MASTER'S THESIS. Sport Sponsorship

Transcription

1 MASTER'S THESIS 2007:004 Sport Sponsorship A Marketing Communication Tool in Swedish Companies Malin Johansson Therese Utterström Luleå University of Technology Master's thesis Marketing Department of Business Administration and Social Sciences Division of Industrial marketing and e-commerce 2007:004 - ISSN: ISRN: LTU-DUPP--07/004--SE

2 ACKNOWLEDGEMENT The process of writing this thesis has been enlightening, exciting and sometimes hard. Several hours have been spent in school during the fall working with this thesis, and therefore it is of great pleasure to long for the Christmas holiday. Without the support of others, first and foremost the support from our supervisor Manucher Farhang, the produce of this thesis would not have been possible. Special thanks are given to him due to his exceptional support, knowledge and constructive feedback. Extraordinary thanks are also given to the respondents, Stefan Erixon at Nåiden Bygg AB and Mats Eklund at NCC, which provided us with useful information for this thesis. Moreover we would like to thank other people that have been involved in this thesis that have either directly or indirectly helped us during the process. At last we would like to announce that we are grateful to our friends and families for their support and understanding during this fall. We hope that this thesis will inspire the reader to learn more about advertising and especially in the sport sponsorship aspect. This subject represents an area that should be of interest for many companies, since it might be the only or major marketing effort for some companies. Luleå December 2006 Malin Johansson & Therese Utterström

3 ABSTRACT Sponsorship is of great importance since it is the part of the promotional mix that supports the interest of the company by associating it with a specific event. Moreover, sponsorship may be the major or only marketing effort for some companies whereby it is further important to consider it as a powerful option when deciding upon marketing tools. The purpose of this thesis is therefore to provide a better understanding of sport sponsorship as a marketing communication tool in Swedish companies. In order to reach this purpose, research questions focus on the objectives, selection process, and evaluation of effectiveness of sport sponsorship. Based on the research questions, a literature review was conducted that resulted in a conceptual framework presenting a foundation for the data to be collected for this study. A qualitative, case study methodology was used, using documentations and interviews of two Swedish companies within the same field of business. The general result of the study is that several objectives of sport sponsorship are commonly used, and the objectives may be either constant or inconstant depending on sponsored unit. The most frequently used objectives of sport sponsorship are however the corporate related objectives, such as corporate image, client entertainment, and employee relations. Further results of the study are that companies base their selection of a specific sport sponsorship on several criteria, for instance, managerial interest, the chosen sport s ability to deliver the marketing message, and the interest of the present and potential employees. In addition the decisions can be made from a client perspective and the values of the company. Moreover, based on the results, companies do not formally evaluate the effectiveness of sport sponsorship whatsoever. Instead, organizations try to find more informal methods for measurement.

4 SAMMANFATTNING Sponsring är av stor betydelse eftersom det är den del av marknadsföringsmixen som stöder företagets intresse genom att associera det med en speciell händelse. Eftersom sportsponsring kan vara den största eller enda marknadsföringssatsningsen för vissa företag, så är det vidare viktigt att ha detta område i åtanke vid bestämmandet av marknadsförings verktyg. Syftet med denna uppsats är därför att uppnå en bättre förståelse för sportsponsring som ett marknadsförings verktyg inom svenska företag. För att uppnå detta syfte så fokuserar forskningsfrågorna på motiven, valet, och utvärderingen av effektiviteten av sportsponsring. Detta resulterade vidare i en teoretisk sammanfattning och ett begreppsmässigt system som grund för insamlingen av data för studien. Metoden som tillämpades för studien var en kvalitativ fallstudie som genomfördes genom dokumentation och intervjuer på två svenska företag inom samma bransch. De generella resultaten av studien är att flera motiv för sporsponsring ofta används, och att dessa motiv kan vara antingen konstanta eller variera beroende på den sponsrade enheten. De mest använda motiven för sportsponsring är dock företagsrelaterade motiv som företagets image, kund underhållning och relationer till anställda. Ytterligare resultat av studien är att företag grundar deras val av en specifik sportsponsring på flera kriterier, som till exempel ledningens intresse, den valda sportens möjlighet att leverera marknadsföringsmeddelandet, och intresset hos den nuvarande och potentiella personalen. Dessutom kan besluten tas utifrån ett kundperspektiv och från företagets grundläggande värderingar. Där till kommer att företag inte formellt utvärderar effektiviteten av sportsponsring över huvudtaget. Istället försöker de hitta mer informella, alternativa metoder för utvärdering.

