Marketing to the Emerging Fan Marketing to the Emerging Fan BaseBaseJoe Louis Barrow Jr.Joe Louis Barrow Jr.Senior Vice PresidentSenior Vice PresidentWorld Golf FoundationWorld Golf Foundation

THE EMERGING POPULATIONTHE CHALLENGE:THE CHALLENGE:Expand the participation in golf to Expand the participation in golf to reflect the changing population.reflect the changing population.

THE EMERGING POPULATION• PART ONEPART ONE

– THE SHIFTING DEMOGRAPHICSTHE SHIFTING DEMOGRAPHICS

• PART TWOPART TWO– WHAT CORPORATE AMERICA IS DOINGWHAT CORPORATE AMERICA IS DOING

• PART THREEPART THREE– WHERE DO WE GO FROM HERE?WHERE DO WE GO FROM HERE?– WHAT CAN WE LEARN FROM CORPORATE WHAT CAN WE LEARN FROM CORPORATE

AMERICAAMERICA

The Emerging Population

• The culture and buying habits of the U.S. The culture and buying habits of the U.S. are changingare changing

• The Golf Industry must understand and The Golf Industry must understand and actively market to this emerging actively market to this emerging customer base.customer base.

• Supplier diversity and workforce diversity Supplier diversity and workforce diversity is critical to the golf industry’s long term is critical to the golf industry’s long term success in the evolving marketplace.success in the evolving marketplace.

The Business CaseThe Business Case

The Emerging Population

• The emerging market focus must be The emerging market focus must be integrated into business plans and integrated into business plans and strategies, otherwise these efforts are strategies, otherwise these efforts are doomed to fail.doomed to fail.

• Industry diversity initiatives must have Industry diversity initiatives must have total buy-in from the top executives total buy-in from the top executives including leaders from all sectors. including leaders from all sectors.

The Business CaseThe Business Case

Shifting Demographics and Shifting Demographics and Economic OpportunitiesEconomic OpportunitiesKen LovellKen LovellDirector, Research & DevelopmentDirector, Research & DevelopmentPGA TOURPGA TOUR

Presentation Overview• Golf Demographics and the Economic Golf Demographics and the Economic

OpportunityOpportunity• Demographic ProjectionsDemographic Projections• Characteristics of the Emerging Fan Characteristics of the Emerging Fan

Base – And Competition for ItBase – And Competition for It

GOLF DEMOGRAPHICSGOLF DEMOGRAPHICS

% In

tere

sted

in P

ro G

olf

20

22

24

26

28

30

32

34

36

38

40

Sep-95 Jun-96 Mar-97 Dec-97 Sep-98 Jun-99 Mar-00 Dec-00 Sep-01 Jun-02

Minority Fan Penetration(12 Month Moving Average)

+49% Minority Interest Since 1995!

Source: ESPN Sports Poll

Fan Base DemographicsPro Golf Minority Fan Base Growth, 1995-PresentPro Golf Minority Fan Base Growth, 1995-Present

Fan Base Demographics%

Inte

rest

ed in

Pro

Gol

f

Source: ESPN Sports Poll

20

25

30

35

40

45

Sep-95

Jun-96

Mar-97

Dec-97

Sep-98

Jun-99

Mar-00

Dec-00

Sep-01

Jun-02

Pro Golf Fans

White

Minority Pro GolfFans

Fan Penetration(12 Month Moving Average)

Minority Fan Base Growth Versus Total Growth Minority Fan Base Growth Versus Total Growth

Fan Base• Fan base becomingFan base becoming

more diversemore diverse• Remains below levelRemains below level

of non-minority fansof non-minority fans• TV audience showsTV audience shows

similar trends andsimilar trends andsome opportunitiessome opportunities

74%

1%3%

12%

10%

Source: ESPN Sports Poll / US Census

1995 DEMOGRAPHICSUS Population Pro Golf Fans

Recent Shift in Golf FansIn 1995 whites were overrepresented in the golf In 1995 whites were overrepresented in the golf

fan base compared with the US populationfan base compared with the US population

Source: ESPN Sports Poll / US Census

2001 DEMOGRAPHICS

US Population Pro Golf Fans

White White

Profile of Today’s Golf FansNon-white population is 30.9% of totalNon-white population is 30.9% of total

US Population versus 25.6% of Pro Golf Fans US Population versus 25.6% of Pro Golf Fans

