way products and services are delivered to the customers. Many of
the products and services, which traditionally distributed in a limited market,
currently have been distributed and consumed globally. This change creates a
tough competition between the product or services providers in most industries.
In sport industry, for instance, a local and national sport clubs face an
intense competition not only between them but also from international sport
clubs in attracting the local or national sport fans (da Silva & Las Casas,
2017). In this competitive environment, scholars (Brown et al., 2017) argue
that developing a sustainable competitive advantage is an important strategy in
order to compete and flourish the business. In developing the competitive
advantage, managing the firm tangible as well as intangible asset efficiently
and effectively is essential. Considering the important role of both assets,
academics and practitioners constantly try to seek a new and better method to
manage both tangible and intangible asset (Osinski et al., 2017).
Literature
shows that studies related to managing assets have been widely conducted;
however, most of the studies focus on tangible assets such as infrastructure as
an element to produce the product or services (Osinski et al., 2017;
Suhartanto, 2015). In contrast, studies focus on customer as important assets
for most of the firm is relatively neglected, although the changing in consumer
behaviour and the advancement of technology has forced many businesses to
switch their product-centric orientation to customer-centric orientation (Lin
et al., 2017). Thus, understanding the customer, more specifically how the firm
can create profit from serving them, is an important factor for any business to
develop competitive advantage. While the tangible assets such as machine and
building tend to decrease its value, the satisfied and loyal customers will
generate higher value (Suhartanto, 2015). Additionally, as an intangible asset,
scholars (Nenonena & Storbackab, 2015), suggest that the customers affect
the firm market value. This is especially important for sport club firm, where
the revenue is not only from the direct income from the sport events (i.e.,
ticket selling) but also from the sport sponsors which are mainly attracted by
the number of the club fans (da Silva & Las Casas, 2017). Therefore, fans
as customers are imperative as an asset for any sport firm and, thus, need to
be managed appropriately.
The
fan behaviour, as other consumer behaviour in the services industry, is complex
and, thus, managing fans as an asset for sport club firm is critical (Funk,
2017; Robinson, 2006). The complexity of the fan behaviour is related to the
sport event services where the event is produced simultaneously with the
consumption. This characteristic is followed with other characteristic of
impossibility to store the event service and to serve a standardised event
services. Due to this event sport complexity, lack of attention has been given
to this issue causing little understood on how to manage sport club fans as an
asset. Driven by this research gap, this study is purposed to assess
conceptually the sport club fans as a business asset for the sport club firms.
Specifically, there are two objectives that this study tries to achieve: (1) to
explore the fans value as an asset, and (2) to review fan evaluation on the
sport event service and fan loyalty in influencing the fans as the asset for
sport club firms.
FANS AS A VALUE ASSET
A firm and its customers, both organization customers
and individual customers are different and separate entities. However, even
though unconnected, customers such as fans in sport industry can be considered
as the firm asset, due to the value they can provide to the firm. Literature in
marketing suggests that customer value is expressed in two distinctive
approaches. First, scholars (Chang, Chang & Li, 2012) define customer value
as a value provided by customers to the firm. Second, other scholars (Weng
& Huang, 2018) maintain that customer’s value is the value perceived by
customer. The last approach believes that the customer value is given by the
firm rather than by the customers. This approach is generated from Theory of
Micro Economic which postulates customer value as the customer perception on
the comparison between the customer benefit and the customer sacrifice in term
of monetary and non-monetary matters. In the context of the sport industry, the
benefit of fans obtained from being a sport club fan is applied to construe the
fans value. Similarly, the value perceived by fans is an important element in
influencing the process of the fans to be an asset to the sport club firms
(Callejo & Forcadell, 2006; Robinson, 2006; Weng & Huang, 2018).
From
the sport industry’s point of view, it is imperative to assess what is denoted
by the value of the fans as an asset for the sport club firm. In the
literature, the term of customer value is also recognised as customer lifetime
value, customer cost-effectiveness, and customer equity (Lin et al., 2017; Weng
& Huang, 2018). Most of the past studies use the term of customer life time
value; thus, in order to be coherent with past studies, this study uses the
term of fans lifetime value (abbreviated as FLV). Lin et al. (2017) describe
customer lifetime value as the current value of customer’s purchases in the
future. Other scholars maintain that customer lifetime value as the overall of
lifetime value from an individual customer (Suhartanto, 2015). A comprehensive
description of customer lifetime value is developed by Weng and Huang (2018) as
the net discounted customer contribution margin over a certain period of time.