5 TABLE OF CONTENTS 1 INTRODUCTION BACKGROUND PROBLEM DISCUSSION RESEARCH PURPOSE & RESEARCH QUESTIONS DEMARCATIONS THESIS OUTLINE LITERATURE REVIEW OBJECTIVES OF SPORT SPONSORSHIP Corporate Objectives Marketing Objectives Media Objectives Personal Objectives SELECTION PROCESS OF SPORT SPONSORSHIP The Sport Event Pyramid The Athletic Platform Criteria for Sponsorship EVALUATION OF SPORT SPONSORSHIP EFFECTIVENESS Stages of the Evaluation Process Media Exposure Measurement Assessing Communication Results Measuring Sales Results Feedback from Participating Groups CONCEPTUAL FRAMEWORK Conceptualization of RQ1: Objectives of Sport Sponsorship Conceptualization of RQ2: Selection process in Sport Sponsorship Conceptualization of RQ3: Effectiveness Evaluation of Sport Sponsorship METHODOLOGY RESEARCH PURPOSE RESEARCH APPROACH RESEARCH STRATEGY DATA COLLECTION METHOD SAMPLE SELECTION DATA ANALYSIS QUALITY STANDARDS Validity Reliability EMPIRICAL DATA CASE 1 NÅIDEN BYGG AB Objectives of Sport Sponsorship Selection Process in Sport Sponsorship Evaluation of Sport Sponsorship Effectiveness CASE 2 NCC Objectives of Sport Sponsorship Selection Process in Sport Sponsorship Evaluation of Sport Sponsorship Effectiveness DATA ANALYSIS WITHIN CASE ANALYSIS Within Case Analysis of Nåiden Bygg AB Within Case Analysis of NCC CROSS CASE ANALYSIS FINDINGS, CONCLUSIONS AND IMPLICATIONS... 53

6 6.1 FINDINGS AND CONCLUSIONS RQ1: How can the objectives of sport sponsorship be described? RQ2: How can the selection process in sport sponsorship be described? RQ3: How can the evaluation of sport sponsorship effectiveness be described? IMPLICATIONS Implications for Management Implications for Theory Implications for Further Research LIST OF REFERENCE APPENDIX A - INTERVIEW GUIDE APPENDIX B - INTERVJUGUIDE APPENDIX C 50 STÖRSTA BYGGFÖRETAGEN I SVERIGE... 66

7 LIST OF FIGURES AND TABLES List of Figures 1.1 The Elements of Sponsorship The Sponsorship Process Hierarchy of Objectives for the Marketing Communication Mix Sponsorship Acquisition Model The Sport Event Pyramid Factors Influencing Sponsorship Choice Criteria for Sponsorship Control Phase of the Strategic Sports Marketing Process ROI Return on Investment Integration of Sport Sponsorship Figure of Cases 30 List of Tables 2.1 Objectives for Corporations Involved in Sponsorships of Sports Sources of Evidence: Examples, Strengths and Weaknesses Summary Matrix of the Analysis of RQ Summary Matrix of the Analysis of RQ Summary Matrix of the Analysis of RQ3 52

8 1 INTRODUCTION INTRODUCTION This chapter will provide an introduction of the chosen topic. The background is first presented, continuing with the problem discussion where the research area is discussed. After the problem discussion the research purpose and the research questions will be presented. Finally, demarcations and an outline of the thesis are described. 1.1 BACKGROUND According to Dolphin (2003), the concept of sponsorship originates in the Greek and Roman era and the word is derived from the Greek word horigia, meaning guarantor. Lately, and for over hundred years, it has made a noticeable impression, and due to its relatively brief history the sponsorship industry has made considerable strides. Today, it is very rare to find any public event that is not sponsored in one way or another. (ibid.) Meenaghan (1991) states that sponsorship is an element of marketing communications within the broader context of the marketing mix of product, price, distribution and marketing communications. Czinkonta and Ronkainen (2004) further claim that in order to achieve marketing communication objectives, tools of the promotional mix, such as advertising, personal selling, publicity, sales promotion, and sponsorship are commonly used. Moreover, Meenaghan (1991) argues that sponsorship is similar to the advertising tool in regards of the money invested for commercial purposes. The author further states that sponsorship although, must not be confused with corporate giving, such as charity, endorsement and patronage, where the objectives are philanthropic with the expected returns to be to society and not to the company itself (ibid.). According to Grönkvist (2000), marketing via events, is commonly called event marketing. Behrer and Larsson (1998) further define event marketing as an effort for coordinating communication of an event, where the event is an activity which assembles the target group at the same situates, or a meeting in which an experience is created and a message is exchanged. In addition, Behrer and Larsson (1998) and Grönkvist (2002) argue that event marketing is an effort by using the event for integrated communication, both within the actual event, and beyond. Sponsorship is further a method for communication and marketing, where the communication takes place trough traditional media, where the sponsor purchases the rights for exposure in connection with an event (ibid.). Furthermore, sponsorship marketing involves investments in events or causes with the purpose of achieving various objectives, as increasing sales, enhancing a company s brand image and reputation, as well as increasing brand awareness (Shimp, 1997). Grönkvist (2000) continues by explaining sponsorship as association marketing, a business agreement for communication, marketing and purchase, where the sponsorship is built on a commercial union between two parties where a company pays for commercial rights in order to achieve an association in connection with an event, a person or a project. Polonsky and Speed (2001), moreover claim that sponsorship programs are of increasing importance in the marketing activities of companies worldwide, as they present opportunities for business, provide community involvement, and counter adverse publicity. Moreover, sponsorship programs build goodwill among staff, opinion formers and decision makers as well as increase company, product or brand awareness, reinforce or alter perceptions of brand or product, indirect increase sales and identify brand or product with a particular market segment. (ibid.) In addition, Meenaghan (1991) explains sponsorship as an investment, in cash or in kind, in 1

