Sports Sponsorship as an Effective Brand Communication Strategy - Essay Example

Company Sponsorhsip Introduction Sports sponsorship is regarded as an effective brand communication strategyand constitutes an integral element of the marketing mix. Sports sponsorship has grown to become a credible and significant dimension of brand marketing given that it represents a long-term investment in generating dynamic relationship between consumers and brands. The growth of new media has altered the nature of the marketing mix, given that sponsorship has become increasingly powerful and engaging tool for brands. Indeed, new media technologies have considerably enhanced the value of sports sponsorships globally. The paper also explores the nexus between corporate sponsorship and brand development of sport teams and its impact on diverse aspects of company’s brand equity. The paper seeks to gain deeper appreciation of how companies exploit sponsorship within sport events as a strategic tool within their marketing program. Corporate sponsorship remains one of the fastest growing modes of marketing communication and has come to occupy an integral component in the survival of sports team. Background Companies have globally enhanced their investment in sport sponsorship and corporate spending, which has reached €72.6 billion and is rising each year, in which football remains the most heavily sponsored sport. The global spending on sponsorships has ballooned in the past three decades, from $2 billion in 1984 (during Los Angeles Olympics) to $48.6 billion in 2011. The initial, one-off, philanthropic donation obscured by intricate agreements that tie a corporation and it associates to a long-term reciprocal relationship. The contemporary professional sports industry is a multi-billion dollar industry. In the case of football, revenue derived from broadcasting companies has transformed the economics of football. The bulk of the money has been utilized to improve product development, especially in creating enhanced stadium experience. Sport sponsorship is a distinct component within an integrated market communications approach and influences the behaviour of the target audiences. Sports sponsorship represents a marketing tool, which is frequently employed by companies to reach a broad audience on a global platform, while generating awareness and high profit margins (Bennett, Henson, and Zhang 2002, p.174). Sponsorship has grown to become a progressively crucial element of the company’s marketing mix, with the bulk of corporations actively seeking sponsorship in a move to avert the clutter linked to more conventional marketing communications. The objectives of corporate sport sponsorship centre on: (1) promotion of corporate image, exposure, and fame opportunities (brand awareness); (2) accomplishing social responsibility; (3) increasing product sales; improve attitudes by changing perceptions of the brand or organization, and (4) influence intentions by moulding product category wants and fostering purchases. Some of the criteria that should be utilized when selecting sponsorship partners include revenue opportunities, capability to integrate product in the event, cost, exposure to target market, image enhancement, competitive advantage gained, and opportunity to demonstrate commitment to community. Product fit remains a potential driver that increases the short-term financial performance. In addition, brand equity and image fit between sporting event and sponsoring company play a crucial role in elucidating the linkage between sponsorship and financial performance (Richelieu 2008, p.29). Discussion Increasingly, corporations are seeking to curry advantage with consumers by bolstering their products and services with the popular industry via sports sponsorship and endorsement opportunities. Corporations view the appeal of sports (teams, leagues, and athletes) and attempt to establish a link with sports so as to attain marketing objectives. Such an alliance incorporates utilizing sports personalities as endorser and/or sponsorship of sports properties (Gerrard1999, p.48). Sport entities (athletes, leagues, teams) are expected to aid companies capture the attention of consumers, augment or reinforcement brand image, avail message credibility, enhance the attractiveness of the product, and improve brand loyalty (Hughes and Shank 2005, p.207). Sports endorsements aid to generate a positive impact on the company’s stock return owing to the positive perception that the company’s investment activities generate. However, endorsements also present risks, especially in cases where a scandal erupts, which damage the corporation’s reputation (Chadwick and Thwaites 2005, p.328). Sport broadcasting has broadened the reach of products and broadcasters are willing to pay substantial sums to broadcast content. Sports organizations are considered an upstream suppliers of content to downstream broadcasters who set up TV channels utilizing the content to broadcast to consumers (Szymanski 2006, p.428). The prominence of majority of sports (premium sports) emanate from the fact that fans do not find any close substitutes. The organizers of certain sporting events mainly sell their rights to the highest bidder. Nevertheless, the most valuable rights tend to be linked to sports league since sports leagues are joint venture where member agrees on specific rules so as to make the product. One of the principal concerns linked to collective selling relates to the fear that premium rights that formerly available on free-to-air would transfer to pay TV platforms (Szymanski 2006, p.429). The significance of sports programming has made the acquisition of premium rights as a central element in building a successful broadcasting business. The capability to gain collectively sold rights, potentially exclusively, augments the potential of such rights to generate a dominant position. Brands, especially image rights, are difficult to appraise and are predisposed to fluctuations within the potency of their symbolic