The Role of Sport Sponsorship Activity to Entrepeneurial Companies Overseas Brand Awareness: An Quantitative Studies of Chinese Entrepreneurial Companies
Sports sponsorship is a marketing technique that consists of an association between a company and the sports club or event (sponsee). Notably, this marking technique is sturdy and has huge impact towards the sponsoring entity. Often, the main agendas surrounding this kind of partnerships depend on the party of the equation; for instance, the sponsor company aims to generate awareness of their brand and to boost customer loyalty, while the sponsee primary objective is to find funds for their club or event. Sports sponsorship enables companies to gain a competitive advantage across the market and acquisition of long-term visibility (Garland, Charbonneau & Macpherson, 2008).
The sponsorship types include primary sponsor, general sponsor, official sponsor and informational sponsor (Curcio, 2018). The primary sponsor is the highest contributor followed by the general sponsor, who contributes about 50% of the total, revenue and they both enjoy extensive media coverage. The official sponsor contributes fewer funds while the informational sponsor is mandated with public relations. The literature review will focus and give a detailed analysis of sport sponsorship activity and its influence on overseas brand awareness for Chinese entrepreneurial companies.
The growth of Chinas sports industry has resulted in the creation of tremendous opportunities to both sports and non-sports organizations (Rick, 2018; Liu, Zhang & Desbordes, 2017) as the industry continues to compel corporates to utilize sport sponsorship to obtain consumer commitment (Jia, 2015). Recently, it has been noted that the Chinese sports industry is booming both nationally and internationally, with its growth allegedly outdoing that of the national economy. This is affirmed by Rick (2018) in which he discusses the report released by the Chinese National Bureau of Statistics (2018) during the National Sports Industry Conference. The report shows that the number of organizations involved in the sports industry had grown by 21.7% from 2015 to 2016. The report further stated that by 2016, the domestic sports industry provided employment for more than 4.4 million people with a total output of 1.9 trillion Yuan (National Bureau of Statistics, 2018).
Sports has a unique way of bringing people together especially for groups of people supporting similar teams or players. Irrespective of who individuals or groups of people are supporting, sports enthusiasts continually engage in sports discussions from season to season. One of the primary ways sports marketers engage fans is by connecting them with the teams they adore. The marketer can utilize online platforms, discussion boards and social media to engage the fan base to converse about their teams, players and their evaluation of the sports. This strategy is mainly utilized by established companies utilizing sports sponsorship to promote their brand, maintain brand loyalty and expand their audience.
A successful utilization of engaging fans in sports marketing can be discussed by referring to Hisense, an established Chinese company that was one of the Official 2018 FIFA World Cup sponsors. To promote its overseas brand awareness in Europe, Hisense organized a “See the Incredible Tour” to provide fans with opportunities to engage with the 2018 World Cup video content (Hisense, 2018). Hisense utilized Facebook Live Shows, YouTube videos and other social media platforms to engage online with fans across the world. In addition, the tour visited France, England and Germany, before proceeding to Russia where the 2018 World Cup has being hosted. To further engage the fans, Hisense hired Lloyd Griffith, a comedian and goalkeeper, to join the tour. Other legends who joined the tour included Michael Owen, Luis Figo and Marcel Desailly. The tour also included freestylers and social media influencers who Hisense tasked with creating stream of humorous video content for the fans and promote them in their own channels. Hisense also encouraged fans to share their memorable moments supporting their countries and use the hashtags associated with the tour, as well as tag Hisense to stand a chance to win a Hisense 4k TV or FIFA World Cup Final tickets.
The fully branded Hisense tour and fan engagement led to a huge success. An analysis of social media mentions and discussions gave Hisense the highest net sentiment score and passion intensity compared to other FIFA World Cup sponsors such as Nike and Adidas (Feigenbaum, 2018). The Company was also ranked among the three stand-out brands with regards to social media mentions during the first week of 2018 World Cup. The case of Hisense demonstrates the power of fans engagement in sponsorship activities. The company, already performing well in China, utilized its FIFA World Cup sponsorship to promote its brand to overseas country and boost its sales. The brand awareness was so successful that a week before the World Cup started, the company’s television sales increased by more than three times in Russia (Shumin, 2018). The success of Hisense plays a significant role in demonstrating how Chinese companies can utilize sport sponsorship to enhance their overseas brand awareness and expand their audience base.