9 INTRODUCTION an activity in return for access to the utilizable potential associated with an activity. Essentially a sponsor is buying both the exposure potential which the activity has in terms of audience, as well as the image associated with that activity in terms of how it is perceived. According to Gillis (2006) sponsorship is moreover a good way of creating brand notice, as sport, music and the arts areas make a connection with consumers in a way that is beyond even the most emotional product categories. Olkkonen (1999) further explains the concept of sponsorship as a business relationship between two parties; the sponsor and its stakeholders, and the sponsored and its stakeholders, as shown in figure 1.1. Corporate Strategy Marketing Strategy Sponsor Sponsorship Sponsored Sponsorship opp. - sports - culture - social targets Communication- Strategy Sponsorship- Strategy Sponsorship consultancy Type of sponsored - individual - group - organization Stakeholders of the sponsor Stakeholders of the sponsored Mass Media Television Radio Newspaper/ Magazines Figure 1.1 The Elements of Sponsorships Source: Adapted from Olkkonen (1999, p.102) The sponsorship activities presented in the figure include consistency of sponsorship activities with the sponsor s strategy, different sponsorship opportunities, types of the sponsored party, and stakeholders of the sponsored and the mass media. Furthermore, the author suggest that sponsorship can be divided into different categories based of the targets of the sponsoring organizations, in the same way as sponsorship can be categorized into sports, cultural, and social sponsorship. However, these categories are not mutually exclusive, and companies usually sponsor several targets from different categories at the same time, and thereby the groups may overlap. (ibid.) Since opinions differ regarding the definitions of sponsorship as a concept, the thesis will be founded on the following definition by Busby and Digby (2002); Sponsorship is a business relationship between a provider of funds, resources or services and an individual, event or organization. The provider is offered rights and association with the individual, event or venue in return for the finance, goods or services, which have been provided (p.13). Consequently, sponsorship is nowadays an increasingly popular medium of corporate communication especially for companies in the consumer market, and the use of sponsorship 2

10 INTRODUCTION is believed to continue to grow as long as sponsors are satisfied and they are receiving value (Dolphin, 2003; Meenaghan, 1991). Dolphin (2003) and Meenaghan (1991) continue to explain the growth in sponsorship programmes as a result of companies alternative ways to promote products beyond government restrictions regarding tobacco and alcohol advertising. The authors further mention the increasing cost of media advertising as another justification of the escalation, since sponsorship programmes is a highly cost-effective marketing communication tool, compared with traditional advertising. Moreover can the increased use of sponsorship programmes as a marketing communication tool be explained by the matured market, where sponsorships positively influence customer s perceptions of its image. Successful sponsorships further identify qualities and values in television programs, community, event or venue being sponsored, and transferring the sponsor's values of the brand and company. (ibid.) Moreover, Busby and Digby (2002), Meenaghan (1991) and Olkkonen (1999) explains that sponsorship is both more obvious for the audience and achieves distinctiveness in a higher level than the traditional advertising, due to the rapidly increasing noise in the mass media that in turn decreases the effectiveness of these types of advertising. Sponsorship may also achieve media coverage by sponsoring popular sports, or cultural or persons toward which/whom an increasing amount of media attention is directed, as the demand for sports and cultural television programs are constantly increasing. The development in telecommunication and broad cast media further offer the ability to attract audiences worldwide. Busby and Digby (2002) continue by saying that marketer's have nowadays realized the potential of the new media such as Internet, CD-ROMs, computer games and digital television, since they capture an entire generation and is today at the centre of many consumer's lives. The new media is further an ideal vehicle for building interactive relationships with prospects and customers (ibid.). According to Dolphin (2003), over 75 percent of total sponsorship concerns sporting activities, for example the provision of uniforms and the funding of stadiums. As explained by Quester and Farrelly (1998) sport sponsorship means that firms generally attempt to connect the brand with highly publicized sports individuals and/or events. A further definition is given by Amis, Slack and Berrett (1999) saying that sport sponsorship involves the allocation of scarce resources with the aim of attaining certain organizational objectives. Hence, sport sponsorship has often been described in the marketing literature as a strategic activity. The authors explain that to be able to develop a sport sponsorship agreement into a distinctive competence, it is essential that it possess three component parts. The first requirement is that the sponsorship is able to offer a significant increase to the perceived customer value of the product or service that the company offers. To manage this requirement the company must ensure that it yields a noteworthy quality or cost advantage. Second, in order for the company to differentiate from its competitors, the distinctive competence must be unique. Thus, sponsorship assets are required to either be uniquely held or contribute more to the company than to any of its competitors. The third, and final requirement, is that the competence must be able to use in several areas, it must be extendable. Considering this, companies must escape from the often held view of regarding a particular sponsorship as being valuable only in a single area. (ibid.) Dolphin (2003) continues by saying that the prominence of sports sponsorship depends on its flexibility as a communication tool as well as the opportunities that it give for association with increasingly commercially driven phenomena like sports heroes. Moreover, sport sponsorship is popular because it exposes the company s investment to participants and the watching spectators. It has been proved that the spectators value the role of sponsors, for example 59 percent of US fans reported that they personally gain from corporate sponsorship 3

