Sports Event Sponsorship - Research Proposal Example

Event management has now-a-days evolved from being a small business to international industry. This is because of the increase in the events around the world relating from birthday and wedding occasions to corporate and government programs. This requires planning and management which has led to the popularity of the event management companies. For event management companies' major source of funding for an event comes from sponsorship. Sponsors invest their capital in a certain event in hope to reap benefits such as increase in sales, customers, reaching a wider target audience. The ultimate goal of corporations is to increase brand awareness which in turn can return them with the aforementioned benefits. Although the benefits for an event management company are the profits, more benefits are gained by the sponsors. Due to this, the popularity of sponsorship events is increasing. Sponsorship is now seen as the new marketing tool. This is because it can overcome communication barriers that media advertising cannot (Walliser, 2003). In addition to this, sponsorship marketing can access unlimited target audience. The most popular corporate sponsorship is seen in sports events. Through sports events, corporations can reach a large number of audiences and can also target their brands according to the type of sports and the events. The aim of this research is to evaluate the importance of corporate sponsorships for sporting events and how can event management companies attract sponsors for such events. The recommendations derived from the research will be given to both the corporations and event management companies so that both gain more benefits. The data collection methods used to accomplish this research include primary and secondary methods. The primary research will be conducted through semi-structured interviews of corporations and event management companies. On the other hand, secondary methods will include thorough review of published literature such as journals, articles, newspapers, books and internet. The findings will be based on both primary and secondary research giving more accurate results. This could lead to practical and implementable solutions for companies through the recommendations. INTRODUCTION Event Management Different occasions are being celebrated around the world on daily basis. People especially the organizations find it difficult to plan an occasion or an event thus give this responsibility over to someone who can perform it well. Thus, event planning started. As the growth of different events and occasions started in the world, an events industry was formed (Bowdin et al. 2006). Now-a-days, the event planning industry has evolved and changed as compared to what it was in the past. According to Ash (2006) as the trends in event planning kept changing over the time and the industry began to grow, many organizations outsource their company events to the event planning agencies that offer a complete management package from the starting point to the end point. The formation of the event industry has been led by the globalization of markets and communication affecting the trends and nature of the events industry (Bowdin et al. 2006). According to Allen (2008) the event planning industry now includes professional event management organizations that plan corporate events, social events and weddings. The industry also includes the independent event planners, incentive houses, meeting planners (Allen, 2002). This event planning industry has grown into a multi-billion dollar industry globally. Preparing for an event and organizing everything has been compared to the direction of a movie where once an event starts there is no turning back (Allen, 2008). Sponsorship According to Walliser (2003), a proper definition of sponsorship does not exist but it usually taken as a strategic corporate giving. Companies now incorporate their sponsoring activities into their marketing plan which has made it a strategic marketing tool (Ferrand & Pages, 1999). Sponsorship management within the company is very crucial for the achievement of the desired objectives which as stated by Ferrand & Pages (1999) could fail due to lack of coherence. Sponsorship activities can usually become a base for biases for the managers who are usually making the decisions related to sponsoring. A good sponsorship management is described by Otker (Ferrand & Pages, 1999) as outlining a good match between the brand image that the company wishes to promote and the image of the sponsored body. Sponsorship & Event Management It is getting really common for companies to sponsor events for many reasons. According to Gwinner & Eaton (1999) corporations sponsor events to increase their brand awareness or to change brand image. Corporations have opportunities to influence consumer behavior as well through their brand image. Brand image can be increased or influenced if it is associated with celebrity through endorsements and the most recent trend is to link it with sporting events (Gwinner & Eaton, 1999). The value of sponsorship within events is very important for corporations and governments in their marketing strategies. They wish to know the value of an event in terms of on-site sales, event promotion sales, publicity, and creation of competitive position for itself (Brown, 2000). Therefore event management companies regularly undertake research to analyze and obtain valued sponsors for their events. According to Fan & Pfitzenmaier (2002), event sponsorship can provide the companies with ability to communicate with target mass as an alternate to mass media. This type of sponsorship can also provide corporations with the ability to reach people not just on local or regional basis but on international basis as well. The increase in sponsorship marketing has out grown the advertising growth by $37 billion worldwide according to Cornwell (2008) Research Question Keeping in mind the aforementioned discussion, this research will try to answer the following question: 'How to successfully manage and maintain corporate sponsorship relations in a sports events context' Implications of the Research Question The implication of the research question is not just related to the event management companies but also for the sponsoring corporations. It is important for