The role of sports sponsorship in increasing brand awareness have been acknowledged by many researchers. A research by Dees, Gay, Popp & Jensen (2018) showed that most firms engage in sports to increase awareness about their brand, which is also affirmed by Jones and Nauright (2017). In addition to the research studies, cases of successive stories of sport sponsorship supports that sponsorship activities plays an important role in the success of overseas brand awareness. For instance, the Wanda group sponsorship of FIFA, which was a significant achievement as it was the first Chinese group to become a partner of FIFA, enhanced its brand awareness to international audience (Yang, 2008). The success of sports sponsorship in overseas brand awareness has been evidenced not only in China but also in numerous global companies. The cases below involve Under Armour which used sports sponsorship to enter the UK market, Red Bull in promoting its brand into the global market and Hisense to increase its brand awareness overseas.
Under Armour is a sport clothing and accessories brand founded in 1996 (Under Armour Inc, 2018). Among the various marketing and advertisement strategies the company have utilized, sports sponsorship has been the key factor towards its success. The main partnerships that has led to the company’s success have all emanated from sports sponsorship (Cave & Miller, 2018). In 1999 and 2000, Warner Brothers chose the company to produce the outfits for two movies on American football. In 2001, the company was already thriving well having signed deals with National Hockey League, Major League Baseball and National Football League. Currently, the company has deals with the North American Soccer League and sponsors various stars including Jordan Spieth and Tom Brady. When the company decided to move into the UK market, it utilized sports sponsorship for brand awareness. This was achieved through associations with different sports clubs including Tottenham Hotspur, Welsh Rugby Union, Southampton and Aston Villa. Through the sport sponsorship strategy, the company’s worldwide revenue 1.47 billion dollars in 2011 to 3.96 billion dollars in 2015 (Cave & Miller, 2018).
Red Bull GmbH is an Austrian-Thain company founded by Dietrich Mateschitz in the mid 1980’s (Red Bull, 2018). The major influence for the company’s success is attributed to sports sponsorship, which have even led to the purchase of various sport clubs. The company is popularly known for sponsoring extreme sports to signify its core value of “always pushes higher”. Currently, the company owns two football teams and two Formula One teams. The sports sponsorship and activities has enabled the company to increase the worldwide revenues from 4.25 billion Euros to 5.9 billion Euros in just four years (Cave & Miller, 2018).
Sponsoring the Formula 1 sport has enabled the company to increase its brand awareness to many overseas countries and achieve its global growth plans. Formula 1 racing is widely seen as the ultimate showcase for high-tech performance cars. When global audience are presented with the close connection between Red Bull and Formula 1 Racing, most gets the intuition that the company’s products are equally powerful. This case also applies for Red Bull’s sponsorship of extreme sports, which gives the audience a perspective that the company’s products are equally powerful. The uniqueness of the sports attracts a huge audience, which in turn promotes the brand in the global market.
Hisense is an appliance and electronics manufacturers based in China, boasting the highest TV share in China for the last 14 consecutive years (Hisense, 2018). The recent new subsidiary in Russia increased the company’s overseas branches to 13. The ability of the company to enter foreign markets and gain significant market share is attributed to its extensive sports sponsorship. Previously, the company has sponsored Red Bull Racing F1, Schalke 04 football club, Australian Open tennis Tournament, NASCAR and UEFA European Championship. In April 2018, Hisense became the first Chinese consumer electronics brand to sponsor FIFA World Cup. The company’s overseas sale soared by more than 30% due to the FIFA World Cup sponsorship. The sales growth was highest in the United States and UK with 54.4 and 41.3 percent respectively (Cave & Miller, 2018), with both rises being attributed to sports sponsorship. This affirms the role played by sponsorship activity in entrepreneurship success.
Sports sponsorship in China is an emerging issue as the market can be said to have began after 2008 when the country hosted the Olympics (Petrovici, Shan, Gorton & Ford, 2015). Since then, the number of Chinese companies utilizing sports for brand awareness has continued to rise with companies sponsoring a wide range of sports including football, baseball, Formula 1, rallying and basketball to expand their brand globally (Yang, 2008; Liu, Zhang & Desbordes, 2017). The sponsoring activities are being utilized by the Chinese companies to increase brand awareness both locally and overseas.
