Introduction
In the contemporary times, event sponsorship is an accepted powerful product promotional tool that when used in conjunction with other marketing tools enables an organisation to reach its set objectives. Event sponsorship is a more innovative marketing strategy than other endeavours such as advertisement and product promotional campaigns as it communicates effectively a company’s products and services to the intended customers. Nowadays, media advertising is considered as a lesser effective way of marketing strategy than it was in the past due to the increased number of media outlets available to consumers together with the fragmentation of the marketplace. Traditionally, event sponsorship was viewed as a philanthropic exercise aimed at offering assistance to the success of an event, but nowadays the perception has changed. Before entering an event sponsorship program, the sponsor must establish clear set of objectives, the size of market in terms of customer audience, and exposure potential, which is referred to as CEDAREE framework. This aspect enables a company to establish effective ways of communication to use in order to attract a great number of potential customers to the event.
Establishing Objectives
The main objective of sponsorship is to inform the target market, which is made up of the event audience that a company intended to sponsor. These two stimuli, viz. sponsor and event, are used as tools for measuring the effectiveness of a sponsorship by mere-exposure effect or classical conditioning methods. The purpose of this report is to validate the importance of sponsorship activities to a company’s success as a powerful marketing tool in the modern fragmented marketing place and consequently convince the board of directors to allow the company to continue with the sponsorship program of Tour Down Under event (Day 2011).
As aforementioned, it is important for a company to establish a clear set of objectives before entering any form of sponsorship to communicate effectively a product message that is consistent with values of the brand. The most widely accepted sponsorship objectives fall into one of the three categories, which include media, corporate, or marketing. Media is a very important factor to be considered, as it links the corporate to the event audience. It is essential for the company to have increased media exposure in order to reach the target markets. Corporate has key objective, which is based on its image to the customers, hence the sponsorship has to be designed in such a way that it will enhance the corporate reputation and increase awareness in different ways. Market objectives include increased sales and brand promotion, which are the main reasons for the corporation to enter the sponsorship program. The latter two objectives imply that sponsorship activities that a company involves in are an investment as they increase the consumer awareness. Both the corporate and marketing objectives presumably have the most influence on consumers. Enhancing corporate reputation through sponsorship increases customers’ positive attitudes towards the company itself as well as their potentiality to purchase the products on sale. After establishing the most crucial objectives, the company should then seek out a potential outlay, which is easily integrated into the promotional strategies that are put forth by the company. This process is a great risk for the company, and thus it should be handled with the utmost preparation and care because it can have detrimental effects to the company’s reputation if it is not handled properly.
Another important factor to be considered before venturing into a sponsorship agreement is the event’s size of audience. Sports events are normally the most liked events in the contemporary world, and thus they offer great opportunities to sponsors for marketing their products and services. In addition, it is important to consider the purpose of an event as some products cannot sell in some cases; for instance, sports events is not a suitable event for marketing matters such as education and medical technology among others. Among the many things to be considered before signing the sponsorship deal is the sponsorship structure in a bid to identify the possibilities of ambush marketing by other companies in the event (Tangen et al. 2010).
Understanding the Audience and Marketing Exposure (CEDAREE Framework)
It is important for the company to understand the target audience properly in order to achieve the desired response from the sponsorship activity coupled with how the audience is going to understand the intended product message that will be put forth on the program. However, it is difficult to establish the target audience’s response towards the product message, but it is important to pay due diligence to some factors pertaining to the product relevance, event, and sponsor factors (Weeks, Cornwell & Drennan 2008). Product relevance is an important factor that should be addressed early before the sponsorship deal because it influences the customers’ perception of the sponsorship. Perceived congruence between sponsor and event leads to favourable responses to the sponsorship, which include likeability and credibility of the sponsor. This aspect implies image transfer from event to sponsor whereby the success of an event earns credibility to the sponsor.
