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Co Branding Relationships Between Nike And Manchester United Marketing Essay

Paper Type: Free Essay Subject: Marketing
Wordcount: 5069 words Published: 1st Jan 2015

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Branding is defined as (American Marketing Association -AMA) defines a brand as a “name, term, sign, symbol or design, or a combination of them intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of other sellers to target to gain a competitive advantage. (Liz Hall, Terry O’sullivan 1996) competitive advantage is a reason why a customer will choose one certain product over another, this show that a successful brand can lead to a product being chosen over another due to the branding. (Doyle 1993) Stated that as well as seeking to gain an advantage branding was also used as a tool as a defence against other competitors and in the sport market of today it is highly congested and competitive so branding is key.

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The importance of branding is with its ability to create and identity for a product and makes it differentiated from those of a competitor to gain an advantage. Aaker 1991, Stanton 1994 and Kotler 1996 all state that a brand is a distinguishing name or symbol which is used to form an identity for products and differentiate from those of the competitors. A good brand is a sign of the origin of the product and can build a relationship with consumers, but also provides security for a company as it protects against competitors trying to produce a product which appears identical (Nzuki Kithung 2006). Kotler also states that branding also brings added value to a product and in and with the success and hype surrounding current sporting markets and competition there is very little that does not receive some form of branding, as marketers seek to create champion brands.

In modern day markets the definition of a brand has become far more than the stereo typical view that it is just names and symbols, they are now there to represent consumer’s opinions towards products and performance. Brand equity is how successful a brand is in term of financial value to a company within a market Dibb et al (2001). It is also argued however that the value of a brand is in its ability to capture user loyalty and preference over other similar brands (Kotler 2005). This all leads to the belief that a powerful brand is key to the success of any business and through the creation and brand loyalty and brand equity. How this achieved (Shank 1999) is stated that there was a branding process and this is shown below. It has four clear stages (shown below) which are how brands are developed.

Create Brand awareness

Which facilitates a positive Brand image,

Which helps establish a level of Brand equity,

This should facilitate, some form of Brand loyalty.

Step one which is brand awareness is the first necessary action as it is the development of an association between the customer and the brand in enough depth so that it can stand out from other brands in that market (Aaker 1991). Brand awareness is imperative as it is instilling in the minds of the consumers aspects of the branding process which are non image (Clark 1997). Positive brand image is a powerful purchase influencer and is tied to peoples feeling and opinion toward the brand and how it make them feel. According to Aaker (1991) who uses the example of someone who purchases a Mercedes, may perceive themselves to be powerful due to the image created by that brand.

The third stage is achieving brand equity which according to (Motion, Leitch and Brodie 2001) is highly important to the branding process as it can add considerable worth to an organisation. Brand equity is the ability of a brand to gain consumer preference and have high satisfaction. Shank (1999) placed high emphasis on satisfaction and the ability of branding to gain a loyal following for a brand, returning customers. This however is not the only theory on how brand equity is created. Feldwick (2002) believed that brand equity could be split into three parts and that each added to bring about brand equity. The three components were brand value, brand strength and brand description. This approach is also taken in the theory suggested by Washburn, Till and Priluck (2000), they suggest that the creation of brand equity is through brand knowledge and the response of consumers. The approach of Aaker (1996) offers a more in depth look at brand equity. It is called the Brand Equity Ten this approach uses a scoring system for brands and measures them against the categories shown below.

Figure One: Aaker, D. (1996) The Brand Equity Ten taken from – Measuring Brand Equity Across Products and Markets, p105 / 138

This model (Aaker 1996) explains that brand equity is measured across markets and products and gives consideration to both the customer and the market. This study also conceptualises brand equity by examining sub components, which appear in narrower models e.g. Aaker (1991) and Washburn, Till and Priluck (2000). These sub components are then broken down to ensure this study is less generalised and more focused. However like nearly all brand equity models there does need to be some flexibility to ensure that it suits each individual brands needs.

