TIM FINCHEM

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Marketing to the Emerging Fan Base

• Joe Louis Barrow Jr.
• Senior Vice President
• World Golf Foundation

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THE EMERGING POPULATION

• THE CHALLENGE
• Expand the participation in golf to reflect the
  changing population.

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THE EMERGING POPULATION

• PART ONE
• THE SHIFTING DEMOGRAPHICS
• PART TWO
• WHAT CORPORATE AMERICA IS DOING
• PART THREE
• WHERE DO WE GO FROM HERE?
• WHAT CAN WE LEARN FROM CORPORATE AMERICA

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The Emerging Population
The Business Case

• The culture and buying habits of the U.S. are
  changing
• The Golf Industry must understand and actively
  market to this emerging customer base.
• Supplier diversity and workforce diversity is
  critical to the golf industrys long term success
  in the evolving marketplace.

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The Emerging Population
The Business Case

• The emerging market focus must be integrated into
  business plans and strategies, otherwise these
  efforts are doomed to fail.
• Industry diversity initiatives must have total
  buy-in from the top executives including leaders
  from all sectors.

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Shifting Demographics and Economic Opportunities

• Ken Lovell
• Director, Research Development
• PGA TOUR

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Presentation Overview

• Golf Demographics and the Economic Opportunity
• Demographic Projections
• Characteristics of the Emerging Fan Base And
  Competition for It

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GOLF DEMOGRAPHICS
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Fan Base Demographics

• Pro Golf Minority Fan Base Growth, 1995-Present

Minority Fan Penetration (12 Month Moving Average)
Interested in Pro Golf
49 Minority Interest Since 1995!
Source ESPN Sports Poll
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Fan Base Demographics

• Minority Fan Base Growth Versus Total Growth

Fan Penetration (12 Month Moving Average)
Interested in Pro Golf
Source ESPN Sports Poll
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Fan Base

• Fan base becomingmore diverse
• Remains below levelof non-minority fans
• TV audience showssimilar trends andsome
  opportunities

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Recent Shift in Golf Fans

• In 1995 whites were overrepresented in the golf
  fan base compared with the US population

1995 DEMOGRAPHICS
US Population
Pro Golf Fans
Source ESPN Sports Poll / US Census
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Profile of Todays Golf Fans

• Non-white population is 30.9 of totalUS
  Population versus 25.6 of Pro Golf Fans

2001 DEMOGRAPHICS
US Population
Pro Golf Fans
White
White
Source ESPN Sports Poll / US Census
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Television Viewership
Pro Golf Television Ratings
Average Rating
Source Nielsen Media Research
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The Future of Emerging Markets

• Minority youth are disproportionately more
  interested in watching golf

of Kids Watching Pro Golf
Source Nielsen Media Research
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DEMOGRAPHIC PROJECTIONS
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Demographic Profile

• Today, there are 275m Americans
• 196.7m White
• 32.5m Hispanic
• 33.5m African Americans
• 10.6m Asian Americans
• 2.0m Other

Year 2000
Source US Census 2000
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Demographic Projections
Year 2020

• By 2020, it is expected that there will be 325m
  Americans
• 207m White
• 55.0m Hispanic
• 41.5m African Americans
• 18.5m Asian Americans
• 2.5m Other

Source US Census 2000
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Demographic Projections
Year 2040

• By 2040, it is expected that there will be 390m
  Americans
• 212.5m White
• 82.7m Hispanic
• 49.6m African Americans
• 29.5m Asian Americans
• 3.0m Other

Source US Census 2000
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Demographic Projections

• By 2060, Minorities will no longer be the
  minority

of US Population
Source US Census 2000
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CHARACTERISTICS OF THE EMERGING FAN BASE - AND
COMPETITION FOR IT
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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
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Shifting Demographics

• Minorities younger
• Generation to be majority
• Developing recreationpreferences now

Source US Census 2000
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Minority Buying Power

• As The Minority Population Grows,
• Its Purchasing Weight Grows Proportionately

