What are Hot Markets?
Many industries use the term “Hot Market” such as Real Estate for a high demand housing area or investing for a stock market that is on the upswing.
Many industries use the term “Hot Market” such as Real Estate for a high demand housing area or investing for a stock market that is on the upswing.
All those IF WIN orders got processed for Ohio State in 2015. Photo by Christian Petersen, Getty Images
In sports licensing, Hot Market is a classic term which refers to an increase in demand for a particular team’s product. They generally occur during Playoffs but can also happen to a lesser extent after a major trade or hot streak in the middle of a season. Sometimes, the term “Event Market” is used but this typically will refer to a specific one-time event such as an All Star Game or the NHL Winter Classic. Event Markets are usually in a neutral city, unlike a Hot Market which occurs in the city or territory where the team is located.
With both the NBA and NHL Playoffs occurring right now, it is an appropriate time to look briefly into how a hot market can be exciting but challenging for vendors, customers, and sales reps.
How do you prepare for a Hot Market?
The first decision with a hot market as a licensee is simple: do you want to participate? It may seem counter-intuitive that a licensee may not want to involve themselves in the time when excitement is at a high, but it is a difficult process to effectively sell product in hot markets. The majority of hot market items sold are tee shirts and hats, which are generally controlled by a couple of the major licensees such as Nike, Reebok, or Adidas.
In order to determine if you can jump into the fray, you must figure out if you can quickly produce product upon a clinch that customers will buy. Ideally, you will want a domestically produced item that can run and ship within 48 hours. This is often a barrier for import-based companies and immediately limits the potential of a hot market. Some licensees have customization processes in place, such as using a patch or chip which allows them to produce them ahead of time and simply assemble domestically.
Either full domestic production or pre-production and assembly will work for hot markets – both generally have higher costs and require quick coordination and overtime work in warehouses or production facilities. Additionally, there may be royalties and further approval processes needed to use marks for playoff logos such as the Super Bowl. With this increased set of costs, there are often higher prices for hot market items but it is acceptable for the fast sales and prominence of participation.
Once you have determined your product assortment and pricing, you must develop artwork (the leagues provide art sheets with all the various logo formats you may need), submit for approvals, and send to your sales team for “If Win” orders. “If Win” is a term used within the sports licensing industry which is as straightforward as it sounds: the order is only processed if the team wins.
How to Sell in a Hot Market
Just having a great line up of products and getting licensed is the easy part of the process. The tough part is when you have to get that product out to retailers in a small, specific market.
The benefit to a hot market is that customers are much more receptive to product they may otherwise be hesitant to try. Cold-calling is better received when you are offering championship product that they know will draw in customers and generate excitement. Growing your customer database during a hot market will pay dividends for regular season sales in the future, so it is essential to make a concerted sales effort when the opportunities arise.
Most sales reps or organizations have large customer databases that only utilize a small portion of their leads. These hot markets are the time when they can filter out all leads or prospects, along with their current customers, and start canvassing the market. Depending on the strength of your database, it may also involve old-fashioned driving around and knocking on doors.
This past week, the Cavaliers have been fighting to make it to the NBA Finals. Our organization, Labyrinth Sales, is based here in Cleveland and has been in the middle of this hot market. Cleveland is a tough retail market – many “mom & pop” retailers have closed their doors over the past 2 decades and the national chains do not buy locally. Also, local team performance has been poor which causes this area to present a major challenge for most licensees.
Our local process started with simply reaching out to our strongest accounts to guarantee product and put them at the front of the line for FIFO (first-in, first-out) production. We followed those ‘easy’ orders up with a large database of prospects and smaller customers. We sort the database by state, city, or even zip code to find customers throughout the sales territory. This large list was divided between our team and telemarketed to build up the rest of the orders. We will continue to follow up with each of these customers throughout the playoffs to build on those new relationships and hopefully evolve into additional year-long business. Using this method, we took what would have been a moderate turnout and tripled the number of doors the product can appear.
This sales process won’t end until the team is either Champions or eliminated. If they lose, the stack of orders is literally thrown in the garbage. If they win, then we start the process over again as retailers come to the realization that they either under bought or should have put in initial orders. It continues for a couple of months post-championship and will represent a nice boost to the sales totals as well as additional notoriety for the product.
It can be tough to get commitments early, but being a bit pushy as a salesperson is essential to allow the licensees and manufacturers to plan their logistics for quick-turn product.
List of Hot Markets
Here is a quick list of hot markets and event markets:
NFL
- Super Bowl
- Playoffs (NFC and AFC Championship)
- Pro Bowl
- Hall of Fame Game
- NFL Draft
- World Series
- Post Season (AL and NL Championship)
- All Star Game
- Spring Training
- Stanley Cup Playoffs
- All Star Game
- Winter Classic
- Stadium Series
- March Madness & Final Four
- Frozen Four
- College World Series
- Bowl Games
- College Football Playoff & Championship Game
I hope this gave you a nice overview of how hot markets are approached in sports licensing. They are an exciting and unique experience compared to most industries, but offer significant challenges and aren’t an easy profit center.
-Joe
RSS Feed