It is argued (Motion, Leitch and Brodie 2003) that a broader approach to brand equity is the ability to develop a relationship with a number of stakeholder groups, branding is the development of a clear bond with the groups. The importance that the brand is perceived in a positive light by the consumer, is highlighted by (Berry, cited By Motion et al, 2001), this is through communication and during the creation of brand meaning.

Sponsorship

In the previous literature a base has been laid out discussing branding and brand equity, it is now important to look at a marketing tool used in passing on the brand to the consumer. Sponsorship according to Meenahan (1991) is the investment of cash or kind in an activity, so that they can then exploit the commercial potential of activity.

Sponsorship within the sporting world has experienced rapid growth over recent years as companies seek out new forms of marketing communication to enhance brand image or introduce new initiatives or products. A positive association to a brand name has become so imperative to a successful marketing strategy that the use of sponsorship has sky rocketed, this is from the perceived benefits that come from being able to channel a carefully planned flow of communication towards a desired target audience. The 1984 Olympic Games in Los Angeles is widely recognised as the origin of corporate sponsorship. This Olympic Games was the first ever to make a profit and to be funded by private capital (Tripodi, 2001).

The UK market for sponsorship grows steadily year on year and in the keynote report 2006 was valued at in excess of £428 million (Drawer 2006). The UK has also won the right to stage the 2012 Olympics and with such a vast audience they stand to bring in a figure of £625 million in sponsorship, this figure is far in excess of the UK annual figure. This is also a fraction of the overall £2 billion pounds which will be brought in through sponsorship, TV rights, merchandising and ticket sales (sportbusiness.com 08/02/10 http://www.sportbusiness.com/news/160169/london-2012-sponsorship-interest-soars)

Sponsorship is a highly effective tool used by companies so that they can bring their products or services to the public’s attention, using association to an activity to gain a positive image. Advertising is used by companies to communicate in a direct manner to the public and to create a clear, coherent and favourable image for a brand. There are several definitions of sponsorship Amis et al (1999) define it is as a strategic investment which seeks to gain a competitive advantage. Meenaghan et al (1999) refers to sponsorship as the right to associate with the profile or image of an event, to take advantage of this to gain commercial benefit.

Bennett 1999 stated that sponsorship was favourable publicity for a business or its brands on a specific audience, through the use or association with an activity which is not directly associated with the businesses activities. Businesses use sponsorship in an attempt to improve the perception of the brand (Wilmhurst 1993). It could also be seen that sponsorship is a method used by businesses to avoid the clutter of the business environment and create a channel to target there defined audiences, such as a certain gender or age group (Cornwell and Roy, 2003).

The potential of sponsorship as a marketing tool has become far more apparent to investors in recent years. This has lead to sport sponsorship becoming a way in which companies are able distinguish themselves from the glut of conventional advertisment, which is thrust upon people on a daily basis. Sponsorship therefore cuts through the overload of messages aimed at consumers and reaches the challege of delivering the relevant message to a target audience (Meenaghan 1998).

To relate sponsorship to a more applicable format, the work of Shilbury et al (1998) states in there research, how sport sponsorship is “an effective tool to enhance corporate image”. Cornwell and Roy (2003) stated that if you linked a brand to a team or an event then via sponsorship this would enable the business to gain consumer recognition, this would be achieved by associating with teams that have close links to your target audience. There have been several notable studies into the effects of sponsorship on consumers (Uggla 2006, Daneshvary and Shawer 2000). Schuman and Garner (1986) stated that 53% of there participants made purchases based on sponsorship. This is due to the target of sponsorship being the spreading of the businesses image and brand to a wider, new and different audinece. Which will in turn encourage a purchase from a whole new audience who will base there purchase on information recived from sponsorship (Bennett 1999).

Successful sponsorship gives the added value that a business strives for through the creation of a unique identity of the brand. The unique identiy and the close links with a sport allows for consumers to personally identify with this new brand position in a favourable manner, leading to added value for the business ( Mcdonald (1999). A focus also exists around the ability of a sport to create a feeling and emotion with a consumer, the creation of a personal attachment. This can be related to the emotion and energy of the sporting event being transfered to to the consumer who then relates it the brand (Shillbury et al 1998). This aproach from Shillbury et al provides an overview of sponsorship in relation to sport which is highly applicable to this study.

