Sponsorship
According to Meenagham (1983) sponsorship can be said to happen when a commercial organization engages itself to offer assistance, be it in the form of finances or in kind, to a certain activity with the sole purpose of achieving commercial objectives. Sponsorship has been proven to be the fastest growing form of marketing in the world (IEG Network, 2001). A total of USD 24.6 billion has been spent on sponsorship alone, which range from education, financial activities, broadcast media as well as arts, and sports. The figure is not constant but has been seen to gradually increase with time.
Looking at sponsorship, it can be seen as a way of indirect persuasion, unlike advertising. Advertising is viewed as a direct attempt with one intention persuasion. McDonald (1991) adds that sponsorship is a promotional spending which is intended to realize marketing objectives. In other words, it acts as an alternative to other means of spending marketing money. According to (Mason, 2005), Sponsorship has the capability of lowering a consumers defense mechanism while in the process of being seen.
Mulin et al discuss sports sponsorship and state that it originally used to appeal to corporations as a type of uncluttered advertising. Since then, the involvement of corporate organizations in the events of sports has become popular in a very overwhelming way. This is especially so in Europe and the United States as a result of how much they value entertainment, accomplishment, and competition. This is also due to their healthy lifestyle motivation.
Lardiniot and Quester (2001) identified two different kinds of sponsorship field and televised broadcast sponsorship. When it comes to field sponsorship, it involves the placing of logos on billboards or other sports equipment at the scene of a particular event. Televised broadcast sponsorship on the other hand is when advertisers want to associate their names with a particular television programme or its promotion.
Today many international corporations have been seen to invest funds on sponsorship which they might have used on other forms of promotion. This trend is likely to continue as new openings for these sponsors, for example the television programme sponsorship.
Today sponsorship is seen as one of the most effective reputation building and brand tools in most of the corporate organizations. Brands professed to have acquired a higher value of equity are more likely to have dominance over the market share (Keller, 2003). That is the reason why organizations strive to build positive belief about their brands in the minds of the consumers. Corporate reputation according to Alexandri (2001) is comprised of two major characteristics. They include the perceptions of the observers of the corporation over a certain period of time, and finally derivation from corporate image. Corporate reputation in other words is long term, and relatively stable.
Objective of the Study
Sponsorship was almost solely the area of sports properties since its early days. Apparently, back in 1984, about ninety per cent of all sponsorship money was directed to sports. The objective of this study therefore is to find out how, as multinational corporations in Malaysia seek for new and improved ways to maintain communication with their key audiences, have continued to benefit every type of sponsorship. Previous research has indicated that multinational corporations do not replace advertising with sponsorship but instead works best as marketing communication which includes usage of all methods of marketing.
Malaysia has a huge appeal among key customer segments of various sporting activities such as golf and motor sports. This is the reason why this study focuses solely on Malaysia.
Scope of the Study
The study will also focus on the companies engaged in sponsorship in terms of money, people, and the challenges they go through. Several companies have engaged themselves in the sponsorship of sports in Malaysia for instance. A leading insurance company ING is for example known to sponsor badminton in Malaysia through the Badminton Association of Malaysia. QI Ltd is also known to sponsor motor racing in Malaysia.
According to the president of Olympic Council of Malaysia, it has been a great problem in Malaysia when it comes to obtaining sponsorship. This he says has forced the government to become more engaged in the business of sports than it actually should. Sponsorship in Malaysia is very hard to find and even if found is inadequate. This is because the private sector has failed to involve itself in the business of sports and sponsorship as it is experienced in other countries.
Tunku Imran, president of Olympic Council of Malaysia, finally states that it is essential that Malaysia sports stop being over dependent on the government unless it wants to achieve its goal of being a sporting nation. This is according to an article from the Business Times. In other words, it is very important that the private sector also engages in sports. The private sector needs to be encouraged to involve itself in the business of sponsorships.
Aim of the Study
The business of sponsorship involves a variety of issues. This study will aim on establishing the various issues that affect sponsorship or rather are directly or indirectly involved in the business of sponsorship. QI for example is known to have spent a total of RM 2 million over a period of one year on the CIMB team, according to the report by Business Times. A budget therefore will be involved. Momentum NA sponsorship senior vice president, Bob, explains that the reason why most sponsorships go wrong have to do with the budget and people. He adds that sponsors engage people in the positions of sponsorships who only have the desire but not the skills to succeed. This is one major challenge in the business sponsorship.
