The Santos Tour Down Under (Santos TDU or TDU) is fast becoming a major global event in Australia, especially because it is the first event of its kind to be held outside Europe. In fact, it is clear that the event has also become the first cycling competition outside Europe to receive the UCI World Tour status, a prestigious status and position that is likely to increase the number of participants, visitors, sponsors, advertisers and dignitaries from all over the world.
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Despite being a new phenomenon in the region, the past two TDU events have yielded huge economic, social and cultural benefits to South Australia and the country in general. For instance, within three years of its initiation, TDU was able to generate revenue of more than AU$ 17 million in 2014 (Santos TDU 2014). In addition, this was an increase of more than 55% from the 2013 event (Santos TDU 2014).
The revenue obtained from the vent has been rising significantly since the first occasion held in 2011. The 2015 TDU event is expected to take place in New Zealand and not Australia, making new Zealand the second nation to have such an event in the world apart from Europe. As such, it is highly recommended that our company take immediate steps to become the major sponsor of the event, considering that other companies are eyeing the event.
Pros and cons of a potential sponsorship agreement
While the event is only a young social feature in the nation and the region in general, it is worth noting that it has been able to attract a large audience and the number of participants from throughout Australia, New Zealand and the world on general. One of the major advantages of becoming the major sponsor of the event is the increasing popularity of the event, which is particularly influenced by the huge media coverage.
In the last four events, the Australian and world media have been covering the event from its organization to the end. In particular, the Australian media has been contributing to the creation of awareness of the event. For instance, the media provide intensive coverage of the event, right from its preparations for the end of the cycling competition. In addition, the government of the commonwealth of South Australia has become a major supporting body for the event.
On its official website, the state government has provided important information, statistics and links about the event and the vast number of factors that attract tourists who visit the region for the purpose of the event. Therefore, all these aspects contribute to the potential of the event to harness huge potential benefits, which will be shared between the organizers and the sponsor according to the established agreement.
Apart from the direct profits associated with the event, our company is set to benefit from the advertisements the organizers use to attract more and more viewers, participants and direct audience. As such, the popularity and the public image of our company will improve significantly, thereby attracting more customers, sales and the annual revenue.
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Another major advantage of sponsoring the event is the ability to use the event to reach out for market segments that are yet to be explored. For instance, the main participants are males. Nevertheless, the event attracts viewers of gender, all ages and social classes. Since we will have exclusive rights from advertising in the fields hosting the event, we will have an additional advantage because we will be in a position to expand our market and the number of market segments for our products.
Using the exclusive rights obtained for the company’s position as the major sponsor, we will have the additional advantage of using celebrities in the sport to create product awareness in the market. The company will take the first three winners of the each event in the major categories, including males and females, and establish agreements with them. This will allow the company to use the celebrities’ position and attributes such as energy and abilities for corporate advertisement.
One of the major disadvantages of sponsoring the event is the high cost incurred during the event. As the major sponsor, the company will be expected to provide the financial support needed to organize and maintain the event. The organizers will expect the company to provide the support needed to provide sporting equipment, advertisement as well as a huge portion of the salaries and wages for the individuals and organizations hired to facilitate the event.
In addition, the company will be expected to provide the financial support needed to award the participants, including the winners and those who complete the entire cycling race. In case the event fails to meet the target level of revenue at the end of the occasion, the company will most likely share the loss with the sponsors. Nevertheless, this is not expected because the past four events have been successful and the popularity of the event is attracting a global audience and participants.
Organizational fitness in TDU event
As described above, the organization fits the position of the major sponsor of the TDU in a number of ways. Considering the products and services we offer, it is evident that we have a strong attachment and relationship with the participants as well as the general audience during the event. In fact, our products and services will not only be part of the utilities in the event, but also part of the products that benefit from the global sports and game culture.
Our organization’s mission will be to develop a close relationship with the event organizers and members of the Club Tour in order to ensure that the company creates a good relationship with this market segment. In fact, an in-depth analysis of the TDU reveals that the organization has a good structure that accommodates individuals of various kinds. For instance, the Santos TDU is based in Adelaide and holds its events across Southern Australia. Within its organizational structure, Santos TDU has a number of activities held on different days during the month of the main event, for instance, it holds cycling race to support cancer patients and cancer management in the region.
It also holds other community tour races at different days, each with a special name such as Adelaide City Council Tour Village, Mutual Community mini tour for the young people and the Mutual Community Challenge. In addition, TDU has developed a members club that is open to interested individuals. Since its inauguration, the Club Tour has attracted a substantial number of members, rising from 91 in 2011 to more than 1,000 in the 2013 event.
Marketing benefits and marketing plan
An in-depth analysis of Santos TDU reveals that the annual event lacks a long-term sponsor. In fact, the event organizers reveal that they are in need of a major sponsor. In addition, they are willing to develop an agreement with a company, which will enable TDU to obtain material and financial support and the sponsor obtain exclusive rights for advertisement and other economic benefits. Thus, it is worth analyzing the number of possible financial benefits that our organization is likely to obtain from the event.
As earlier mentioned, the major benefit will be in terms of marketing rather than the revenue shared with Santos TDU. First, the organizers have agreed to enter into an agreement with our company and give us the exclusive rights for advertisement before, during and after the event. In fact, they have an agreement with the state government as well as local councils in Adelaide and other areas covered during the event.