both the parties to assess how the event's image and image of the corporation benefit them both. The research question can also be used to analyze the sales objectives of any sponsor corporation. Aims & Objectives In order to make any event successful, many elements of in event management have to be taken into consideration. One such element is sponsorship to fund the events. As sponsors are usually the major source of funding for any event, event management companies needs to maintain close ties with them. Therefore the aim of this research as mentioned in the question above is to find out about the importance of sponsorship for corporations for events in general and sports event in particular. The objectives of the research are given as follows: To identify the importance of sponsors for any event To evaluate importance of corporations as sponsors To identify the reasons for sporting event sponsorship popularity To assess the interest of corporations in sporting events To evaluate the benefits gained by corporations for sponsoring sporting events The aforementioned aims and objectives will form the basis around which the literature review will be conducted and therefore will ultimately answer the research question. METHODOLOGY The research methodology and design is based on qualitative information which will take into account the primary methods such as interviews from the companies under review to have a deeper understanding of their understanding about sponsorship events. The use of primary method is important as it will give the analysis a strong basis for answering the research questions. Although this is a theoretical base research, the primary research will provide more concrete ground and validity for the research. The primary research will be based on semi-structured interviews of corporations and event management companies. The secondary sources will consist of journals, articles, books, newspapers and internet so that different views can be taken into account when considering the recommendations. The data sources will consist of literature review on the event management industry, event sponsoring and in particular sports event sponsoring. The aim behind conducting an extensive collection of data is to gain knowledge on the importance of corporate sponsorship for sporting events. LITERATURE REVIEW Corporate Sponsorship For corporations, enhancing its corporate image and increasing brand equity is the most important sponsorship goal (Walliser, 2003). Grohs et al. (2004) adds that this traditional goal has evolved to include the changing of consumer behavior through sponsorships. Survey in London and Germany according to Grohs et al. (2004) present that the main reason for corporate sponsorship is to create brand awareness as well as influence consumer behavior. Sports Events & Sponsorship The increase in the growth of sports activities over the years pose as a potential offering for corporations for sponsorship. Sports events are increasing across the globe which now portrays an image of range of values and symbols. As sports is becoming an image in itself, any major sports event cannot sell itself as it takes a mix of communication to have an impact on the event (Ferrand & Pages, 1999). This is where the corporate sponsorship comes in. Corporations use this image of the sports to highlight their brands. As sports event cater all types of people, it is easy to use for corporations to use the image of the sports to enhance itself as it is believed by Ferrand & Pages (1999) that the image can impact consumer behavior. According to Hanlon & Jago (2000) sports events around the globe is playing a very important role in the generation of tourism and economic activity not only on national scale but on international scale as well. Sponsoring sports events has been found really effective in reaching a wider target audience which establishes links between the audience and the brand image of the sponsoring company (Fan & Pfitzenmaier, 2002). Sports sponsorship can cut through clutter and also target specific segments of consumer (Smolianov & Aiyeku, 2009). As a result, sports sponsorship is according to Smolianov & Aiyeku (2009) becoming an important element of marketing and promotional mix for corporations. The ever increasing internationalization of sport, according to Cornwell (2008) is making corporate sponsorship an international communication vehicle under which local and international objectives of any corporation can be united providing a consistent brand image across multiple markets simultaneously. In 2001, worldwide investment in sports sponsorship has increased to US$27 billion (Walliser, 2003). The opinion of public about sponsorship advertising is analyzed in different ways by corporations. According to Walliser (2003) public perception of sponsorship varies from sponsorship area such as sports to sponsored activity such as golf, football and athletics. Therefore corporations differentiate sponsorship programs on three different levels. First level is that sponsors (corporations) consider sponsorship as an advertising forum (Walliser, 2003). The second level as described by Walliser (2003) is corporations associate their sponsorship activities with other communication activities. On the third level, corporations play an active role in the sports event and therefore integrate its sponsorship activities fully into the marketing strategy (Walliser, 2003). Corporations invest tens of millions of dollars in the sponsorship activities according to the aforementioned levels (Smolianov & Aiyeku, 2009). Thus according to Hoek (1999) major sports events such as Football and Rugby World Cups and the Olympics is seen as the most popular event for third level sponsorship as they generate considerable revenue for the company. Right Sponsor for Right Sports Event Scientific literature according to Grohs et al. (2004) has used a range of words such as synergy and link to describe the fit between sponsor and sponsored sports activity. Most authors use the terms such as functional fit and image related fit to describe the link between sponsor and activity. Functional fit is the thematic connection between sponsor and the sport event (Grohs et al. 2004). In contrast, image related fit according to Grohs et al. (2004) is associated with attribute recognition of a sponsor to the