He also states that middlemen are also part and parcel of these problems as some of them at times do not accurately represent the point of view of their clients. Some go to the extent of exaggerating to the point of not telling the truth. Good middle men however are in a position to differentiate between a good and bad deal, which is the key to starting the relationship between the sponsor and the one being sponsored on the right note.
Another reason why those being sponsors get sponsorships wrong is because most of them are ignorant to know what the sponsors business entails in terms of positioning, objectives, key management, and strategic management. They are in most cases more interested in making sales rather than selling and servicing. In other words, they do not invest in high quality people to service sponsorships, and by this they find themselves spending much more money than they actually could.
Methodology
There are different methods of data collection, sampling and analysis. The paper will apply some of these methods during the course of the study. For instance
Interview As a form of data collection method, the interview can be conducted either by telephone, face-to-face interview or written interview through filling of questionnaires. It is however the face-to-face interview that is most effective since it allows the interviewer access the facial expression and attitude of the interviewee (respondent).
Quantitative Research This research covers figures and statistics and gives the percentage of the number of companies in the sports fraternity.
Qualitative Research Human capital and resources available for the task at hand are categorized under this segment.
Sampling After the information has been collected, it is then sampled into different categories depending on how it will help in the evaluation of the different projects that have been set up by the multi national companies.
Literature Review
Some of the renowned companies involved in sponsorship in Malaysia include Intel, Shell, Schlumberger, PricewaterhouseCoopers (PwC), Ernst Young (EY), KPMG, HSBC, Public Bank, CIMB, Maxis and Petrobas Zul (2009b).
Petrobas
According to Bugatti (2010), the Petrobas Company is not new when it comes to sponsoring of sports and sporting events. The Brazilian company, which sponsors motor racing and Formula 1 events, has in the past sponsored races in Brazil and other major cities around the world. The company hopes to make a great sports and economical impact in Malaysia once it joins the sports industry as a sponsor.
Shell
As the leading petroleum company in the world, the company sponsors the MotoGp in Malaysia as the official Grand Prix title sponsor. The company also provides trackside advertising in conjunction with their co-sponsors the Ducati team (MotoGp, 2010).
HSBC
The HSBC Company is not a new entrant when it comes to corporate sponsorship in sports. As the leading local bank, the organization has been sponsoring sports in Asia since 1980. In Malaysia the company sponsors the rugby circuit. In addition to that, the HSBC offers sponsorship for training of coaches in different fields (HSBC, 2010).
Maxis
The telecommunication giant company is the proud sponsor of two of the best badminton players in Malaysia, Datuk Lee Chong Wei and Datuk Misbun Sidek (Maxis, 2010a). The sponsorship, which was signed in 2009, will run for a period of one year (renewable). Maxis (2010b) states that as the official brand sponsors of the company, the two sports personality will attend Maxis advertising campaigns, attended key Maxis corporate and launch events, and also participated in the companys employee engagement programmes.
Sports sponsorship is considered the most important type of sponsorship as well as the most popular. According to the World Sponsorship Monitor, sports sponsorship accounted for seventy nine per cent of a market size of 43 billion approximately in 2008 (Maxis, 2010b) Sports sponsorship in addition to this is a highly accepted tool of marketing. The sponsoring of sports also involves the aspect of reciprocity. What this means is that the both parties, the sponsee and the sponsor, give and receive at the same time. In most instances, it is the sports organizations that are receiving donations from the sponsor, in terms of financial donations. These are the reasons why most of these companies engage in sports sponsorship. But they also face challenges. For instance, when it comes to sports, a consumer may like a particular sport which may in fact enhance their favor towards the sponsor. This however does not mean that it will automatically engage the consumers engagement on the products of the sponsors. This remains a challenge of event managers responsible for sponsoring sport events to use this opportunity to convert it to monetary gain for the company. (Speed and Thompson, 2000).
Conclusion
Before proceeding with the relevant arrangements of sponsorship, it is important that a company considers a number of factors. To begin with, it should be able to determine the impact period. The company should ask itself, how long the sponsorship profile will last, that is, before and after the event.
The company should also be in a position to know the relevance of the sponsorship arrangement, which is between the two organizations and the target audience. It should also be aware of the uniqueness of the sponsorship agreement. Looking at it from a competition perspective, the agreement should be such that it allows the market, brand, and competitive position be in a unique way differentiated.
The company should also conduct prior research on matters related to budgeting so that it avoids over budgeting or even under budgeting for a particular sponsorship activity.
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