Television ViewershipAv

erag

e Ra

ting

00.20.40.60.8

11.21.41.61.8

2

1994 1995 1996 1997 1998 1999 2000 2001

White

Black

Hispanic

Pro Golf Television Ratings

Source: Nielsen Media Research

The Future of Emerging Markets• Minority youth are disproportionately more Minority youth are disproportionately more

interested in watching golf interested in watching golf

21%

14%

6%

0%

5%

10%

15%

20%

25%

HispanicYouth

BlackYouth

WhiteYouth

Hispanic YouthBlack YouthWhite Youth

% o

f Kid

s Wat

chin

g Pr

o Go

lf

Source: Nielsen Media Research

DEMOGRAPHIC DEMOGRAPHIC PROJECTIONSPROJECTIONS

1%

71% 12%

12%4%

White Black Hispanic Asian Other

Year 2000

Demographic Profile• Today, there are Today, there are

275m Americans275m Americans– 196.7m White 196.7m White – 32.5m Hispanic 32.5m Hispanic – 33.5m African 33.5m African

Americans Americans – 10.6m Asian 10.6m Asian

AmericansAmericans– 2.0m Other2.0m Other

Source: US Census 2000

1%

64%

13%

17%

6%

White Black Hispanic Asian Other

Year 2020

Demographic Projections• By 2020, it is expected By 2020, it is expected

that there will be 325m that there will be 325m AmericansAmericans– 207m White 207m White – 55.0m Hispanic 55.0m Hispanic – 41.5m African 41.5m African

Americans Americans – 18.5m Asian Americans18.5m Asian Americans– 2.5m Other2.5m Other

Source: US Census 2000

1%

56%

13%22%

8%

White Black Hispanic Asian Other

Year 2040

Demographic Projections• By 2040, it is expected By 2040, it is expected

that there will be 390m that there will be 390m AmericansAmericans– 212.5m White 212.5m White – 82.7m Hispanic 82.7m Hispanic – 49.6m African Americans 49.6m African Americans – 29.5m Asian Americans29.5m Asian Americans– 3.0m Other3.0m Other

Source: US Census 2000

Demographic ProjectionsBy 2060, “Minorities” will no longer be the minorityBy 2060, “Minorities” will no longer be the minority

0102030405060708090

1980 2000 2020 2040 2060 2080Multi-ethnic White

% o

f US

Popu

latio

n

Source: US Census 2000

CHARACTERISTICS OF THE CHARACTERISTICS OF THE EMERGING FAN BASE - AND EMERGING FAN BASE - AND COMPETITION FOR ITCOMPETITION FOR IT

Characteristics ofEmerging Markets

• Black consumers will spend 572.1 billion this year, nearly double the 301 billion in spending power Blacks had in 1990

• Hispanics are more brand loyal than non-Hispanics - 39% of Hispanics buy products based on quality rather than price vs. 20% of Non-Hispanics

• In the past 20 years, HH Hispanic Median Income grew 130%, vs. 17% for the general population

Source: Selig Center for Economic Growth and DYG

Ratio of Whites to People of Color In Successive Age Groups

0 2 4 6

Over 70

40-70

Under 40

0-9

White People of Color

Shifting Demographics• Minorities youngerMinorities younger• Generation to be majorityGeneration to be majority• Developing recreationDeveloping recreation

preferences nowpreferences now

Source: US Census 2000

Minority Buying PowerAs The Minority Population Grows, As The Minority Population Grows,

Its Purchasing Weight Grows ProportionatelyIts Purchasing Weight Grows Proportionately

$0

$250

$500

$750

$1,000

1990 2000 2002 2007

Black

Hispanic

Asian

NativeAmericansBu

ying

Pow

er (B

illion

s)

Source: Selig Center for Economic Growth

Other Sports AggressivelyPursuing Hispanics

Competitive Landscape –Media Spending• Corporate America Increasing Multicultural SpendingCorporate America Increasing Multicultural Spending

1. Procter & Gamble 55.0 +19%

2. Ford 51.0 +264%

3. AT&T 42.0 +20%

4. WorldCom 41.3 +10%

5. Sears, Roebuck 38.0 +9%

6. Americatel 30.0 +20%

7. Miller Brewing 30.0 +20%

8. General Motors 29.5 +82%

9. McDonalds 27.0 -0-

10. Altria Group (formerly Phillip Morris) 25.0 -0-

Top Hispanic Advertisers (2001 Media) % change

vs. 2000 $M

Source: Hispanic Business Magazine

PARTICIPATIONPARTICIPATION

Participation

12%

5% 5% 5%

0%2%

4%6%8%

10%

12%14%

White African-American

Hispanic Other

Estimated Participation Rates2001

• Minorities have lower participation rates than whitesMinorities have lower participation rates than whites

