An Examination of Marketing Resource Allocation in NCAA Division I Athletics

Administrators at NCAA Division I institutions have multiple sport programs to market, yet resource limitations challenge these administrators to identify efficient and equitable resource allocation strategies. Therefore, the purpose of this study was to determine how NCAA Division I marketing administrators allocate marketing resources to their various sport programs. Three norms of exchange: rationality, distributive justice, and power, are used as a conceptual framework, and primary marketing administrators at NCAA Division I institutions were surveyed. Results revealed past results and perceived scarcity of both monetary and non-monetary resources predicted allocation norms used to distribute marketing resources. Marketing administrators who agreed with distributive justice as a resource allocation norm were likely to allocate more monetary and nonmonetary resources to women's sports. Administrators agreeing that power influenced marketing resource allocations were more likely to allocate both monetary resources and non-monetary resources to men's sports over women's sports. An Examination of Marketing Resource Allocation in NCAA Division I Atbletics Intercollegiate athletic programs consist of many different sports, each with different levels of fan support and opportunities for increased support. One goal of many athletic departments is to effectively market each of its teams. Limited marketing resources, however, often prevent administrators from marketing each T. Christopher Greenwell, PhD, is an associate professor in the Department of Health and Sport Sciences at the University of Louisville. His research interests include customer service and customer satisfaction. Daniel F. Mahony, PhD, is an associate university provost and professor at the University of Louisville. His research interests include sport consumer behavior and resource distributions in intercollegiate athletics. Damon P. S. Andrew, PhD, is an assistant professor in the Department of Exercise, Sport, and Leisure Studies at the University of Tennessee. His research interests include human resource management and organizational behavior/theory in sport. "...legal requirements, such as TitleIX, challenge marketers to make decisions that not only maximize financial returns hut promote equality." sport to its fullest. Therefore, athletic marketers are challenged to identify resource allocation strategies that are both efficient and equitable. Distribution decisions are rarely easy. For example, marketers may question whether they should allot resources into marketing soccer or football. Football is the traditional money maker in many Division I-A athletic departments (Fulks, 2004), but soccer is a growing sport with established popularity worldwide. If more attention were paid to soccer, could it grow into a sport which produces significant revenue? Similarly, marketers may struggle with whether to distribute more resources into marketing their men's or women's basketball programs. Marketers often struggle with the decision of whether to continue to invest resources into men's basketball which typically draws larger crowds (NCAA, 2005), or invest in women's basketball in an attempt to enhance the experiences of the athletes and increase revenue production. These dilemmas are just a few of the decisions faced by marketers trying to maximize returns from marketing resources for a large number of sport programs. There are several reasons why resource allocation decisions are particularly challenging in intercollegiate athletics. First, intercollegiate athletic departments consist of mviltiple sport programs, each having different qualities and needs. For instance, most athletic departments have both men's and women's teams, teams with varying levels of success, teams with assorted levels of tradition, and teams competing in sports with different levels of consumer interest. Second, limited resources often prevent administrators from marketing each sport to its fullest. This scarcity of resources restricts marketers and impels them to provide resources to some teams at the expense of others. Third, various forces make it difficult to develop distribution patterns that are both efficient and equitable. For example, outside entities such as donors or other powerful constituents may exert pressure to promote certain sports. Further, legal requirements, such as Title IX, challenge marketers to make decisions that not only maximize financial returns but promote equality. 82 Volume 16 • Number 2 • 2007 • Sport MarHeting Quarterly In addition, these decisions are complex in that multiple resources and rewards are exchanged in intercollegiate athletics (Greenwell & Armstrong, 2002). Marketing resources are generally thought of as being monetary in the form of dollars spent on advertising, promotions, and publicity campaigns, but non-monetary resources are exchanged as well. Time spent by staff, facilities used for events, and other non-monetary resources also must be allotted. In exchange for tbese resource allocations, multiple rewards are expected from sport programs. In some traditional business settings, revenue may be tbe one and only reward expected from a marketing allocation. However, in athletics, marketers may seek non-monetary rewards in addition to monetary rewards. In intercollegiate athletics, marketers may allocate marketing resources to a specific sport program to promote equality in order to meet Title IX expectations, improve the experience of all participants, or support neglected sports or athletes (Greenwell & Armstrong, 2002). Also, marketers may allocate resources to promote a