and capital worth. Football requires television for the cash injection that the rights of access to broadcast can herald. Sports such as football have played a big role in protecting in protecting images, data, and essential commercial information from misusing rights in the public domain (Hughes and Shank 2005, p.207). The money derived from television rights and sponsors has changed the football’s position within popular culture and altered the relationship between players and clubs. The integration of new media technologies has altered the way in which sport is marketed, produced, delivered, and consumed. The growth of new media technologies has become a vehicle for the broadening of integrated marketing communications, coupled with the utilization of multimedia channels and publicity. The utilization of multiple media platforms within sports sponsorship communications allows brands to communicate effectively with consumers, establish brand awareness within new markets, and avail new content opportunities (Santomier 2008, p.15). Brand management has minimized dependency on advertising and allowed engagement of consumers and sustained experience around the brand. The acceleration witnessed within the growth of sports sponsorship has been fuelled by global business complexity and media channel fragmentation. A team can internationalize its brand through a number of strategies including brand reputation, brand challenger, brand affinity, and brand conquistador. The value of a brand is gauged as brand equity base on the level to which it possess brand loyalty, perceived quality, name awareness, trademarks, and strong brand associations (Solberg 2002, p.57). Strong brand equity demonstrates that the company has an effective brand strategy development and enjoy brand loyalty. In order to foster brand development, teams ought to be innovative and competitive in the manner in which they attract fans, while guaranteeing accessibility and affordability (Haynes 2007, p.361). Commercial TV channels acquire broadcasting rights so as to reinforce their market position. Football is the most expensive TV sport and pays service channels pay substantial sums of money to acquire the expensive rights. The European regulations seek to prevent prominent events from been migrated to pay service channels by minimizing the number of channels that are permitted to enter the bidding process and minimize prices, which is designed to avert a scenario in which TV channel obtains exclusive rights (Beck-Burridge and Walton 2001, p.14). The more liberal regulations in the US enable major broadcasting networks to attain the highest penetration rate. The liberal regime allows TV channels to submit higher bids relative to European colleagues. Channels usually do not agree to adopt fixed sports rights fees owing to the high proportion of sunk costs. A nexus exists between corporate sponsorship and brand development. There is a distinct and intricate symbiotic relationship between corporate sponsorship and brand development. Companies can find unlimited opportunities to widen its competitive advantage by improving credibility, image and prestige in sponsoring events that respond to the target market. Sponsorship avails the potential of attaining several objectives including improvement of image and consumer attitudes, enhancing sales and generating positive publicity/visibility. The current motives mirror growing recognition and utilization of sponsorship as a vehicle for attaining profit-oriented business objectives including increased brand awareness, market penetration, media exposure, and revenue increase. However, it is essential to note that sponsorship fees may just be the tip of the iceberg given that a corporation is expected to spend heavily on promotional materials, special events, and customized product designs to emphasize the partnership. Given that sponsorship incurs extra additional expenses, it carries the potential of minimizing profits even as it enhances brand equity. Investors are also worried that consumers might pay too much attention to the event and disregard the corporate logos, signs, and billboards. Moreover, high profile sporting events usually attract multiple sponsors, which make it hard for individual brands to gain prominence. Conclusion Sports sponsorship represents a means of leveraging a firm’s investments within sports. The sponsorship arrangement ought to be mutually beneficial so as to be sustainable. Although, not all companies sponsoring sporting events enjoy a significant increase in cumulative returns, and brand value. A nexus exists between corporate sponsorship and brand development as a value creating strategy for sport brands. Sponsorships constitute a critical part of corporation’s social responsibility and marketing communication strategies. Indeed, sponsorships are central to building a brand and creating relevance within markets in which the company operates and avail a platform for the company to interact with the clients. Sponsorship offers new platforms for marketing, especially since conventional marketing communication elements encounter challenges in reaching increasingly fragmented consumer markets. Corporate sponsorship of sports has gained popularity because it bypasses media clutter and avails a favourable environment in which corporate brands can differ from others. References List Beck-Burridge, M., & Walton, J. (2001). Sports sponsorship and brand development: The Subaru and Jaguar stories, Houndmills, Basingstoke, Palgrave. Pp.14-5. Bennett, G., Henson, R. & Zhang, J. (2002). Action Sports Sponsorship Recognition, Sport Marketing Quarterly, 11 (3), 174-185. Chadwick, S. & Thwaites, D. (2005). 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The Economics of Television Sports Rights Europe and the US-A Comparative Analysis, Norsk Medietidsskrift, 9 (2), 57-80. Szymanski, S. (2006). Policy Forum: Economics of Sport-The Eonomic Evolution of Sport and Broadcasting, The Australian Economic Review, 39 (4), 428-34. Read More