11 INTRODUCTION as it is the sponsorship that makes the race possible. Motor racing and football are known to be the sports that attract most sponsorship. (ibid.) Furthermore, Quester and Farrelly (1998) note that companies in Australia have embraced the tool of sport sponsorship enthusiastic, which could be explained by the love of sport that grips the population in this country. According to the authors the estimated efforts in sport sponsorship were expected to rise even more to the 2000 Sydney Olympics since the sponsorship program started with the sponsors IBM and Telstra paying $A100 million and Westpac Bank $A50 million. Whereas, Official Olympic sponsors like Coca Cola and Eastmen Kodak each sponsored the Atlanta games with US$40 million. (ibid) Turley and Shannon (2000) claim that what makes sport facilities an interesting application of this type of advertising is that since respondents are inside facilities for two hours or longer, and since many spectators visit multiple games over a season, there is a possibility of high number of exposure to individual ads. For example, a study on advertisements in college basketball arenas and football stadiums confirmed that 72.6 percent of the respondents indicated that they noticed in-arena advertisements and almost 70 percent were able to correctly identify at least one of the advertisements. Furthermore, advertising messages in sports arenas are rather unique since such ads appear in what can often be considered as an emotionally charged environment. Some of the elements associated with the complex environment of a sports arena are cheerleaders, dance teams, mascots, and other fans at the games, vendors, the public address announcers, referees, coaches and the game itself. Studies of this environment showed that the environment can influence a number of behaviours and attitudes, such as satisfaction, repurchase intentions, desire to stay in a facility, pleasure, and perceived value. The authors further state that one of the reasons for placing ads in sports arenas is that advertisers wish that some of the excitement and affiliation associated with the home team will shift to the product or organization. However whether this excitement inhibits or encourages the processing of the information in the advertisement is not well understood at this point. (ibid.) 1.2 PROBLEM DISCUSSION As mentioned in the previous section sponsorship has become an increasingly popular medium and its status increases, and as a result sponsorship has shifted from a tactical to a more purposeful strategic focus (Fahy, Farrelly & Quester, 2004). Moreover, since the market for sponsorship itself has become intensely competitive and challenging in order to attain a competitive advantage, it is significant that sponsorship investments are carefully managed to guarantee their effectiveness (ibid.). For companies such as McDonalds, Nike, and Coca Cola, the effort in time and money devoted in sport sponsorship could make it a skill in which world leadership is worth striving for. However, for most companies it is more realistic to consider sponsorship as one of a number of skills that, together with other activities, can contribute to an area of competence within the company, like marketing and communication. (Amis, et al., 1999) To apply for a donation and to propose for a sponsorship relationship differs considering the goals and the language. Hence, companies may have a variety of objectives to engage in a sponsorship activity. (Dolphin, 2003) According to Pope (1998), three broad categories of sponsorship objectives have been identified and accepted in sport marketing literature, namely: media objectives (cost effectiveness, reaching target markets), marketing objectives (brand promotion, sales increase), and corporate objectives (mostly image related). Additionally, Dolphin (2003) explains that sponsorship assists other marketing activities to 4

12 INTRODUCTION communicate messages to a variety of stakeholders. The consumer is the primary target for corporate sponsorship activity, since a well selected sponsorship has the ability to drive particular brand values, as well as it offers a chance for companies to reach consumers through their hearts and minds. Sponsorship can further enhance corporate image, increase awareness of the brand, stimulate the sales of products and services, as well as leverage corporate reputation. (ibid.) This is also confirmed by Amis et al. (1999), saying that raising public awareness of a brand or company, and altering or enhancing company or brand image and reputation, are mentioned as the major reasons for a company to enter a sponsorship agreement. The results from a study made by Liu, Srivastava and Woo (1998) further confirm that organizations use sport sponsoring as a tool to promote their products as well as their organizations. Since image and reputation are resources that could make it possible for a company to secure a competitive advantage, sport sponsorship should be regarded as a significant source that may help companies to guarantee a position of a competitive advantage (Amis, et al., 1999). Another issue of importance in the area of sponsorship is the selection of sponsors (Pope, 1998). Ivarsson and Johansson (2004) further state that once the role of sponsorship has been established, the management process in the sponsorship selection is next. (ibid.). Selecting an appropriate cause is occasionally a matter of fitting the brand to a cause that is naturally related to the brand s attributes, benefits, or image as well as it should relate closely to the target market s interest. Developing relationships with customers, and create better relationships with trade should also be the main objective when choosing sponsors. Regarding the budget constraints, companies that sponsor events should also be able to support the sponsorship activities with proper advertising. (Shimp, 1997) The study made by Liu et al. (1998) additionally show that there did not appear to be a set of conditions that could be used as a standard, although the major selection criteria proved to be via the establishment of an overall corporate policy. Dolphin (2003) claims that despite the rapid growth of sponsorship, little is known about its effectiveness since sponsorship messages are more difficult to control than those originated from other parts of the communication mix. Sponsorship success is also dependent upon whether or not the objectives are reached, and few organizations make any attempts to evaluate the effectiveness, as the true costs is difficult to determine. In the same order Polonsky and Speed (2001) state that awareness, interest and attitude are relatively difficult for the sponsor to observe. Hence, sponsorship may be evaluated by measuring exposures of the brand name generated, or customer knowledge of the sponsorship relationship. If it is impossible to observe or attribute the relationships between sales activity and sales outcomes, behaviour of sales personnel and reward for behaviours that are thought to influence sales outcomes may be examined. (ibid.) In addition, evaluation is complicated if measurement goals have not been set up before the actual sponsorship takes place. Moreover, no single evaluation form can measure the whole aspect of the sponsorship, but several methods may work as support to each other. (Busby & Digby, 2002; Grönkvist, 2000;) The measurement of sponsorship effectiveness can take place either before, during or after the actual sponsorship has taken place (Busby & Digby, 2002; Meenaghan, 1991). At present, sport sponsorship is an increasingly popular tool of the marketing communication mix among corporations world wide (Olkkonen, Tikkanen & Alajoutsijärvi, 2000), although researchers agree that the topic of sport sponsorship is sparely examined (Dolphin, 2003; Olkkonen, et al., 2000; Shannon, 1999). Research in the area of sponsorship is relatively new, but the processes are continually being refined and developed according to Busby and Digby 5

