I Have An Idea… Build A Loss Leader

[Ed.: “I Have An Idea…” is a series written for College AD by the author of Brands Win Championships, Jeremy Darlow.]

 

“Sometimes we need to lose the small battles in order to win the war.” – unknown

INC. Magazine defines a loss leader as: “an aggressive pricing strategy in which a store sells selected goods below cost in order to attract customers who will make up for losses on highlighted products with additional purchases of profitable goods.”

Make no mistake. College baseball is a loss leader. And a great one at that.

The reality is, at most universities baseball is not a sport that will drive a tremendous amount of revenue. However, because of its general popularity (the 2nd most popular sports in the United States according to The Harris Poll) and strong participation at the high school level (over 480k males participate in high school baseball), America’s Pastime remains a valuable brand driver to schools, and one that can be used as bait to draw fans, boosters and potential athletes into the sports that do generate revenue.  

 

 

A quick way to establish brand authenticity, no matter the product or service, is to leverage equity and success from a cousin brand within your company’s own portfolio. For instance, by having success with its 3 Series, BMW was able to enter into the SUV market with ease. The company had built consumer awareness and trust based on the success of their compact luxury car business, in essence giving them permission to venture into a new marketplace.

The same approach can and should be adopted by athletic departments. I urge you to take baseball, a program that most universities underfund or ignore entirely, and build it into a national power. That success can translate into the same trust and awareness that allowed BMW to build a successful SUV business. Will you make money in the short-term by constructing a preeminent baseball program? Probably not. But, in the long-term your success on the diamond will only improve your chances of selling fans, boosters and recruits on your football and basketball programs. And as the definition suggests, that’s the point of a loss leader. To “make up for losses on highlighted products (baseball) with additional purchases of profitable goods (football and basketball).”