The last definition suggests the revenue obtain from the customers spending is
deducted with the costs spent by the firms to generate a selling to the
customers. In sport industry context, this definition means that fans are
entity providing sport club firms with revenue. Concurrently, the firms spend
expenditures to obtain fans trust and serve them with an entertaining sport
event. Thus, fans become a pivotal factor of the overall value of the sport
industry.
The
FLV model shows that there are two ways where the value of sport fans
relationship can be enriched. The first, the sport club firms through their
sport events can increase the level of margin by lowering cost to serve the
fans and, at the same time, increasing the revenue from the fans. The second,
the sport club firms could add the revenue through the extending the fans
retention rate by offering a constant high quality of sport events. In short,
the sport club firms can trade-off between their revenue and cost by offering a
constant a high quality of sport event to keep fans favourable attitude and
behaviour toward the sport club. By understanding on how to predict the revenue
and cost associated with obtaining and maintaining the relationship with the
fans, a sport club firm can develop an effective marketing strategy to attract
and create loyal fans.
PROPOSED MODEL
Prince (2005) contends that in the service industry, three signs that
exhibit the relationship intensity between customers and the service providers:
the depth, the duration, and the breadth of the relationship. In sport industry
context, the depth of a relationship refers to the occurrence of fans consuming
the sport event and purchasing the merchandise in a certain period. Further,
the depth of the relationship is indicated by customer's decision to upgrade
and purchase premium events and merchandises. The length of the relationship
refers to the likely fans will continue or dismiss their support for the sport
club. The breath of the relationship between sport clubs and their fans is
signified with the fan different behaviour related to the relationship stage.
The breadth of the relationship is also indicated in buying other club services
(add-on services). Sport fans tend to attend sport club matches that provide
comfortable environment, such as stadium cleanliness, pleasant restrooms, and
other extra services such as providing TV sets so that fans would not miss the match
while they are in ticket queues. The authors argue that the relationship
intensity concept between sport club firms and their fans will form fan loyalty
toward the sport club. The next discusses customer loyalty from the perspective
of fans as sport club asset.
FANS LOYALTY
An important concept that draws attention from both practitioners and
academics in the field of sport services marketing is fans loyalty (Hosseini et
al., 2017; Javadein, Khanlari & Estiri, 2008) which is the bonding feeling
followed by a consistent purchasing behaviour from a certain sport club
service. Past studies use behavioural and attitudinal dimension approach to
understand the phenomenon of loyalty. Due to the drawback of each approach,
experts use both approach concurrently to measures customer loyalty (Yen, 2017;
Suhartanto, Clemes
& Dean, 2011). Using this combination approach, a fan is considered as
loyal if he or she has a good attitude towards a sport service and always
consumes the services if the need arises, which is beyond than just having a
good perception towards related service. Moreover, further developments in
recent studies on customer loyalty show that the loyalty dimension is
considered as a multi-dimensional instead of a single-dimensional or
two-dimensional (Yen, 2017; Suhartanto, Clemes & Dean, 2011).
Oliver (2010) was the first scholar to examine the issue of
multi-dimensional loyalty even though past researchers have been aware of the
existence of multi-dimensional customer loyalty. He defines customer loyalty
(to a brand) as a profoundly held psychological commitment to the re-purchase
of a favoured product/service regularly in the future. Thus, despite
situational impacts and marketing efforts from competitors that possibly can
instigate a changing behaviour, it triggers recurring same-brand or same
brand-set purchasing. This definition highlights that attitude expression not
only hints to customer behaviour to repurchase service in the future, but it
will also act to refuse the marketing efforts made by another sport service
competitors. Thus, a true loyal fan in term of attitude will lead to a
preference for a certain sport brand or club. Oliver conceptualization of
loyalty indicates that loyalty is not a contrast (loyal and disloyal) or
multi-group typology (e.g. low, spurious, latency, and high loyalty), but it is
a series or continuum of four phases: cognitive, affective, conative, and
ultimately behavioural loyalty. Based on these stages, at the beginning, a fan
will build a confident feeling towards a sport service in preference to another
sport service (cognitive). Then, he or she will have a sense of loving towards
the sport service (affective) and raise his or her intention to buy (conative)
the sport service. Finally, when a need and opportunity arises, he or she
actually purchases the sport service event (behavioural loyalty).