In reasoning about the customers’ response towards the sponsorship, the schema theory is essential for the establishment of possible responses. Henkel (2009, p. 29) defines the schema’s theory as ‘a cognitive structure, stored in memory that represents information about an object, concept, or stimulus domain including its attributes and the interrelations among the attributes’. Hence, when target customers hear the information about the product in the sponsorship program, they use previously heard information about the brand and event to make their judgement about the matching of the event and sponsor in the sponsorship program.
Normally, a perceived congruence between brand and event leads to positive evaluations of set brands due to the transfer of positive effects from the event to the brand schema. These effects are explained typically by the fact that high-congruence pairing is easier to accommodate within the existing cognitive schemas as well as being easily retained in memory due to the positive association (Tangen et al. 2010). Furthermore, if the consumers continue to learn about both the brand or event and perceive a positive matching of the two elements, the two schemas will become almost similar and positive characteristics will be attributed to the brand, from the event’s schema, that were not present prior to the knowledge and experience of the sponsorship(Pelsmacker & Neijens 2012). On the other hand, discrepancy in the fitness can often distort the consumers’ perception of the sponsor’s positioning. Consumers with a clear understanding of the sponsor’s positioning are less likely to perceive risk when choosing the brand as well as a decreased need to investigate the brand further before a purchase, thus easing the purchase decision process (Tsiotsou & Alexandris 2009).
However, if company fails to attain a perfect fitness of the brand and the event, there is still a chance of attaining its objectives because the results of the schema theory do not guarantee failure or success of the sponsorship, but rather an increase in the probability of success of fitness is guaranteed. Hence, in the case of low congruence, the company needs to invest in communication strategy to ensure that the intended message is capable of convincing customers on the relevance of brand to their lives and spending habits. Additionally, a helpful performance, which is an indicator of success in the sponsorship program, is the customers’ attitudes on the event under sponsorship. An event must have the ability to benefit its audience because people go where they can get benefits; on the other side, they keep away from events that add nothing to their perceived wellbeing. Hence, it is essential for the company to analyse the benefits that the sponsored event is likely to bear to the people in a bid to determine the ability of the event to have a good size of target customer population (Henkel 2009).
In most cases, a great confusion engulfs every company, which is hopeful of becoming an official sponsor of an event. Apart from the confusion brought by the target customers’ perception to the brand, a company is not sure of the possibility of ambush marketing by other firms. Unfortunately, in most cases, such ambush marketing comes from a direct competitor of the sponsoring company. Just like in any other form of business, companies are at standby to ambush a market that guarantees successful sales of their products, and hence the firm involved in the sponsorship program needs to have a guaranteed assurance of ambush marketing-free event sponsorship (Degaris & West 2013).
Tour Down Under Event and Organisational Fitness
Tour Down Under is the world’s greatest cycling race event outside Europe that takes place around Adelaide in South Australia. The race attracts participants from all over the world. In addition, the event attracts a great number of sponsors due to the large number of spectators forming the event’s audience. The majority of the interested sponsors are multinational companies such as Subaru.
The event is ranked amongst the world’s greatest sports events, hence a perfect event for sponsorship. Therefore, it is an ideal event for the company to sponsor. As aforementioned, the even has a large population of customer audience from across the work, which gives us an opportunity to market our products and brands to potential customers. People from over 150 countries view the event across the world through television, which enables people to follow live event proceedings.
Hence, the event presents us with a great opportunity for media exposure to customers from across the world without extra costs of marketing. Since the event has proved to have positive impact on viewers, the company should have great confidence in the event sponsorship deal as it has a high potential of increasing sales volume as well as enhancing the company brand in the international market. The event has been in existence for nearly ten years in Australia, which highlights its success and popularity. Perceivably, multinational organisations have the ability to sponsor international events, and especially those related to sports. Hence, the opportunity to have an official sponsorship deal will improve the company’s reputation to attain the level of well-established multinational companies (Humphreys et al. 2010).