sport program's image within the community or its conference. These allocations may be made to bring prestige to the university, attract recruits, draw students, and/or display the university's assets. "...do marketers make allocation decisions to be fair, or do they base them on maximizing returns?" Social Exchange Theory Despite tbese challenges, little is known about how administrators make these difficult decisions. Therefore, the purpose of this study was to better understand how NCAA Division I marketing administrators allocate marketing resources to their various sport programs. The current paper utilizes classic social exchange theory to analyze how resource allocations are made. Social exchange is defined as voluntary actions motivated by expected returns (Blau, 1964), whereby participants seek to maximize gains and minimize costs (Emerson, 1981; Homans, 1974). Social exchange theory accounts for the ways resources and rewards are exchanged beyond a merely economic level. In other words, resources and rewards are not solely monetary, but can also be social and psychological in nature (Napier & Bryant, 1980). Organizational resources may take the form of money, human resources, time, effort, and information (Sniezek, May, & Sawyer, 1990). In its simplest form, social exchange theory explains exchange relationships at an individual level, but it is also relevant on an organizational level as organizations are forums for transactions (Cropanzano, Howes, Grandy, & Toth, 1997; Randall, Gropanzano, Bormannn, & Birjulin, 1999). Exchange theories have been used to evaluate how resources and rewards are exchanged in a variety of settings such as cooperation between police and the media (Simmons, 1999), labor markets (Van Dyne & Ang, 1998), salesperson relationships (Ramaswami, Srinivasan, & Gorton, 1996), community support for tourism (Kayat, 2002), employee mentoring (Ensher, Thomas, & Murphy, 2001), business-to-business relationships (Lambe, Wittmann, & Speckman, 2001), and supplier relationships (Hallen, Johanson, & Seyed-Mohamed, 1991). Principles of exchange have also been applied in the sport and leisure literature to understand leisure participation (Auld & Gase, 1997) and corporate sponsorship (McGarville & Gopeland, 1994). The current study seeks to better understand how NGAA Division I marketing administrators allocate marketing resources to their various sport programs by addressing three key areas. First, it seeks to address which norms impact the decision making process. Specifically, do marketers make allocation decisions to be fair, or do they base them on maximizing returns? In addition, this study examines whether other parties are influential in the decision making process. Second, tbis study seeks to address which antecedents predict exchange norms. For example, if monetary resources are perceived to be scarcer, does tbis impact the norms used in making distribution decisions? Third, this study seeks to address how norms of exchange influence which types of sport programs receive resources. The findings from this research should clarify how resource allocation decisions are made and identify sources of inequitable or inefficient marketing resource allocations. The results can be useful in predicting decisions and in suggesting ways to influence and change distribution patterns in order to maximize returns. Norms used for making allocation decisions Using social exchange theory as a framework, Greenwell and Armstrong (2002) identified a number of bases for making exchange decisions. Their conceptual paper utilized principles of exchange to examine forces influencing how resources and rewards are exchanged in multi-sport athletic organizations such as intercollegiate athletic departments, and their work illustrated some of the challenges that athletic administrators may face in the allocation of marketing resources. Further, their work used key exchange norms to explain why inequitable and inefficient decisions are made. The three most prominent exchange norms presented were rationality, distributive justice, and power. A more detailed description of each follows. Volume 16 • Number 2 • 2007 • Sport Marheting Quarterly 83 The rationality proposition suggests actors will base their decisions on the probability of accruing returns and will seek the greatest reward at the least cost (Homans, 1974). Actors take into account the importance of rewards, cost of resources, and the expense of pursuing alternative exchanges (Kalberg, 1980). The rationality proposition is based on three of Homans' earlier propositions: success, stimulus, and value. The success proposition asserts if rewards are frequent, the activity leading to those rewards is likely to be repeated. The stimulus proposition states that if an activity was successfiil and rewarding in the past, the activity is more likely to take place again. The value proposition asserts activities vwll be regulated by the value ofthe rewards received. In sum, this proposition suggests marketers in intercollegiate athletics who use this basis for their allocations are likely to repeat what has worked in the past. The problem this creates is many programs that have not generated good results in the past, or have never had the opportunity to generate these results because they were not given marketing resources, may be continually overlooked when resources are distributed (Greenwell & Armstrong, 2002). The distributive justice proposition suggests that actors will be impacted by their perceptions ofthe fairness of allocation methods (Deutsch, 1985). While many may support basing distribution decisions on fairness, the difficulty has been in defining what is fair. Prior research has