Academic journal article International Journal of Sport Finance

An Analysis of the Olympic Sponsorship Effect on Consumer Brand Choice in the Carbonated Soft Drink Market Using Household Scanner Data

Academic journal article International Journal of Sport Finance

An Analysis of the Olympic Sponsorship Effect on Consumer Brand Choice in the Carbonated Soft Drink Market Using Household Scanner Data

Article excerpt

Abstract

Diverse notions on the effectiveness of sport sponsorship have been discussed to some degree in literature on consumer psychology and shareholder wealth. However, there is little investigation on a micro-level that provides empirical evidence for financial returns resulting from sponsorship. In fact, few studies have explored issues related to the evaluation of sponsorship return on investment (ROI), particularly regarding the scope of measurement. This study investigates the effects of a major Olympic sponsorship on consumers' actual soft drink choices. It analyzes Nielsen Homescan purchase data for over 10,000 American households for a 3-year period spanning Coca-Cola's sponsorship of the 2006 Olympic Winter Games and the 2008 Summer Games. Our analysis indicates that Olympic sponsorship may have generated significantly greater consumer choices for Coke over Pepsi during the Games. The effectiveness of sponsorship is statistically supported, even after controlling for sales increases attributed to traditional media advertising. It demonstrates that evaluation of sponsorship ROI is empirically achievable.

Keywords: sponsorship, brand choice, return on investment, household scanner data

(ProQuest: ... denotes formulae omitted.)

Introduction

Sponsorship as a form of commercial activity is clearly differentiated from philanthropic sponsorship (Meenaghan, 1991). First, a sponsorship program requires the sponsor to deliver a contribution, in cash or in kind, to the sport organization. Second, the sponsored activity is not a part of the sponsoring company's own commercial functions. Finally, the sponsor expects a commercial return for its investments. Based on these elements, Meenaghan (1991) defined commercial sponsorship as "an investment, in cash or in kind, in an activity, in return for access to the exploitable commercial potential associated with that activity." (p.36)

Basically, this perspective accentuates the mechanism of sponsorship as a process of value transaction, such as product and service bartering, direct financial support, or indirect investment for some marketing initiatives. That is, unlike philanthropic donations, strategic commercial sponsorship of athletic events seeks to fulfill marketing objectives in exchange for giving cash or non-cash resources to sporting events. To be specific, sponsors cite various commercial reasons for sponsorship: increased brand awareness (Javalgi, Taylor, Gross, & Lampman, 1994), stronger brand identification (Chebat & Daoud, 2003), image transfer from sporting events to corporate sponsors (Deane, Smith, & Adam, 2003; Gwinner & Eaton, 1999), building positive attitudes (Dees, Bennett, & Ferreira, 2010; Lee & Cho, 2009; Roy & Graeff, 2003), and increased sales (Cornwell, Pruitts, & Clark, 2005).

In recent years, the worldwide sponsorship market has maintained its rapid and consistent growth as the number of transactions and the value of sponsorship have significantly increased. According to Cameron (2009), the worldwide sponsorship market in 2007 is estimated to be over $37.7 billion. Among all the sponsorship categories, including arts and other types of events, sport sponsorship is the leading category, accounting for 84% of worldwide sponsorship expenditure in 2007 (Fenton, 2009). Sport sponsorship has grown exponentially because of its unique attractiveness to marketers (Aaker, 1996) and due to historical events such as the Public Health Smoking Act, which made it illegal to advertise tobacco products in traditional mass media (Kropp, Lavack, Holden, & Dalakas, 1999). Today, sport sponsorship has become a dominant industry as a fair number of major sporting events heavily rely on revenues from sponsorship agreements. In particular, the Olympic Games are one of the most popular event types in the industry. According to the International Olympic Committee (IOC), 34% of its total revenues for the 2001-2004 period came from its flagship corporate sponsorship agreements (i. …

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