Buying Power (Billions)
Source Selig Center for Economic Growth
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Other Sports AggressivelyPursuing Hispanics
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Competitive Landscape Media Spending

• Corporate America Increasing Multicultural
  Spending

Top Hispanic Advertisers (2001 Media)
change vs. 2000

M
Source Hispanic Business Magazine
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PARTICIPATION
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Participation

• Minorities have lower participation rates than
  whites

Estimated Participation Rates 2001
Source National Golf Foundation
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Participation

• Leading to much lower numbers of participating
  golfers

Estimated Total Participants 2001
Source National Golf Foundation
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Measuring GolfParticipation Rates

• Estimating Participation
• Overall numbers reliable
• Subgroups difficult to measure
• Most data sources under-represent
• Financial upsideworthy of investmentin better
  data

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THE ECONOMIC OPPORTUNITY
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Quantifying the Opportunity
Objective Estimate the revenue available to the
industry if minorities were fully activated

• Assume upside is current US average
  participation rate
• Assume spending remains constant based on Golf
  20/20 per golfer spending study

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Quantifying the Opportunity

• Average Spending per golfer
• African Americans 988 per year
• Hispanics 872 per year
• Average Participation Rate
• Assume 12 for all minority golfers
• Projections based on US Census population
  projections through 2020

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Participation Projections
Estimated Incremental Minority Golfers in
2001 (Assumes 12 participation rate)
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Participation Projections
Estimated Incremental African-American and
Hispanic Golfers Through 2020 (Assumes 12
participation rate)
6.0
5.5
5.0
4.5
4.0
Millions
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
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Quantifying the Opportunity
Best Customer Upside

• Definition
• Must be a golfer (at least 1 round in last year)
• Age 18
• AND Either
• Play 25 Rounds OR
• Household spends at least 1,000 per year on
  equipment and fees

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Quantifying the Opportunity

• Total Incremental African Americanand Hispanic
  Golfers in 2001
• African Americans 1.9 Million
• Hispanics 1.7 Million
• Percentage of Best Customersin each group
• African-Americans 42
• Hispanics 32

• Total Incremental Best Customers in 2001
• 1.3 Million

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Participation Projections

• Incremental African-American and HispanicBest
  Customers Through 2020

2.5
2.0
1.5
Millions
1.0
0.5
0.0
Note Assumes a jump from 5-12 in
participation and current rates of Best
Customers in each group and growth based solely
on population
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Quantifying the Opportunity

• Estimated 2001 Incremental Minority Spending
• Average Spending per golfer
• African Americans 988 per year
• Hispanics 872 per year
• Incremental Golfers
• African Americans 1.9 Million
• Hispanics 1.7 Million

• Estimated Incremental Spending in 2001
• 3.4 Billion

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Incremental Spending Projections
Estimated Incremental African-American and
Hispanic Core Golf Spending
6.0
5.0
4.0
Millions
3.0
2.0
1.0
0.0
Note Assumes a jump from 5-12 in
participation rate and current rates of spending
for each group and growth based solely on
population
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Summary

• Minorities are growing
• Minority interest in golf is growing
• Minority participation is low
• The upside for golf marketing to minorities is
  substantial

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MARKETING TO THE FAN BASE

• Gregory Dixon
• Manager for Diversity Marketing and
  Communications
• Volvo Cars of North America

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VCNA MISSION

• We, Volvo, deliver the Best Product, the Best
  Value and the Best Experience
• To a Diverse Target Audience
• Via our Product-, Communication- and Retailer
  Network Strategies and Actions

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CHALLENGES FACING VOLVO
Lagging in Diversity

• Lowest ratio of sales to African Americans,
  Asians and Hispanics among all Premium/Luxury
  brands.
• Diverse consumers represents 9 of total Volvo
  sales.