The Pros and Cons of this Potential Sponsorship Agreement
The advantages include media exposure, growth, and large market coupled with the enhancement of brand reputation and competitive advantage. The company needs to advertise in many media outlets in a bid to reach out to the targeted customers. The event sponsorship gives an opportunity for the company to take advantage of seven days of international media advertising through live event broadcasting.
Companies seek to enjoy a large market size for their products (Cornwell 2014). However, achieving a large market size is not easy, as it requires good marketing strategies and brand reputation among other strategies.
In addition, agreeing to sponsor this event will contribute to the enhancement of company brands. The company is confident of the ability of its products to satisfy the targeted customers, and thus the sponsorship would play a major role of enhancing the customers’ confidence on the product brands. Attaining the customers’ confidence on products is always a major and hard-earned achievement. Customers believe that companies that produce high-quality brands sponsor big events, which presents an advantage to new entrant sponsors that have products that are not well known in the market (Tangen et al. 2010). Additionally, sponsorship will boost the company’s reputation worldwide since the event is broadcasted live in many countries across the world.
On the other hand, sponsoring this event has some disadvantages to the company, which include high cost of sponsorship and exposure to high risks. Sponsorship is a high cost investment and if not well managed, it interferes with the companies’ budget. The event has unknown market size, which makes it hard to estimate the amount of product stock to be kept for the event customers. Optimism of large sales can mislead the company into overproducing its products in order to meet the perceived demands, which is expensive, and thus it can strain the available resources. If the company sells fewer products than estimated, it ends up in huge losses (Lane 2009).
In addition, the company is exposed to the huge risks associated with this event. First, event sponsorship requires professionalism for the event to succeed. The company might be overwhelmed by the event due to the great publicity created instantly, hence overcoming the company’s ability to handle welfare matters (Day 2011). Secondly, the failure of the event would have serious ramifications to the company’s success. As aforementioned, the schema theory depicts that target customers derive the reputation of a company’s brands from the reputation of the event. Hence, the company’s success in achieving its sponsorship objectives is directly related to the success of the event. Moreover, most spectators stand along the racing track where they can watch the riders, thus creating a good opportunity for other companies to do ambush marketing in uncontrolled environments (Pelsmacker & Neijens 2012).
Marketing Benefits and Plan
The main objective is to market our products in the event by taking advantage of the sponsorship. As aforementioned in the advantages of sponsoring the event, the company will be in a position to create awareness of its products to a huge number of potential customers within a short period. Therefore, it should have a well-defined marketing plan that should be used during the event.
As an official sponsor, the company is allowed to do branding on the winner’s jersey, which is always the goal of the majority of riders. In addition, the road to be used should have signs of the official sponsor, and thus the company should erect some temporary banners along the road as well as a big banner at the finishing line. Finally, there should be some marketers issuing flyers to the spectators as well as marketing to them as the event continues.
Return on Investment Plan
As aforementioned in the marketing plan, the success of the marketing plan will cause an increase in the sales revenue. This event sponsorship will give returns to the sponsor and the company will take the advantage of the event to market its products. The company plans to reduce the inventories through change of logistics whereby the products shall be delivered to the event by company vehicles and sold out by the marketing team at normal prices. This move will reduce the supply chain costs, and thus sales revenue will cushion the invested funds in the sponsorship deal. The event sponsorship is expected to create awareness of the company’s products, hence increased sales and revenue.
Recommendation
Business environment does not always guarantee a risk-free environment, but the company stands a high chance of succeeding in the sponsorship even in the presence of ambush marketers because official sponsorship guarantees media exposure benefits that ambush markets do not always get. However, it is prudent for the company to sponsor the Tour Down Under event because there are many advantages associated with it, from which the company stands a chance of reaping great benefits, which are geared towards achieving its objectives. Therefore, the company should sponsor the event.
Reference List
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