Source: National Golf Foundation

Participation

24.6

1.3 1.4 0.4 0.10

5

10

15

20

25

30

White Hispanic Black Asian Other

Mill

ions Estimated Total Participants

2001

• Leading to much lower numbers of participating golfersLeading to much lower numbers of participating golfers

Source: National Golf Foundation

Measuring GolfParticipation Rates• Estimating ParticipationEstimating Participation

– Overall numbers reliableOverall numbers reliable– Subgroups difficult to Subgroups difficult to

measuremeasure– Most data sources under-Most data sources under-

representrepresent– Financial upsideFinancial upside

worthy of investmentworthy of investmentin better datain better data

THE ECONOMIC THE ECONOMIC OPPORTUNITYOPPORTUNITY

Objective: Estimate the revenue available to Objective: Estimate the revenue available to the industry if minorities were fully activatedthe industry if minorities were fully activated

Quantifying the Opportunity

• Assume “upside” is Assume “upside” is current US average current US average participation rateparticipation rate

• Assume spending Assume spending remains constant remains constant based on Golf 20/20 based on Golf 20/20 per golfer spending per golfer spending studystudy

Quantifying the Opportunity• Average Spending per golferAverage Spending per golfer

– African Americans:African Americans: $988 per year$988 per year– Hispanics:Hispanics: $872 per year$872 per year

• Average Participation RateAverage Participation Rate– Assume 12% for all minority golfersAssume 12% for all minority golfers

• Projections based on US Census Projections based on US Census population projections through 2020population projections through 2020

1.91.8

0.6

0.10.0

0.5

1.0

1.5

2.0

Black Hispanic Asian Other

Mill

ions

Participation ProjectionsEstimated Incremental Minority Golfers in 2001

(Assumes 12% participation rate)

Participation Projections

3.7 3.8 3.9 4.0 4.1 4.2 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.8 4.9 5.0 5.1 5.2 5.3 5.4

2001 2003 2005 2007 2009 2011 2013 2015 2017 2019

.

Estimated Incremental African-American and Hispanic Golfers Through 2020

(Assumes 12% participation rate)

Milli

ons

0.00.00.50.51.01.01.51.52.02.02.52.53.03.03.53.54.04.04.54.55.05.05.55.56.06.0

Quantifying the Opportunity

• DefinitionDefinition– Must be a golfer (at least 1 round in last Must be a golfer (at least 1 round in last

year)year)– Age 18+Age 18+– AND EitherAND Either– Play 25+ Rounds ORPlay 25+ Rounds OR– Household spends at least $1,000 per year Household spends at least $1,000 per year

on equipment and feeson equipment and fees

Best Customer Upside

Quantifying the Opportunity• Total Incremental African AmericanTotal Incremental African American

and Hispanic Golfers in 2001and Hispanic Golfers in 2001– African Americans:African Americans: 1.9 Million1.9 Million– Hispanics:Hispanics: 1.7 Million1.7 Million

• Percentage of “Best Customers”Percentage of “Best Customers”in each group:in each group:– African-Americans:African-Americans: 42%42%– Hispanics:Hispanics: 32%32%

• Total Incremental “Best Customers” in Total Incremental “Best Customers” in 20012001– 1.3 Million1.3 Million

Participation Projections

1.3 1.4 1.4 1.4 1.5 1.5 1.5 1.6 1.6 1.6 1.7 1.7 1.7 1.8 1.8 1.8 1.8 1.9 1.9 1.9

2001 2003 2005 2007 2009 2011 2013 2015 2017 2019

Incremental African-American and HispanicIncremental African-American and Hispanic“Best Customers” Through 2020“Best Customers” Through 2020

Note:: Assumes a jump from 5%-12% in participation and current rates of “Best Customers” in each group and growth based solely on population

Milli

ons

0.00.0

0.50.5

1.01.0

1.51.5

2.02.0

2.52.5

Quantifying the Opportunity• Estimated 2001 Incremental Minority Estimated 2001 Incremental Minority

SpendingSpending• Average Spending per golferAverage Spending per golfer

– African Americans:African Americans: $988 per year$988 per year– Hispanics:Hispanics: $872 per year$872 per year

• Incremental GolfersIncremental Golfers– African Americans:African Americans: 1.9 Million1.9 Million– Hispanics:Hispanics: 1.7 Million1.7 Million

• Estimated Incremental Spending in 2001:Estimated Incremental Spending in 2001:–$3.4 Billion$3.4 Billion

Incremental Spending Projections

Estimated Incremental African-American and Hispanic Core Golf Spending

Note:: Assumes a jump from 5%-12% in participation rate and current rates of spending for each group and growth based solely on population