event. Corporate sports sponsorship according to Ewing (2007) is a win-win proposition. The reason behind this is that attaching a brand name to any sports or sports team, corporations can generate international publicity at a low cost while they can get the opportunity to hang around sport events. Recently many companies have realized the risk factor attached to the sponsoring events. To explain, example of BMW Oracle is used by Ewing (2007). The company sponsored a sailboat team which was eliminated from the America's Cup qualifying competition in Spain even before the main event began. The cost of the failed Cup bid for BMW was at almost $200 million (Ewing, 2007). Another example of misfit is given by Mishra (1997) of the Virginia Slims tennis tournament in United States. The sponsorship of Virginia Slims was seen as immoral by spectators as it was a cigarette company that sponsored tennis which is seen as a symbol of health. In addition to this, the company was targeting women with cigarettes which had a negative impact on company's image and hence affected its sponsorship impact. Given the unpredictable nature of competitive sports, certain companies try to find low-risk sponsorships. For example Dutch brewer Heineken sponsors events rather than teams or individuals which are ethical and beneficial for the company as it cannot link teams to alcoholic beverage drinking (Ewing, 2007). One such event sponsored by the company is UEFA Champions League that exposes the company to a huge target audience of alcohol drinkers. Another example of successful fit between sponsor and event is given by McCarthy (2008) of a cycling event in Baltimore sponsored by Kelly Benefit Strategies. The company spends $200,000 in this event with almost 10,000 fans annually. As the CEO of the company is also a cyclist, the benefit of sponsoring the race on professional level in addition to personal level is the alignment of the business concept of the company with wellness. Maintaining relations with Sponsors As the business of sponsorship grows, it has become a foundation for a strong business to business relation that is needed to be kept intact as the brand image of both corporations and sport events go hand in hand for a successful synergy. In short, sponsorship has evolved to become a strategic co-branding partnership vehicle (Farrelly & Quester, 2004). Large scale sports events bind the event managers and the corporations (sponsors) together which is hard to undo (Cornwell, 2008). The corporations and brands that are related to the event continuously are more likely to be identified as actual sponsors by the consumers. This is because consumers or event viewers use event-sponsor fit to identify the sponsors of sports event even after a certain time period. Therefore it becomes essential for event managers to maintain a strong relation with the sponsor corporations. According to Farrelly & Quester (2004) activation and leveraging sponsorship relationships is very important for any event management organizer. Farrelly & Quester (2004) quote Cadogan and Diamantopoulos (1995) 'Sponsorship market orientation is indicated by intelligence generation, intelligence dissemination and responsiveness activities, characterized by a customer and competitor orientation, and guided by a coordinating mechanism which ensures that all sponsorship related activities are carried out effectively and efficiently.' The reason for using this definition is that market conditions and dynamics can be critical to business to business relationships which include sponsorship. The main element in maintain a close relation with sponsoring corporations is trust. According to Farrelly & Quester (2004) the element of trust ensures the sponsors that the association is worthwhile and will work for a win-win position. On the basis of level of trust between the sports organizer and sponsors, investment of resources will be made by sponsoring corporations. In addition to this, trust will also ensure any renewal of sponsorship agreement through which both parties can have higher returns. Researchers are now interested in learning how consumers identify non-sponsors as sponsors in a certain event which raises the topic of ambush marketing. Co-branding strategic partnerships as aforementioned can cause certain challenges as well. One such challenge is ambush marketing. For example, strategy of Wendy's appropriation at Lillehammer Winter Games at the expense of McDonald's as mentioned by Farrelly & Quester (2004) caused ambush marketing syndrome to arise. Other examples include American Express's strategy to surpass Visa as official Olympic sponsor and Nike's efforts to ambush Reebok as official sponsor of 1996 Atlanta Olympic Games (Farrelly & Quester, 2004). Such confusion between corporate sponsors arise due to the complex sponsorship agreements as different elements of sports events such as assets, teams and sports may be sponsored by different companies. A research survey by Meenaghan in 1999 for Soccer World Cup 1998 (Grohs et al., 2004) examined the concept of fan involvement in sports and implications for corporate sponsorship. The result showed that increased fan involved in a sponsored sport activity increased a positive emotional orientation towards the sponsor (corporation brands). Another result of the survey as mentioned by Grohs et al. (2004) showed that 80% of the fans could recall any sponsors at the event which in turn reduced the number of incorrect sponsor attributions from 67% to 56%. Several strategies are used by event organizers to reduce ambush marketing and maintain strong relations with sponsors. One such effort mentioned by Farrelly et al. (2005) is to reduce the number of sport sponsors and combine them into genuine or authentic partners for a certain sport event for long term. Building trust relationship with sponsors is another way to create value and mutual beneficial relationship. REFERENCES Allen, J. "Event Planning." John Wiley & Sons. 2008. ISBN: 978-0-470-15574-5 Allen, J. "The Business of Event planning." John Wiley & Sons. 2002. ISBN: 0-470-83188-X Ash, S. "Special Report: Conference, Convention and Event Planning." Northern Ontario Business. (2006). Retrieved from http://www.thefreelibrary.com/Trends+in+event+planning-a0149770403 Bowdin, A. 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