13 INTRODUCTION (2002). Sport sponsorship is today a common marketing strategy within companies, and the need to justify expenditures on sponsorship has increased, which has on the other hand led to the type of sponsorship research where the need for planning/setting up objectives, selection, and evaluation for sponsorship programs are emphasized (Olkkonen, 1999). Moreover, a great part of the literature about sponsorship has its main focus on large corporations and international events. Yet, the possible benefits for small businesses sponsoring small or regional events are remarkable. (Dolphin, 2003) While the degree of the use of sport sponsorship as a marketing communication tool may differ in different countries, according to Olkkonen (1999) the value of sponsorships rights in 1996 in Sweden was equivalent with 154 million dollars, which was 0,9 percent of the total worlds figure. Since the topic has only been subject to few comprehensive studies in Sweden, thus it would be of interest to further investigate the topic. 1.3 RESEARCH PURPOSE & RESEARCH QUESTIONS Based on the problem discussion above, the purpose of this study is to provide a better understanding of sport sponsorship as a marketing communication tool in Swedish companies. The three research questions outlined will serve in order to accomplish the purpose. RQ1. How can the objectives of sport sponsorship be described? RQ2. How can the selection process in sport sponsorship be described? RQ3. How can the effectiveness of sport sponsorship be evaluated? 1.4 DEMARCATIONS Due to the time limit, we have decided to only focus on the subject of sport sponsorship from the sponsoring company s perspective. This study has been further narrowed by only examining the use of sport sponsorship in two Swedish companies operating within the building construction industry in the area of Norrbotten. 1.5 THESIS OUTLINE This master s thesis is divided into six interrelated chapters. Chapter one provides a background of the area of marketing communication, specifically focused on sponsorship, and sport sponsorship as a part of the marketing communication mix. Following the background is the problem discussion, narrowing down to purpose, research questions, and demarcations. Chapter two continues with presenting previous literature concerning the research area in addition to a conceptual framework. In chapter three the methodology of the research is presented, with its descriptions and justifications. The fourth chapter includes all the collected empirical data gathered, and the data is further analyzed in chapter five. The conclusions are drawn, the implications are stated and by that the research questions are answered and the research purpose is fulfilled in chapter six. 6

14 LITERATURE REVIEW 2 LITERATURE REVIEW In this chapter an overview of previous studies related to the research area will be presented. The theoretical overview will start by presenting theories on sport sponsorship, including its objectives, selection process, and effectiveness evaluation. Finally a conceptual framework based in theory is displayed. In order to carefully develop sponsorship programs, companies worldwide commonly use a systematic process for designing a sport sponsorship program (shown in figure 2.1). The marketing exchange can be seen from two perspectives, that of the sponsor as well as that of the sponsored entity. (Shank, 1999) As mentioned in 1.4 this study is based on the sponsoring company s perspective. Moreover, from this point and forward, the word sponsorship will be equal with the concept of sport sponsorship, since sport sponsorship contributes to about 75 percent of the world s total sponsorship according to Dolphin (2003). Sponsorship Objectives (budgeting) Sponsorship acquisition (Implementing) & Evaluating sponsorship Figure 2.1 The Sponsorship Process Source: Adapted from Shank (1999. p.370). According to Shank (1999), when developing sponsorship programs, decisions are based on objectives and budgets, since the most meaningful objectives will never be reached without the money. After the objectives and budget have been set up, the specific sport sponsorship opportunity is chosen from the available, that is further implemented and evaluated. Based on the discussion in the previous chapter sponsorship objectives, selection process in sponsorship (sponsorship acquisition), and evaluation of sponsorship will further be examined. (ibid) 2.1 OBJECTIVES OF SPORT SPONSORSHIP When designing a sponsorship program the first stage is to carefully outline the sponsorship objectives (Meenaghan, 1991; Olkkonen, 1999; Shank, 1999). Due to the diverse range of definitions and classifications of sponsorship, the concept of sponsorship also offers several objectives, which can be utilized in different kinds of situations (Olkkonen, 1999). According to Olkkonen (1999) and Shank (1999) sponsorship is one form of promotion where the sponsorship objectives should be linked to the broader promotional planning process and its objectives, as illustrated in figure 2.2. These objectives serve in order to achieve the higher marketing goals which in turn originate from the objectives of the organization (ibid.). Overall Company Objective Marketing Objective Advertising Objective Publicity Objective Personal Selling Objective Sales PR Objective Figure 2.2: Hierarchy of Objectives for the Marketing Communication Mix Source: Meenaghan (1983, p. 15) 7