Milli

ons

$0.0$0.0

$1.0$1.0

$2.0$2.0

$3.0$3.0

$4.0$4.0

$5.0$5.0

$6.0$6.0

Summary• Minorities are growingMinorities are growing• Minority interest in golf is growingMinority interest in golf is growing• Minority participation is lowMinority participation is low• The upside for golf marketing to The upside for golf marketing to

minorities is substantialminorities is substantial

MARKETING TO THE FAN MARKETING TO THE FAN BASEBASEGregory DixonGregory DixonManager for Diversity Marketing and CommunicationsManager for Diversity Marketing and CommunicationsVolvo Cars of North AmericaVolvo Cars of North America

VCNA MISSIONWe, Volvo, deliver the Best Product, the We, Volvo, deliver the Best Product, the Best Value and the Best Experience Best Value and the Best Experience

To a Diverse Target AudienceTo a Diverse Target Audience

Via our Product-, Communication- and Via our Product-, Communication- and Retailer Network Strategies and ActionsRetailer Network Strategies and Actions

* = Source: Strategic Vision 2002 NVES Early Buyers Study

Lagging in DiversityCHALLENGES FACING VOLVO:

• Lowest ratio of Lowest ratio of sales to African sales to African Americans, Asians Americans, Asians and Hispanics and Hispanics among all among all Premium/Luxury Premium/Luxury brands.*brands.*

• Diverse Diverse consumers consumers represents 9% of represents 9% of total Volvo sales.*total Volvo sales.*

Volvo Acura Audi InfinitiCars Cars SUV Cars Cars SUV

African American 4% 4% 2% 4% 5% 7%Hispanic 3% 4% 3% 3% 2% 2%Asian American 2% 11% 12% 5% 5% 7%Share of total 9% 19% 18% 12% 12% 15%

BMW Mercedes LexusCars SUV Cars SUV Cars SUV

African American 4% 2% 8% 8% 5% 4%Hispanic 3% 2% 4% 6% 3% 2%Asian American 14% 21% 9% 9% 8% 10%

Share of total 21% 25% 21% 23% 16% 15%

KEY INITIATIVES RECENTLY LAUNCHEDSponsorshipSponsorship• Hispanic Heritage AwardsHispanic Heritage Awards• LA Black Business ExpoLA Black Business Expo• Hispanic Chamber of CommerceHispanic Chamber of Commerce• Latin Grammy’sLatin Grammy’s• Little Saigon ExpoLittle Saigon Expo

AdvertisingAdvertising• Incorporate diversity into mainstream advertisingIncorporate diversity into mainstream advertising• Measure the reach of placement in diverse Measure the reach of placement in diverse

communitiescommunities

KEY INITIATIVES IN LAST 90 DAYSPeoplePeople• Team Planning Session with the Marketing Team Planning Session with the Marketing

Business Unit to establish diversity objectivesBusiness Unit to establish diversity objectives• Review diversity focus group material conducted Review diversity focus group material conducted

by Market Intelligenceby Market IntelligenceResourcesResources• Meetings held with diversity events vendor to Meetings held with diversity events vendor to

renew contract and review events for 2003renew contract and review events for 2003• Solicit feedback for the Marketing Diversity Solicit feedback for the Marketing Diversity

Council Sub-committeeCouncil Sub-committee

SPECIAL FOCUS ON DIVERSE CONSUMERSAction Plan:Action Plan:

For any diversity strategy to work there For any diversity strategy to work there needs to be multiple levels of commitmentneeds to be multiple levels of commitment

• Diversity must be integrated in everything Diversity must be integrated in everything we do.we do.

• The face of diversity should be blended into The face of diversity should be blended into communications in an “ethnic neutral” way.communications in an “ethnic neutral” way.

SPECIAL FOCUS ON DIVERSE CONSUMERS• Dedicating an incremental budget to Dedicating an incremental budget to

reach these groups in non mainstream reach these groups in non mainstream ways: targeted events, publications, ways: targeted events, publications, one-to-one relationship building, media one-to-one relationship building, media etc.etc.

• Dealer appointments when available.Dealer appointments when available.• VCNA and dealer employment.VCNA and dealer employment.

KEY INITIATIVES FOR 2003• Inclusive Marketing ApproachInclusive Marketing Approach

– Diversity to be a component of everything we doDiversity to be a component of everything we do– Advertising and one-to-one consumer events to Advertising and one-to-one consumer events to

reflect this approach.reflect this approach.