identified three basic distribution principles that decision makers may perceive as fair: equality, equity (or contribution), and need (Hums & Chelladurai, 1994). Equality generally suggests that all groups or individuals receive equal shares ofthe resources being distributed, while equity (or contribution) suggests more resources should be distributed to those programs making a greater contribution to the organization (e.g., working harder, more productive) (Hums & Chelladurai, 1994). Others have suggested contributing resources to those with the greatest need (e.g., lack resources, higher costs) to be most fair (Mahony, Hums, & Riemer, 2005). Regardless ofthe principle one sees as being most fair, it is important to understand the fair way of allocating resources is not always how decisions are made and may not be the most efficient. The power proposition suggests actors' allocation decisions may be based on the influence of others inside and outside the organization (Blau, 1964; Emerson, 1981). Sport programs can be viewed as organizational subunits, and the relationships between those subunits can dictate power relationships. According to Hickson, Hinnings, Lee, Schneck, and Pennings (1971), subunits have power when they can reduce uncertainty in the organization, cannot be easily replaced, and are central to the organization's activities. In sport, this principle implies programs that have historically delivered more revenue, fan support, or have more tradition may have more influence over decisions than other programs. More powerful sport programs may demand a greater share of resources, and less powerful sport programs may be willing to accept a smaller share. In addition, resources are likely to be allocated to sport programs whose success benefits other sport programs (Greenwell & Armstrong, 2002). For example, some basketball teams may demand more resources because their revenues subsidize other teams; this justification could be used to defend the inequity in marketing allocations for basketball in comparison to other sports. Influential parties can also have power over distributions. University administrators, powerful coaches, and influential alumni may all be able to influence the allocation of marketing resources. Often these power imbalances create inefficient exchanges, but change is difficult as powerful programs are often motivated to prevent change in order to protect their own interests (Amis, Slack, &Hinings, 2004). "University administrators, powerful coaches, and influential alumni may all be able to influence the allocation of marketing resources." Antecedents to allocation norms Another goal of the current study is to explore which antecedents predict which norm is used. Two antecedents are of particular interest: scarcity and previous experience. Perceived scarcity is an important issue, as allocations of limited resources occur on a regular basis (Langholtz, Gettys, & Foote, 1993). Since it is rare to have sufficient resources to achieve all organizational objectives, marketing directors must make difficult decisions about how to distribute a scarce amount of resources. The degree to which an allocator perceives a resource to be scarce has been found to influence the allocator's evaluations of the recipient's worthiness (Ross & Ellard, 1986; Skitka & Tetlock, 1992) and the norm used to make allocations (Brinberg & Castell, 1982). When resources are in short supply, decision makers are likely to place an emphasis on accountability and efficiency more than when resources are abundant (Botner, 1998). Therefore, it is hypothesized that marketing managers will favor rationality as an allocation principle when resources are scarce because marketers in this situation will likely be more interested in maximizing returns from the little resources they have. On the other hand. 84 Volume 16 • Number 2 • 2007 • Sport Marketing Quarterly it is hypothesized that when resources are perceived to contrary, if these programs have successfuUy delivered be abundant, marketers will be more likely to consider in the past, then the marketer may be more open to distributing resources based on what is fair. Further, making distributions based on fairness. perceived scarcity influences the types of resources that m, ^K J are exchanged. When resources are perceived to be ^ " ® abundant, money and goods are likely to be ^ , , r, J exchanged. However, when resources are perceived to Sample and Procedure be scarc'e, intrinsic resources are likely to be exchanged The population for this study mcluded the top rnaricetrr, • u o w .̂ lQQĉ ^ ing admmistrator at each NCAA Division I mstitution (Brinberg & Wood, 1983). ^^^^^^^^ ^.^^^ ^^^^ ^^^.^^^.^^ .̂ ̂ ^^^^.^^^ differently, "Since most institutions do not distribute resources participants were not identified by title but by their rank exclusively to either men's or women's sports but within the organization. The organizational structures of somewhere in between, a dichotomous variable athletic departments were examined to identify the priwould not be appropriate in measuring the gender mary marketing administrator, the person most likely to distribution of resources." be in charge of making marketing allocations. Division I administrators were chosen for the sample because their The other antecedent of interest is previous experiinstitutions are most likely to aggressively market their ence Blau (1964) argues humans are motivated to act programs and depend on returns from their marketing by expectations of rewards and avoidance of costs. efforts. Initial questionnaires were distributed by mail to Prior experience weighs heavily on how these expectathe primary marketing admmistrators at each mstitutions are formed (Homans, 1974). Prior experience also tion. A foUow-up questionnaire was sent to non-responinfluences perceived certainty, and resource aUocation dents two weeks after the initial mailing, behaviors differ depending on whether rewards are cerinstrument tain, risky, or uncertain (Langholtz et al., 1993). Since ^ questionnaire was designed to assess relationships much of the rationality proposition is based upon between allocation norms and types of sports receiving whether or not the marketer has received rewards in the j^gji^gting resource allocations. The questionnaire conpast, this variable should predict whether marketers use gj^^^^ ^f ^j^^.