In these agreements, the organizers are expected to advertise the potential of the region as a major tourist attraction site, especially the Adelaide Dinner events, Adelaide Breathe event, Adelaide international Guitar Festival, Adelaide Cabaret festival and the Adelaide Oval AFL events (Government of South Australia 2014). In addition, the event attracts tourists who like nature walk, especially because it allows spectators to walk up the Adelaide Hills and the Clare Valley to observe the participants undertake the challenging race (Smith 2010).
Therefore, it will be easy and effective to target these individuals in our marketing strategy. There is need to examine the market from a social, demographic and economic perspectives. For instance, the social aspects of the region and the community are likely to support our marketing strategies in a number of ways. The event attracts individuals from various parts of Australia and the world in addition to the Adelaide and South Australian community.
While the locals are aware of our products and services, the foreigners attending the event are also looking for local products and services. They want to have a south Australian experience. Thus, we should plan some marketing strategies that will provide the market with their needs during the event. In addition, it will create awareness of our products and ensure that the foreigners return home with an idea of our products. Thus, when marketing our products and services beyond Australia, it will be easy for the people who have attended the event to identify and recognize our products within their countries. In fact, this is a long-term strategy for our globalization strategies.
Secondly, from an economic perspective, the company will benefit from the marketing strategies that Santos TDU develops to attract participants, fans, spectators and tourists in the region during and after the event (Gibson 2011). For instance, Santos TDU has been using the regional tourist attraction sites mentioned above to attract more people into the event. It advertises in Europe, the USA and Southeast Asia. In this case, it attracts individuals from economically stable regions because they are likely to spend their money in leisure. In fact, most people come to watch the cycling game as well as experience the huge tourist attraction sites in the region.
Therefore, in the 2015 Santos TDU event to be held in Auckland, New Zealand, it is expected that the popularity of the Adelaide TDU will attract more people to the new site. In fact, New Zealand, like Australia, is a popular tourist destination in the modern world. It will provide our company with an opportunity to create awareness of and introduce its products in New Zealand. In addition, foreigners will have an experience of our products, making it easier to enter into the foreign markets.
Summary of the proposed marketing plan
|Aspect of analysis||Features|
|Situational analysis||Our organization is entering into an agreement with TDU to sponsor its 2015 event in Auckland |
Our company offers quality services and products in food, travel and electronics
The TDU event creates a basic market that is in dire need of these products
|Market summary||Customers during the 2015 TDU event will mainly be foreigners Australia, other parts of NZ, Europe, Americas and Asia |
The market is defined by various segments:
Demographics- adult males, adult females and children
sport and nature tourists,
|Market needs||They need food, entertainment, travelling and hospitality services |
They need to watch the cycling game as it takes place in the field
|Market trends||Customers are ready to spend because they have planned for a touring season during the event |
The market lasts for one to two months
|Market growth||The attendance rate has grown from 760,500 in 2009 to more than 1.5 million in 2013 |
Total visitor nights has grown from about 320,000 to more than 500,000
Economic impact has grown from $39 million to more than $50 million (Santos TDU 2013)
Expected return on investment
Return on investment is the ratio that determines the efficiency of an investment by calculating the ration of the difference between the gain and cost of investment (Farris, Bendle, Pfeifer & Reibstein 2012). It is calculated as follows:
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ROI= (Gain from investment-cost of investment)/ cost of investment
In this case, the expected cost of investment is $201,524 million and the expected gain from investment after the first event is about 326,700 million. Thus, our ROI is 0.62, which is a good margin.
Proposed strategy to minimize risks and increase benefits
Considering the possibility of undergoing financial risks due to the large amounts of finances requires to sponsor the event, this briefing paper proposes a better approach to the event. It is based on the Ukman (1995) model that considers six major attributes.
First, we need to consider benefits and not features. In all the aspects mentioned about, a benefit must be tied to each of them. For instance, the tourist attraction sites, the increasing number of participants, the increasing popularity of the event and other aspects have a financial benefit attached to them. Secondly, we need to address the needs of the sponsors and not those of the event. In this case, our company will provide the financial support as requested by the organizers and consider our marketing needs.
Thirdly, the event will be tailored to the business category of marketing, which is the major need in our organization. Fourth, our proposal will consider promotional extension as mentioned above, which will allow the company to use the celebrities as well as the event to develop advertisement and product promotion after the end of the 2015 event. The fourth feature is to minimize risks through involvement of the media to advertise the event as well as the company’s role in sponsoring the occasion. Finally, our company will need to include benefits (added value) after the event by targeting a financial gain from the revenue obtained from the event, the advertisement risks and use of the event for our market extension.
The investment is worth for our company because TDU is a relatively new but popular event. The annual rate of growth in terms of visitors, participants and revenue is high and the popularity is growing every year. In addition, there is no official sponsor of the 2015 event and our company will gain exclusive rights in the event.
Farris, PW, Bendle, NT, Pfeifer, PE & Reibstein DJ, 2012, Marketing Metrics: The Definitive Guide to Measuring Marketing Performance, Cengage, Mason, OH.
Gibson, H, 2011, Sport Tourism, OUP, Sydney.
Government of South Australia, 2014, Things to do in South Australia, Web.
Santos TDU, 2013, Santos Tour Down Under: Events and media, Web.
Santos TDU, 2014, Fast Facts: Santos Tour Down Under, Web.
Smith, H, 2010, Adelaide & South Australia Travel Adventures, Hunter Publishing, Adelaide.
Ukman, L, 1995, The IEG’s complete guide to sponsorship: Everything you need to know about sports, arts, event, entertainment, and cause marketing, IEG, Chicago, IL.