Attitude
consists of three components, that are, cognitive, affective and conative.
However, Eagly and Chaiken (2007) disclose that attitude measurement do not
have to include all of the three components of attitude. Further, Eagly and
Chaiken (2007) maintain that attitude can be expressed by any one or a mix of
cognitive, affective, and conative component. Other scholars (Suhartanto, Clemes & Dean, 2011) suggest that attitudinal
loyalty as consisting of cognitive and affective aspects of attitude without
cognitive aspect. Furthermore, scholars (Li & Petrick, 2010; Suhartanto, Clemes & Dean, 2011) study reveals a significant
association between attitudinal and behavioural loyalty. Based on the past
studies, this study specifies that fan loyalty formation exists among
attitudinal, conative and behavioural loyalty. Fans behavioural loyalty is formed
by conative loyalty and attitudinal loyalty. Finally, the behavioural loyalty
of fans that is signified with their frequency to consume the services will
ensure the sport industry revenue.
FAN SERVICE EVALUATION
The
conceptualization of service loyalty shows that the sport fans become an asset
(by showing loyal behaviours) through the complex stages, specifically through
how they evaluate the service (Kirkup & Sutherland, 2017). Although
Suhartanto, Clemes
& Dean (2011) report that marketing literature has not clearly identified
the theoretical framework of factors forming service loyalty; yet, three
elements of service evaluation that have been widely recognized as the building
block of loyalty are perceived service quality, customer satisfaction, and
perceived service value (Yen, 2017; Zhang et al., 2014).
Kirkup
and Sutherland (2017) recognize service quality as an important factor for
customer loyalty, which is an essential strategy for the survival of any business
organization, because of its ability to influence customer buying behaviour and
business performance. Service quality is also familiar as an important factor
for building competitive advantage. Hence, many studies were dedicated to
examine service quality in the service industry context, indicate that service
quality has different dimensions in different cultural contexts (Ladhari,
2009). Other studies do not only quantify the quality of service, but also
measure its relationship with other variables such as customer satisfaction,
perceived service value, brand image, and purchase behaviour (Yen, 2017;
Suhartanto & Noor, 2012). In essence, these reports consent that perceived
service quality is an imperative element that will affect customer loyalty, perceived
service value, and customer satisfaction (Kirkup & Sutherland, 2017). The
impact of service quality on customer service loyalty can be direct and
indirect through perceived value and customer satisfaction toward a sport
centres (Yen, 2017). The high service quality will allow service providers to
sell their services at a premium price; therefore, it will affect the value of
the sport fans as an asset by increasing incomes from the selling of premium
services (da Silva & Las Casas, 2017; Hosseini et al., 2017).
Lovelock
& Wirtz (2007) state that customer satisfaction is one of the purposes of
the marketing events, which connects the consumer buying process and
post-purchase phenomenon. The central element in marketing is satisfying the
customers, because of its effect on future customer behaviour, the level of
profit, and the value of the firm share (Suhartanto, Clemes & Dean, 2011).
According to past studies that have been conducted to examine customer
satisfaction, these can be organized into two groups. The first group studies
measured the level of customer satisfaction as well as identify gaps in service
delivery (Lai, Griffin & Babin, 2009). Due to the diagnostic characteristic
of the study, the purpose of those studies tends to be for managerial purposes.
In addition, the second group of studies discusses customer satisfaction in
relation with another variable (multivariate models) such as service quality,
brand image, perceived service value, and customer loyalty (Lai, Griffin &
Babin, 2009; Marshall, 2010). Overall, previous studies agree that customer
satisfaction is not only responsible for the level of customer loyalty and
retention, yet also leads to perceived service value, perceived service
quality, and brand image. In other words, fans future behaviour pattern in
consuming the sport service will be determined on how fans are satisfied
(Hosseini et al., 2017; Kirkup & Sutherland, 2017; Yen, 2017).
The
perceived service value is an important concept in marketing activities because
of its importance in the customer decision-making process. So, customers choose
a service compared to other services because they believe that the service they
purchased gives more value (Bhattacharya & Singh, 2008). As in the case of
customer satisfaction and perceived service quality, perceived service value is
interpreted differently. For example, Kotler, Bowen & Makens (2010) state
that the value perceived by a customer is the difference between the benefits
and the costs spent to obtain a service. Lai, Griffin, M & Babin (2009)
explain it as the quality perceived by the client. In general, several
definitions that have been given by scholars agree that service value is the
consumer's general valuation of the service based on the perception of what is
received and what is given as defined by Zeithaml, Bitner & Gremler (2009).