15 LITERATURE REVIEW According to Shank (1999) sponsorship objectives can in the same way as advertising objectives be categorized as either direct or indirect, where direct sponsorship objectives have a short-term focus on increasing sales as a result of impact on consumption behaviour. Indirect sponsorship objectives on the other hand focuses on enhancing sales by creating awareness and a desired image of the product before the consumers purchase the product. However, the primary objectives of sport sponsorship stated by the author is awareness, competition, reaching target markets, relationship marketing, image building, and sales increase from the sponsor s perspective. Although, in a single sponsorship campaign, several objectives can be achieved, and objectives can moreover refer to strengthen the company brand, building goodwill among decision makers and opinion formers, in addition to displaying a socially concerned company to the public. (ibid.) Meenaghan (1991) further states that a company has an extensive variety of audience with whom it wish to communicate, such as the internal public, the key decision-makers and the company s target markets. The author also explains that sponsorship play a major role in encouraging staff pride, rewarding effort, and in communicating the values of the organization to its staff. In addition to Shank (1999) and Meenaghan (1991) state that when considering the key decision-makers, sponsorship also has the ability to create goodwill among opinion-formers and decision-makers, as sponsorship most commonly is built around a particular event and has moreover the ability to offer corporate hospitality to the guests of the occurrence. Busby and Digby (2002) argue that sponsorship objectives need to be deliverable, measurable and integrated to the overall corporate and marketing strategy. These objectives can also deliver incentivising customers, enabling data capture and database building, developing customer loyalty, enhancing community relation, revitalizing brand/corporate image and niche targeting. Moreover, as measurable activities, the authors include increase in sales, new sales leads, retention of customers, staff recruitment, positive impact on perceptions of brand/company and increase in trade distribution (ibid.). Moreover, the pioneering study of sport sponsorship made by Meenaghan (1983) divides sponsorship objectives in relation to target markets into corporate objectives and brand objectives, such as broad corporate objectives, product related objectives, sales objectives, media coverage, guest hospitality and personal objectives. This classification of sponsorship objectives includes the organizational features on the corporate and product level, as well as visibility and interactive relationship aspects in the appearance of media coverage and guest generosity, sales aspects in regards of the sales objectives and personal aspects in the form of personal objectives. (ibid) Meenaghan (1983) moreover claims that several of the objectives may frequently overlap as well as an interaction of the objectives is commonly used in sponsorship campaigns, as for instance, the corporate image affects the product image in the same way as the corporate image is affected by guest hospitality. Nevertheless, Pope (1998) and Dolphin (2003) state that media objectives, corporate objectives, marketing objectives and personal objectives are four broad categories of sponsorship objectives that generally are acknowledged and accepted in the literature of sport marketing. This theory is presented in table

16 LITERATURE REVIEW Corporate Objectives Marketing Objectives Media Objectives Personal Objectives Public awareness Business relations Generate visibility Management interest Corporate image Reach target Generate publicity market Public perception Brand positioning Enhance ad campaign Community involvement Increase sales Avoid clutter Financial relations Sampling Target specificity Client entertainment Government relations Employee relations Compete with other co. Table 2.1 Objectives for Corporations Involved in Sponsorship of Sport. Source: Adapted from Pope (1998, p.2) Corporate Objectives Dolphin (2003) notes that the major drivers behind sponsorship may be to alter public perception, increase community involvement, build relationships, and create goodwill. According to Abratt, Clayton and Pitt (1987), broad corporate objectives have their basis in developing a favourable public perception of a firm, increasing public awareness of the company and its products, as well as creating goodwill among a company s stakeholders. The most basic objective with sponsorship is to generate awareness, or raise levels of knowledge of a company s products and services, product lines, or corporate name (Dolphin, 2003; Meenaghan, 1991; Olkkonen, 1999; Shank, 1999). Olkkonen (1999) further states that achieving, increasing or sustaining awareness of a company or its brands/products is one of the most important tasks of a company s marketing activities, especially within marketing communication. The concept of awareness can moreover be linked to the hierarchy of effects models, which assumes that there is a series of steps that potential customers must pass through in a chronological order, from unawareness to purchase. However, creating awareness aims to generate a positive atmosphere around a sponsoring company towards the general audience, but does not automatically aim at directly locating prospective customers. (ibid) Moreover, Shank (1999) claims that based on the broader marketing strategy the sponsors must understand on which level to target; e.g. to promote an individual product or the company name. The author further notes that sponsorship can generate widespread awareness in a short period of time which is especially important for a new company or a company with a new product. In order to make the consumers aware of the sponsor s relationship with the event, the sponsor normally designs a promotional program around the event, as well as make sure that the company s promotional mix elements are integrated. (ibid.) 9