• Dedicated budget to support diversity Dedicated budget to support diversity effortsefforts– Recommend 10% to be allocated towards Recommend 10% to be allocated towards

diversity by each cost center managerdiversity by each cost center manager– Continued allocation of funds for diversity Continued allocation of funds for diversity

opportunities. Target is 3% of the marketing opportunities. Target is 3% of the marketing budget. budget.

PRODUCT MARKETINGINITIATIVESINITIATIVES• Get understanding of different ethnic groups' Get understanding of different ethnic groups'

"hot buttons" "hot buttons" • Bring awareness to VCC/VCC PPL Bring awareness to VCC/VCC PPL

• Focus groups Focus groups • Purchase motivators Purchase motivators

• Cut existing data by ethnic group Cut existing data by ethnic group

CRM & eBUSINESS • Today Online Ads Today Online Ads

– Terra.com Terra.com – Netnoir.com Netnoir.com – BET BET – AOL (Aolla/latin Grammys) AOL (Aolla/latin Grammys)

• Opportunities Opportunities – Asian (AsiaAve – P1)Asian (AsiaAve – P1)– Chinese Chinese – Web: Multilingual site (with new platform) Web: Multilingual site (with new platform) – Call Center: Multilingual Volvo Personal ShopperCall Center: Multilingual Volvo Personal Shopper

CONSUMER MARKETING• Drive ProgramsDrive Programs

– Special focus events (local Chamber of Special focus events (local Chamber of Commerce) Commerce) • African American African American • Hispanic Hispanic • AsianAsian

– Consumer Recruitment Focus (for 2003 events) Consumer Recruitment Focus (for 2003 events) – Auto Shows Auto Shows – Best Buddies Best Buddies

• Hire and support Hire and support

ADVERTISING/MARKETING INTELLIGENCE • Understand how the brand is perceived Understand how the brand is perceived

by various diverse groupsby various diverse groups• Baseline measurement of current year's Baseline measurement of current year's

media delivery against diverse targetmedia delivery against diverse target• Diversify champion/council at Diversify champion/council at

advertising agencyadvertising agency• Integrate messages with community Integrate messages with community

outreach activitiesoutreach activities

PRODUCT PLANNING • Ordering cars (masks) – Are masks Ordering cars (masks) – Are masks

contented to best represent contented to best represent – Who is building the mask?Who is building the mask?– Is it product content related/image/offer? Is it product content related/image/offer?

• Focus groups – internal/externalFocus groups – internal/external• Verbiage in ads/monroney Verbiage in ads/monroney

labels/owner's manuals labels/owner's manuals • Reviewing and acting on market data Reviewing and acting on market data

DIVERSITY EVENTS AND SPONSORSHIP RECAP• Volvo Safety CampaignVolvo Safety Campaign

– Presence in twelve cities and Presence in twelve cities and collected 6,030 names captured for collected 6,030 names captured for the Marketing Database and sales the Marketing Database and sales matchesmatches

– Print, radio and online presencePrint, radio and online presence

DIVERSITY EVENTS AND SPONSORSHIP RECAP• Celebrity & High Profile Events Celebrity & High Profile Events

– Marilyn CrawfordMarilyn Crawford– Art For Life introduced Volvo to Star Jones and select Art For Life introduced Volvo to Star Jones and select

the XC90 as the vehicle of choice for the XC90 as the vehicle of choice for The ViewThe View..– Celebrities have purchased such as Bill Cosby. Celebrities have purchased such as Bill Cosby.

Director Lee Daniels interested in positioning a Volvo Director Lee Daniels interested in positioning a Volvo in his next film.in his next film.

– Retailer support and traffic generatedRetailer support and traffic generated

• Tour For Success – Magic JohnsonTour For Success – Magic Johnson– 12 city tour in diverse communities 12 city tour in diverse communities

with a theme for small business with a theme for small business ownersowners•Captured approx. 5,860 names for the Captured approx. 5,860 names for the

Marketing Database and sales matchesMarketing Database and sales matches•Radio, print, TV and online exposureRadio, print, TV and online exposure

DIVERSITY EVENTS AND SPONSORSHIP RECAP

• Local Events and SponsorshipsLocal Events and Sponsorships– Chamber of Commerce, NAACP, Chamber of Commerce, NAACP,

NAMAD, Hispanic Heritage NAMAD, Hispanic Heritage Awards, Chicago Financial Awards, Chicago Financial SeminarSeminar•Data capture of names and support Data capture of names and support

corporate citizenshipcorporate citizenship

DIVERSITY EVENTS AND SPONSORSHIP RECAP

MARKETING TO THE FAN MARKETING TO THE FAN BASEBASEMike de MaioMike de MaioManaging DirectorManaging DirectorBurrell Communications, Inc.Burrell Communications, Inc.