Scholars (Yen, 2017) argue that by providing superior services will create a
high perceived service value and strongly affect customer orientation,
satisfaction, and customer loyalty. Therefore, providing high service value is
an essential strategy in building a competitive advantage for any service
business. Much more attention is given to this construct in the sport industry
(Hosseini et al., 2017), because of the importance of service value in
influencing fans behaviour.
Although
literature shows that studies have been considerably conducted, most past
studies on customer service value focus on its relation with other concepts
such as service quality, brand image, customer satisfaction, as well as
services related to outcomes, particularly customer behaviour towards the brand
(Funk, 2017). These studies show that service value is an important determinant
(either directly or indirectly through customer satisfaction) of customer
loyalty to a service brand. Thus, service value is an important factor
affecting the value of fans as a sport business asset, together with service
quality and fan satisfaction. This effect is caused by the higher the fans
perceived service value of the particular sport club, the more frequent the
fans would consume the services and the more they will tend to be loyal toward
the sport club.
DISCUSSION
Due
to the intense and mature stage competition (Yen, 2017), the sport service
industry needs to switch their focus from service-centric to customer-centric.
It changes from treating sport fans as an object in the business process to
treat them above everything else.
Customer-centric
orientation basic premise is creating a positive fan service experience during
their use of sport service (Barrie et al., 2005). However, the positive
experience is based on a series of transactions, not based on only one
transaction. This condition highlights that developing a long-term relationship
with fans is an essential need of the sport service industry. In this
relationship, the fans should be treated as an asset for the sport industry.
Thus, managing the fans as an asset must be considered an integral part of the
success of sport industry business (Yen, 2017).
The
proposed model of managing fans as a sport industry’s asset consists of
marketing mix instruments, event evaluation, fan loyalty, and the business
outcome offers a comprehensive model to manage the lifetime value of their
fans. The model provides an understanding of the role of marketing mix
instruments in influencing the financial outcome of the fan lifetime value
through fan service experience and fan loyalty behaviour. So, the sport
services firms could assess the complete value of the fan as sport industry’s
assets through the proposed model. The adoption of this model to manage the fan
as an asset of the sport industry will not be problematic as it embraces the
service evaluation and service loyalty model that has been widely accepted in
the service industry (Zhang et al., 2014).
There
are two potential benefits could be gained from applying the fans as an asset
model. First, the model could help managers to scrutinize how their marketing
mix instruments affect fan behaviour as a source of business revenue and
expenditure. For example, the development of loyalty program such as
frequent-fan programs as a common strategy that is currently used in the sport
service industry. But sport industries may lose competitive advantage obtained
from such loyalty program once other sport industries mimic the program (da
Silva & Las Casas, 2017). Therefore, the proposed model could be used to
make a decision on how much to spend on supporting such a frequent-fan program.
Second, the proposed model could assist sport managers to compare the magnitude
of resource allocation decisions regarding strategies that a sport service
industry could carry out. For instance, a sport manager could compare the
effect of emotional loyalty program and the frequent-fan loyalty program on the
fan lifetime value. Thus, the sport managers could choose the best strategy to
keep their business competitive by understanding the effect of such programs.
This
study shows that the application of the proposed model of managing fans as an
asset is encouraging. However, the implementation of the model has some
challenges. Sport managers must collect longitudinal data on their marketing
activities, service operation, and fan behaviour overtime to apply the model.
Since the model is complex as it includes both business operation data and fan
behaviour; thus, it requires the availability of an excellent database and the
sophisticated analytical skill on marketing metric to examine the proposed
model.
CONCLUSION
This
article highlights that the intangible asset, the fan, is an important factor
for the sport industry in building a competitive advantage. Even though the
general understanding of firm asset leans towards and is focused more on the
tangible asset. Due to the importance of fan as a sport industry asset,
managing fan effectively and efficiently will determine the future success of a
sport industry business since fan provides revenue and attracts sponsorship.
The proposed model of managing fans as an asset consists of marketing mix
instruments, event evaluation, fan loyalty and the business outcome offers a
comprehensive conceptual understanding for sport managers to manage their fans.
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