^^ multi-item scales generated to measure rationality as a distribution principle. Further, this facexchange norms, and general questions pertaining to tor may influence which teams receive resources. If which types of teams received the most monetary and women's sports and lower profile sports have not delivnon-monetary resources, the scarcity of each type of ered suitable returns in the past, then marketers should resource, and which teams had produced acceptable be less likely to believe in distributive justice. On the results in the past. Additional demographic data on Table I. Scale Items. Means, and Standard Deviations of Distributive Norms Variable Sample Males Females Rationality 5.14(1.06) 5.15(1.04) 5.07(1.15) 1. Marketing resources are spent on teams that have the greatest likelihood of producing the greatest return on investment. 2. Marketing resources are spent on teams that produce the most valuable rewards. 3. Marketing resources are spent on programs where the receipt of rewards is most certain. Distributive Justice 4.59(1.28) 4.56(1.28) 4.70(1.30) 1. Fairness is an important consideration in how marketing resources are allocated. 2. Fairness plays no part in how marketing resources are allocated (rev). 3. Marketing allocations that will be unfair to the teams involved should be avoided. Power 4.17(1.42) 4.18(1.40) 4.14(1.52) 1. More resources are allocated to teams with a lot of influence in the athletic department. 2. More resources are allocated to teams with influential constituents such as boosters and alumni. 3. The influence of a team allows it to demand and receive more marketing resources. Volume 16 • Number 2 • 2007 • Sport MarHeting Quarterly 85 respondents was collected for the purposes of describing the sample. Three scales were constructed to measure rationality, distributive justice, and power. The extant literature (e.g., Blau, 1964; Emerson, 1981; Greenwell & Armstrong, 2002; Homans, 1974) was used to generate eight to nine items for each construct. The list of items was presented to a panel of expert judges (four college professors who had done previous research in this area) in order to assess content validity. Each judge was asked to rate whether he or she agreed that the items represented the appropriate domain and whether the format was conducive to obtaining desired results. Items receiving less than 75% agreement among panel members were automatically rejected. The three items with the highest level of agreement and with the most conceptual meaning were retained for each measure. Items were measured on a 7-point Likert scale ranging from strongly disagree (1) to strongly agree (7). The three items for each subscale were averaged to provide an overall measure for each construct. Each ofthe subscales was found to be internally consistent with Cronbach's alpha coefficients greater than the .70 minimum suggested by Nunnally and Bernstein (1994): rationality = .71, distributive justice = .72 and power = .75. A confirmatory factor analysis indicated acceptable measures of absolute fit (x' = 23.82, p = 0.47; RMSEA = 0.0062; GFL = 0.96; AGFI = 0.93) and comparative fit {NFI = 0.94; NNFI = 1.00; CFI = 1.00; RFI = 0.91). Scale items for these three variables are presented in Table 1. To address the antecedents, separate items were used to measure the perceived scarcity of monetary and non monetary resources. These various resources were measured using 7-point response scales (1 = abundant and 7 = scarce). Respondents were also asked to rate how often allocations of marketing resources had produced desired results for four different categories of sport programs using 7-point response scales {I = not very often to 7 = very often). The following sport categories were used for the study: men's high profile sports, women's high profile sports, men's other sports, and women's other sports. Categories of sports were used rather than specific sports, because different universities place greater emphasis on different sports. For example, baseball may be a key sport or revenue generator at a southern institution, while volleyball may be the equivalent at a West Coast institution. Respondents were given specific instructions as to which types of sports fit these categories. Since most institutions do not distribute resources exclusively to either men's or women's sports but somewhere in between, a dichotomous variable would not be appropriate in measuring the gender distribution of resources. Therefore, 7-point response scales were used to determine the proportion of resources that are allocated to men's and women's sports (1 men's sports to 7 = women's sports). Similarly, the next item asked respondents to rate which types of sports were more likely to receive monetary resources on a 7-point scale (1 = high profile sports to 7 = other sports). The next two items were identical, but "non-monetary resources" was substituted for "monetary resources." "... results from this study indicate that resource allocation decisions are behavioral in addition to being monetary."