Source Strategic Vision 2002 NVES Early
Buyers Study
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KEY INITIATIVES RECENTLY LAUNCHED

• Sponsorship
• Hispanic Heritage Awards
• LA Black Business Expo
• Hispanic Chamber of Commerce
• Latin Grammys
• Little Saigon Expo
• Advertising
• Incorporate diversity into mainstream advertising
• Measure the reach of placement in diverse
  communities

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KEY INITIATIVES IN LAST 90 DAYS

• People
• Team Planning Session with the Marketing Business
  Unit to establish diversity objectives
• Review diversity focus group material conducted
  by Market Intelligence
• Resources
• Meetings held with diversity events vendor to
  renew contract and review events for 2003
• Solicit feedback for the Marketing Diversity
  Council Sub-committee

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SPECIAL FOCUS ON DIVERSE CONSUMERS

• Action Plan
• For any diversity strategy to work there needs
  to be multiple levels of commitment
• Diversity must be integrated in everything we do.
• The face of diversity should be blended into
  communications in an ethnic neutral way.

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SPECIAL FOCUS ON DIVERSE CONSUMERS

• Dedicating an incremental budget to reach these
  groups in non mainstream ways targeted events,
  publications, one-to-one relationship building,
  media etc.
• Dealer appointments when available.
• VCNA and dealer employment.

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KEY INITIATIVES FOR 2003

• Inclusive Marketing Approach
• Diversity to be a component of everything we do
• Advertising and one-to-one consumer events to
  reflect this approach.
• Dedicated budget to support diversity efforts
• Recommend 10 to be allocated towards diversity
  by each cost center manager
• Continued allocation of funds for diversity
  opportunities. Target is 3 of the marketing
  budget.

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PRODUCT MARKETING

• INITIATIVES
• Get understanding of different ethnic groups'
  "hot buttons"
• Bring awareness to VCC/VCC PPL
• Focus groups
• Purchase motivators
• Cut existing data by ethnic group

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CRM eBUSINESS

• Today Online Ads
• Terra.com
• Netnoir.com
• BET
• AOL (Aolla/latin Grammys)
• Opportunities
• Asian (AsiaAve P1)
• Chinese
• Web Multilingual site (with new platform)
• Call Center Multilingual Volvo Personal Shopper

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CONSUMER MARKETING

• Drive Programs
• Special focus events (local Chamber of Commerce)
• African American
• Hispanic
• Asian
• Consumer Recruitment Focus (for 2003 events)
• Auto Shows
• Best Buddies
• Hire and support

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ADVERTISING/MARKETING INTELLIGENCE

• Understand how the brand is perceived by various
  diverse groups
• Baseline measurement of current year's media
  delivery against diverse target
• Diversify champion/council at advertising agency
• Integrate messages with community outreach
  activities

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PRODUCT PLANNING

• Ordering cars (masks) Are masks contented to
  best represent
• Who is building the mask?
• Is it product content related/image/offer?
• Focus groups internal/external
• Verbiage in ads/monroney labels/owner's manuals
• Reviewing and acting on market data

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DIVERSITY EVENTS AND SPONSORSHIP RECAP

• Volvo Safety Campaign
• Presence in twelve cities and collected 6,030
  names captured for the Marketing Database and
  sales matches
• Print, radio and online presence

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DIVERSITY EVENTS AND SPONSORSHIP RECAP

• Celebrity High Profile Events
• Marilyn Crawford
• Art For Life introduced Volvo to Star Jones and
  select the XC90 as the vehicle of choice for The
  View.
• Celebrities have purchased such as Bill Cosby.
  Director Lee Daniels interested in positioning a
  Volvo in his next film.
• Retailer support and traffic generated

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DIVERSITY EVENTS AND SPONSORSHIP RECAP

• Tour For Success Magic Johnson
• 12 city tour in diverse communities with a theme
  for small business owners
• Captured approx. 5,860 names for the Marketing
  Database and sales matches
• Radio, print, TV and online exposure

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DIVERSITY EVENTS AND SPONSORSHIP RECAP

• Local Events and Sponsorships
• Chamber of Commerce, NAACP, NAMAD, Hispanic
  Heritage Awards, Chicago Financial Seminar
• Data capture of names and support corporate
  citizenship

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MARKETING TO THE FAN BASE

• Mike de Maio
• Managing Director
• Burrell Communications, Inc.