17 LITERATURE REVIEW According to Olkkonen (1999), people s attitudes and actions are conditioned by the image of an object, as image is a set of beliefs, ideas and impressions that an individual holds regarding an object. Meenaghan and Shipley (1999) argue that various elements of brand identity contribute to the development of brand image, where marketing communication is particular important in achieving brand image effects. Within communications, two separate elements; the message and the medium combine to deliver brand image values. Regarding sponsorship the message and media elements are inextricably linked and imagery is delivered by association with particular events and activities. (ibid.) Olkkonen (1999) continues by noting that a successful image conveys a message that establish a product s/company s character and value proposition in a distinctive way so that it is impossible to confuse it with similar messages from competitors, as well as it delivers emotional power so that it hits both the hearts and the minds of the customers. According to Shank (1999) and Dolphin (2003) building or maintaining an image is the most important reason for a company to engage in a sport sponsorship activity. This is due to the fact that the sponsor associates itself and/or its brands with the images generated by the sponsored personality, team or sporting event. Meenaghan and Shipley (1999) additionally argue that sponsorship allows the sponsored company to live in the reflection of the sponsored activity, which differ somewhat from the approach offered by traditional media, as well as it enables the sponsor to suggest associations for the brand. Moreover, Shank (1999) claims that the more matching image of the endorser with the image of the product being promoted, the more effect will be brought to the marketing message. Olkkonen (1999) also explains the basic idea of image building as a company that is sending a set of signals and cues (identity) which further creates a basis for perception by its various audiences (image). Meenaghan (1983) continues by stating that sponsorships with a particular set of personality attributes can help a company to achieve a particular image which in turn can change or reinforce public perception of a company, including its products and its services. Changes in image may moreover, be achieved through visibility, visual expression, or via interactive relational aspects. In addition, Olkkonen (1999) notes that a company further has the ability to build an image through sponsored events, although it cannot be implanted in the public s mind overnight nor seeded by one marketing vehicle separately. Olkkonen (1999) moreover explains that when comparing product level with the broad corporate level, image could be built into products and adjusted for a company. Product image is thereby manipulable, whilst the company image is less easy to control as it contributes as an outcome of performance determined by a mix of non-manageable and controllable variables (ibid.). Meenaghan (1991) and Abratt et al. (1987) state that all business operations exist within an environment, and to some extent the success of a company is a result of organizations interaction with the environment in which it operates. Sponsorship may thereby be explained as a way to display the product/service in front of the market, as it also provides a great function for the company to give a return to the community by which it is supported (ibid.). Meenaghan (1991) continues by arguing that the involvement in the community is consequently an important corporate objective, since sponsors get involved in improving the life of the community at either a local or national level, by showing manner of good citizenship. Furthermore, sponsorship has more direct impact on the community than any other promotion medium (Meenaghan, 1983). 10

18 LITERATURE REVIEW According to Shank (1999) one of the most important issues for marketers in competitive marketing environment of today is to build long-term relationships with customers and clients in order to put the principles of marketing into work. The community is therefore of interest for the sponsor, as many corporate sponsors believe that returning something to the community is an important part of sponsoring a sporting event (ibid.). In addition, Dolphin (2003) argues that companies are increasingly concerned if they are seen to be fulfilling their societal obligation in respectful and responsible manner. Olkkonen (1999) further claims that stakeholder relationships may be created interactively via sponsorships by inviting important representatives of various stakeholders to a sponsored event and enhancing the relationship on an individual level at informal occasions. Meenaghan (1991) also states that sponsorships thereby provide companies with the opportunity to create goodwill among opinion formers and decision makers, as well as companies can use sponsorship in order to assure their shareholders and policyholders, who is of especially importance in the areas of banking, insurance and finance (ibid). Another benefit of sponsorship as a marketing vehicle is its ability to assist employee relations by simply sponsoring activities and events with which the employee can identify. Although the idea of assist staff relations is in many cases pursued solely with the interest of senior management in mind. (Meenaghan, 1983) Another corporate objective of importance is the guest hospitality that creates entertainment, which according to Jobber (2001) creates opportunities both for the consumer and the trade, whereby sponsoring of sport activities can be highly effective. Abratt et al. (1987) further explain sponsorship as an opportunity to entertain potential and existing customers in an informal, suitable environment. In addition Meenaghan (1983) states that a guest can often include opinion formers and decision makers in business as well as government organizations, trade acquaintances, dealers, wholesalers, and retailers. The author moreover claims that there are various ways in providing hospitality, as special events often can be arranged in order to put the customer under some kind of obligation of future purchase (ibid.). Shank (1999) argues that to stamp out and meet any competitive threats is another primary objective. Many companies claim that they are not that interested in sponsorship programs, but that they have to be involved within these, since their competitors do so. However, when engaged in a sport sponsorship activity there is a risk that the sponsoring company may be harmed by competitors that use planned efforts or campaigns by an organization in order to associate themselves indirectly with an event, with the aim to gain at least some recognition and benefits associated with being an official sponsor (ambush marketing tactics). (ibid.) Marketing Objectives According to Shank (1999) reaching new target markets is also an objective of importance of sponsorship programs since sponsorship has the ability to reach people who are attracted to sports entities because they share a common interest. Sport sponsorship therefore represents a natural vehicle for psychographic segmentation of consumers, and reaching consumers with similar tastes in activities, interest and opinions (ibid.). Sponsorship is moreover used in order to achieve product and brand related objectives, since many objectives are the same as under corporate related objectives, such as increased awareness of product/brand, strengthen or changed market perception of the product/brand, and identifying the product/brand with a particular market segment (Meenaghan, 1983). 11

