Nature of the Sponsorship Exchange

1
Nature of the Sponsorship Exchange

• Sport Finance

2
Definition of Sponsorship

• A business relationship between a provider of
  funds, resources, or services and a sport event
  or organization, which offers in return specific
  rights that may be used for commercial advantage.
• Reciprocal Relationship
• business relationship and commercial
  advantage distinguish from philanthropy.

3
Sports Managers Role

• Understand how companies use sponsorship in their
  marketing program.
• Be responsive to their needs.
• Charge them the maximum fee they are prepared to
  pay for providing them with these communication
  opportunities.

4
Exchange Theory

• Two or more parties exchange resources.
• Businesses and sports organizations have multiple
  resources that they may use as currency.
• The resources offered by each party must be
  equally valued by the reciprocating parties.
• Whats in it for me? How much will it cost
  me?
• Fairness
• Level of benefits received compared to those that
  were expected
• Level of benefits received compared to those
  received by other sponsors.

5
Trends in Evolution of Sport Sponsorship

• Increased recognition of sponsorships marketing
  value as a communication vehicle and the
  concomitant increase in magnitude of corporate
  investment
• Widespread extension from professional and elite
  sport to collegiate and high school sport

6
Factors Stimulating Sponsorship Growth

• Ability to efficiently communicate with specific
  target audiences
• Increased acceptance of the commercialization of
  sport by the public and by organizing bodies
• Two factors initially responsible, but have since
  waned
• Tobacco Advertisements
• Avoid communication clutter

7
Strengths That Have Sustained Growth

• Positioning has become a central concept in
  marketing strategy, and corporate and brand image
  development are key factors in positioning
• Used for both integrating a promotion strategy
  and as a platform for furthering objectives with
  employees, distributors, and customers
• More intimate and emotionally involved
  relationship with its target audience

8
Benefits Sought From Sport Organizations

• Media
• Financial
• In-Kind
• Product support
• Personnel support
• Communication resources and expertise
• Prizes
• Website exposure

9
Associated Costs for Sports Organization

• Sponsors may insist on changing the sporting
  event
• Commercial needs of a sponsor become more
  important than the intrinsic merit of the
  sporting event itself
• Potential of negative repercussions to a property
  if the sponsor engages in actions that are
  perceived to be anti social, which generate
  adverse publicity
• Nonprofit monetary costs payable to IRS

10
Benefits Sought by Business Organizations

• Increased awareness
• Enhanced image
• Demonstration platform
• Hospitality opportunities
• Product trial or sales opportunities
• Last three take precedent today, with sales being
  the priority.

11
AIDA Concept

• Awareness individual becomes aware of product
  and its attributes
• Interest more knowledge of products benefits,
  interest, preference, distinct image
• Desire Appraisal, desire or intent to purchase
• Purchase Action product purchased or rejected
• Reinforcement reassure or confirm decision and
  consolidate loyalty

12
Increased Awareness

• Repeated exposure likely to lead to positive
  affect among potential customers
• Verizon
• Cornhill
• Danka
• SEGA

13
Image Enhancement

• Image is the sum of beliefs, ideas, and
  impressions that a person has of a business or
  its product
• Businesses striving to create interest and a
  favorable attitude toward their products
• John Hancock
• Gillette
• Marlboro

14
Demonstration Platform

• Demonstrate the excellence of their product
• York International
• Hewlett-Packard
• Seiko

15
Hospitality Opportunities

• Interest targeted individuals in a product or
  strengthen bonds with existing customers and
  reinforce their commitment
• Develop relationships, thanks for business
  received, encouragement for staff, impression of
  success, building new business, and gifts or
  apologies
• UPS
• Nabisco
• GCE
• DeWalt Industrial Tool Co
• Olympics
• John Hancock/Olympics

16
Product Trial and Sales Opportunities

• Used to affect desire, purchase action or
  reinforcement stages of the adoption process
• Palm Inc.
• Samsung
• Popsecret
• Lowes
• National Thoroughbred Racing Association/John
  Deere
• Sprint
• NASCAR

17
Risk Associated with Business

• Poor presentation
• Labatt Brewery, Canada
• Poor performance
• Race car or horse losing always,Virgin
  travel,Cartoon network on race car,IBM
• Disreputable behavior
• Converse shoes/Dennis Rodman and Credit Suisse
  Bank and Cycling
• Community backlash from charges of
  overcommercialization
• Fila and Footlocker backboards
• Liability
• Vogel - skier