Research shows that business opportunities are increasing and booming due to investment and growth in the sports industry (Jia, 2015; Lu, 2016), which is a clear indication of how sponsorship activity has led to entrepreneurship success. For instance, The Chinese Bureau of statistics indicated that the sports in China had increased, also boosting the growth of the economy. Notably, the government plans to invest $ 813 billion in sports by 2025, confirming that there will be more business opportunities in the sports industry (Jia, 2015). Companies sponsoring major events or individuals playing the games market themselves and acquire a name for them. Sponsoring events presents the Chinese organizations with unique promotional opportunities that boosts their sales and brands awareness. Since the sport sponsorship industry is still in its growing phase in China, there exists many opportunities for firms such as liaising with international sports bodies and sportswear sellers. For instance, in 2016, Wanda Group became the first Chinese company to get a top-tier partnership with FIFA (Wilson, 2016). Following the FIFA sponsorship, Wanda Group was approached by the Germany Sportswear maker Adidas (Adidas, 2018) and the World Cycling Body (SCMP, 2018) for partnerships.
Chinese companies engaging in sponsorship activity enjoy several benefits such as brand visibility and increased sales (Santomier, 2008). For instance, Adidas, a German sportswear firm signed a deal with Wanda to promote both football and basketball. The Wanda’s sponsorship activity led Adidas to open stores in Wanda’s mall. The two groups have been able to be successfully enhance their brand awareness and increase their sales. Notably, sponsoring of sports has enabled organizations like the Wanda group to open stores in other parts of the country due to their popularity and visibility in China (Jia, 2015).
Sport sponsorship is facing numerous challenges as well, with the main being difficulties in measuring effectiveness of the sponsorship, and this has been affirmed by many researchers (Pope, 1998; Fahy et al., 2004; Chadwick & Thwaites, 2004; Stotlar, 2004). Being an evolving science and lacking sufficient understanding of the key factors influencing sponsorship outcomes (Kim, Lee, Magnusen & Kim, 2015. Another main challenge is the emergence of legal disputes which have adversely affected the sponsors, for instance, the Suning Commerce Group was sued by FC Barcelona due to the breach of the sponsorship contract; this caused the sponsor to incur losses as they had to pay for compensation. Also, the firms are exposed to some risks like having their named tarnished due to activities that fans and the team members are involved. Hence they have to have a public relations team to control public affairs and protect their image.
Although sports sponsorship has drawn increasingly impressive results that has seen brands growing exponentially (Turley & Kelley, 2014), research on the areas remains limited and neglected (Amis et al 1999; Cornwell & Maignan, 2008). There exist many gaps in the sports sponsorship industry which firms can utilize to enhance their brand awareness, improve customer loyalty and increase their market share, thus leading to an overall success of the organization. However, the companies’ need to come up with strategies that positively influence purchasers during the sponsorship (Hagstrom, 2001), and similarly ensure that the sports participants are loyal to them (Pitts & Slattery, 2004). Many firms in China are yet to embrace the sports sponsorship, leaving only a few firms to provide the sponsorship. The communication industry is failing the sponsors as often they do not adhere to the agreed advertisement time which affects the firm. Mostly the television broadcasters are accused of such practices, making the sponsors to rely on other marketing activities. Unlike in Western countries where marketers and broadcasters are dedicated to ensuring that sports sponsors receive visibility in their countries (Alonso-Dos-Santos et al. 2016). Also, sponsors cannot rely on fan wear such as caps and bags as the market is small; most of their consumers are trend-inspired which makes little firms to invest in that area.
It is suitable for sponsoring firms to be actively involved in contract negotiations and acquire an important role in assuring the success of the agreement. Sponsoring contracts should take into considerations all the aspects of each issue that may affect the deal. Often, this is to prevent unnecessary scandals and disagreements. Notably, sports sponsorship has resulted in the growth of sports widely and mainly in China. The firms (sponsors) give other individuals a chance to participate and grow their skills in the different sports, in turn, the organizations can build their brand and increase trust with the people( Alonso-Dos-Santos et al. 2016). Often, this increases their sales. Hence both the sponsors and team/event (sponsee) benefits from these agreements. Arguably, it is advisable for firms to invest in sports and promote the players as well as enhance the growth of the country regarding economic and infrastructure growth.
Although sports sponsorship has drawn increasingly impressive results that have seen brands growing exponentially (Turley & Kelley, 2014), research on the areas remains limited and neglected (Amis et al 1999; Cornwell & Maignan, 2008). However, it is notable that despite the limited research and lack of full understanding of sports sponsorship, its use has led to entrepreneurship success. Many corporate organizations based in China have been successful through sport sponsorship, examples including the Wanda Group. The questions this study aims to answer are:
– What is the role of sport sponsorship activity to Chinese entrepreneurial companies?