19 LITERATURE REVIEW Companies thereby try to link brand name with a particular sponsorship in order to achieve product-related objectives. (Abratt, et al., 1987; Meenaghan, 1983). Although, increased sales is in general the most used objective for sport sponsorship programs, since organizations certainly would not spend money to lend their names to stadiums or events if they did not know that they would get something in return for their investment (Abratt, et al., 1987; Olkkonen, 1999; Shank, 1999). Meenaghan (1983) further claims that sponsorship can be extended to most elements of the marketing communication mix, with the ability to assist the movement of the buyer towards the point of actual sale. Sponsorship is therefore an important stimulus when purchasing is seen as a multi-stage, multi-influence activity, in the same way as it may influence sales in a more direct manner (ibid.). However, regardless of the various sponsorship objectives, organizations must evaluate how the sponsorship will help them achieve their unique marketing objectives, whereby increased sales of the sponsorship activity is the most comprehensible method for the measurement. (Abratt, et al., 1987; Olkkonen, 1999; Shank, 1999) Meenaghan (1983) additionally state that the use of sponsorship in order to create public awareness of the company, further may assist the prospecting and selling tasks of the sales force Media Objectives Abratt, et al. (1987) and Meenaghan (1983) argue that the achievement of media coverage is another objective of significance for companies involved in sponsorship activities. The coverage of an event is particularly important for companies that consider brand-, and company awareness as the main reasons for entering a sponsorship program. However, media coverage is more an intermediate objective rather than an end or final objective as market awareness. Moreover, the increasing use of new media offers new opportunities for sponsorship, as worldwide events supply the platform for global media coverage. (ibid.) Dolphin (2003) and Meenaghan (1983) further note that sponsorship can enhance the promotional message by cutting through the noise usually affecting traditional mass media advertising. Meenaghan (1983) further states that the achievement of media coverage is of special importance for companies in the alcohol and tobacco industry, since most governments have restrictions on advertisements of these products Personal Objectives Meenaghan (1991) claims that sponsorship has the capacity of delivering personal satisfaction, which also is of significant importance for the company. Abratt et al. (1987) continue by saying that personal objectives reflect the hobbies, interests, and personal views of the management of a company, whereby the decision to sponsor a sport and the selection of a sport are constantly influenced by the personal views of the decision-maker. Meenaghan (1983) additionally states that sponsorship unitarily provides a unique opportunity to achieve rigorously defined communication targets simply by impulses in the executive s own personality, regardless of motivation. 2.2 SELECTION PROCESS OF SPORT SPONSORSHIP After the sponsorship objectives have been studied and financial resources have been allocated, the next step is for the company to make decisions concerning the appropriate sponsorship opportunity (Meenaghan, 1991; Shank, 1999). Due to the growing complexity of sponsorship relationships along with the potential conflicts that this harbours, marketers have 12

20 LITERATURE REVIEW become more aware of the need for clear strategic justification to support their choice of partner (Fahy, et al., 2004). Of the several worthy causes, only a few are relevant to the interests of any brand and its target market. Selecting an appropriate cause is about matching the brand to a cause that is related to the brand s attributes, benefits, or image in a natural way. Moreover, the choice of sport sponsorship should be closely related to the interests of the target market. (ibid.) Shank (1999) further states that in order to understand the evaluation and selection of sponsorship opportunities, a conceptual model of the corporate decision making-process of sport sponsorship acquisition is commonly used by sponsoring companies (presented in figure 2.3). Aquisition of sport sponsorship proposals Buying grid Buying centre composition Interaction process Purchase decision Figure 2.3 Sport Sponsorship Acquisition Model Source: Adapted from Shank (1999, p. 388) According to Shank (1999) the process starts with the acquisition of sponsorship proposals which generally is an automatic process where organizations receive several sponsorship possibilities from sports entities wishing to secure sponsors. Connected to the sponsorship proposal, potential sponsors seek information regarding demographic profile of fans at the event, cost per number of people reached, length of contract, media coverage, value-added promotions, and sponsorship benefits. The next step is to form the buying centre, which is a group consisting of four to five individuals who is responsible for evaluating and choosing the sponsorship. Usually, these roles are named gatekeepers, influencers, decision makers, and purchasers. (ibid.) McCook, Turco and Riley (1997) further define gatekeepers as those individuals in the company who make the decision on what and how much information that is being passed on to key decision makers. These individuals are the committee members who receive the first sponsorship proposal, and can integrate receptionists, assistants, and even consulting firms. Influencers are known as those individuals who have some type of connection or information regarding the sponsorship requester and can include senior managers as well as other company employees. The ultimate decision maker differ depending on the level and cost of the sponsorship, where small sponsorship proposals often are referred to local or regional managers, whereas large proposals are taken care of by the corporate staff. The final role, which is the purchaser, has the responsibility to negotiate with the event manager. (ibid.) Shank (1999) further argues that it is important that the sponsorship requester is aware of who these individuals are before submitting the proposal in order to meet the unique needs of each individual in the buying centre. To make the purchase decision is the next step in the sponsorship acquisition model; generally it takes an organization three to six weeks to make this final decision. The purchase decision contains three interrelated steps. At first the company needs to consider the wanted scope of the sponsorship, for example international versus local sponsorship. In order to do this, a simple scheme for categorizing sponsorship opportunities has been developed, which is called the Sport Event Pyramid. (ibid.) 13