– How does the sport sponsorship industry link to overseas brand awareness?
The research will utilize the Qualitative research methodology. This approach has been accredited for being the best when researching for most of the “why” and “how” questions. Since my topics incorporate understanding “how” sport sponsorship link to entrepreneurship success among Chinese companies, and “why” it is important for companies to understand and utilize sports sponsorship makes the design to fit as the best methodology to use. The qualitative approach is also very beneficial to this research due to its exploratory nature. The qualitative approach helps in understanding underlying opinions and reasons, and further gives insights into the problem (Taylor, Bogdan and DeVault, 2015). All these apply to my research, which aims to understand and provide an insight into how sport sponsorship activity enhances entrepreneurship success.
Qualitative research mainly utilizes interviews and focus groups for data collection. The research will utilize both interviews and focus group to collect data. The interview will comprise of five brand current and previous managers in China including Meizu (top four mobile company in China); JD.com (biggest B2B e-commerce company in China); Lenovo; and Yili Group (top milk product producer in China); Alibaba Sport; and two sport agents from CAA (the most valuable sport agency in the world). Interviews offer the best opportunity to explore the views and experiences of individual participants (Gill et al., 2014) thus enabling the acquisition of primary information from experienced entrepreneurs and venture investors.
Interviews will enable me to gather in-depth detail from experienced sport agents and entrepreneurs (Turner III, 2010). This will enable me have a good perspective of how sports sponsorship is affecting entrepreneurship success in Chinese companies in their efforts towards overseas brand awareness. The interviews will also enable me to learn further through social cues such as body language and intonation. Through interviews (Groenewald, 2004), it will be possible for me to tailor questions that will give me rich information regarding my research questions. The interview will also enable getting an insight into the experiences of the participants on how they perceive the sponsorship and interpret how it affects the entrepreneurship success.
The interviews include five participants who are experienced sport agents from the most valuable agencies, OFO Bike and Lining. OFO Bike is a Chinese startup company that has already indulged in successful sports sponsorship. Most startup companies rarely engage in sports sponsorship, which is mainly seen as a strategy for the well established companies. By interviewing agents from the startup, I will gain substantial information on how the company experienced sponsorship activity and determine whether it positively impacted their brand awareness. The other company, Lining, is a giant Chinese corporate known as the first Chinese company to engage in international sports sponsorship. Having been the first company, and still indulging in sponsorship activity, the company provides a pool of information on various aspects of sports sponsorship. Additionally, the continued use of sponsorship activity by the company is a clear indication that the strategy is successful and profitable.
Focus groups can either be used at the preliminary or exploratory stages of a study (Kreuger 1988); during a study, perhaps to evaluate or develop a particular programme of activities (Race et al 1994); or after a programme has been completed, to assess its impact or to generate further avenues of research. They can be used either as a method in their own right or as a complement to other methods, especially for triangulation (Morgan 1988) and validity checking. Focus groups can also help to explore or generate hypotheses (Powell & Single 1996) and develop questions or concepts for questionnaires and interview guides (Hoppe et al 1995; Lankshear 1993). The use of focus groups is particularly useful when there are power differences between the participants and decision-makers or professionals, when the everyday use of language and culture of particular groups is of interest, and when one wants to explore the degree of consensus on a given topic (Morgan & Kreuger 1993).
The focus group involve 2 marketing analysts from sport agent who are well acquainted with the sports industry. Use of focus group will assist me in gaining more understanding on the linkage between sponsorship activity and entrepreneurial success (Kuban, 2017). It will also help me in in dealing with sensitive issues existing in the sport sponsorship industry as well as helping me in producing qualitative data that I can use in understanding the research topic from the view of experts (Lotich, 2011; Powell & Single 1996)). Use of focus group will also enable me in comparing between the feelings, beliefs and experiences of the two participants, and thereafter use these comparisons in gauging the ability of sport sponsorship to positively influence overseas brand awareness for Chinese companies. Focus groups will also benefit me as they are fast and inexpensive, and produce findings in a form that most users fully understand.
The data analysis will encompass analyzing the data acquired through of five brand managers in China and two sport agents. The analysis will be conducted using the Thematic Content Analysis. This analysis is oriented towards finding a common pattern in a data set. By interviewing seven interviewees, there will be seven different primary data combined to make one data set. By following the thematic analysis steps, it will be possible to define common patterns that will facilitate understanding of the underlying problem and give an insight of possible solutions.