It is however highly important to remember and realise that not all sponsorship agreements turn out to be positive for the sponsor. Studies have shown that brand association to individuals (celebrity) can have a negative impact on consumers perception of the brand (Carlson et al 1994). This is clear through recent events where Tiger Woods one of the most famous men on the planet and before this year one of the most marketable. Due to the amount of sponsorship deals he was involved in which included one single sponsorship deal from Nike worth $40million a year. The estimated damage to his sponsors income was $12 billion (University of California 2010), this is a stagerring figure and just shows the power of sport sponsorship and the daming effect negative sponsorship can have.

Match up Hypothosis

Having looked at branding and sponsorship there is now a need to examine whether the two can be related and function together. The match up hypothosis should help discover whether there is fit between the two. The match up hypothosis (kamins 1990) is the suggestion that endorsments become more effective when a “fit” exists between the endorsed product and the endorser. Most of the research which has been carried out has focused on the variable of physical attractiveness and monitored the effects on the endorser.

The examination of endorsers and their effectiveness is important for marketers and academics (Kaikati 1987). There have been a number of studies carried out which examine the effects of celebrity endorsements and look at under what conditions they are most effective. (Kamakura & Agrawal1995, Freiden 1984).

These studies focus on a number of central themes which are often the impact of celebrity on a certain brand. The results of this research (Friedman and Friedman 1979) showed that there is a variance from product to product on the effectiveness of celebrity. The study by Kamins 1990 took the research to a more in depth level, from his finding he stated that endorsers can be more effective if a “fit” exists between endorser and endorsed product. There is further support from (Pervan et al 2000) there work looked at the impact of celebrity and brand congruity and the ability to recall. There results showed that recall was improved when the brand and endorser were compatible.

This theory of a match up hypothesis and the idea of a celebrity and brand relationship can be transferred easily to the brand sponsor situation. It is taken that the sponsorship will be more successful if there is a fit between both parties who enter into the agreement ( Xing et al 2006).

Corporate Co-brands

The purpose of a corporate co brand is not to unlike sponsorship, its main purpose to extend brand image and to develop the brand while not devaluing the corporate brand equity. Sponsorship however is a pure agreement which put simply is the exchange of money for the rights to an event. There is however evidence of success, where organisations have taken their brands in to new markets having joined forces to exploit each others’ brands. This is evident in the case of Manchester United and AIG, both parties have made it clear that the arrangement between the two parties was made to help boost their presence within the Asian market (Chadwick 2007). This collaboration does not just allow each party to enhance their brands, it also allows for the strengthening of each corporations brand values. The brand extension can also be created for the benefit of both parties (Shocker 1995) which is evident in the case of Manchester United and AIG.

Corporate co-branding is an ever developing function within the marketing world, which is reliant upon the involvement of two well established and highly recognisable brand. They will enter into an agreement, which will seek to develop brand awareness, increase market share and quality through association. Baumgarth defined it as “the branding of a product or service by two or more established brands with significant customer recognition” (Baumgarth 2000; 117p). Kotler et al (2005) shares a similar view of co branding focusing his belief around the bonding of two separate brands to bring to market a single product from the two brands. An example of this is the marketing of Mac 3 turbo by Gillette and Duracell batteries together as a single product offering, as a co branded product offering. Balmer (2001) defines the corporate co brand as a conscious decision taken by senior management. He outlines that co branding has the ability to filter the organisations identity into a proposition which is properly prepared and clearly defined to further the brand.

The major challenge of co branding is the ability to move the two co branding partners together into a co branding proposition. It is the difficulty of aligning the two company’s values and beliefs as each company as an individual will operate under whole different set of values. According to Blackett and Boad (1999, cited Motion et al, 2001) there are four main categories of values that need to be considered when entering into a co branding agreement. The main issue is with creating a co brand is the ability to align values but through this there is also the opportunity for a brand to enhance their current values through the adoption of new values (Uggla 2006). It is the selection of brand values in potential partners and there areas of commonality which best provide the basis on which a co brand can be founded (Balmer and Dinnie, 1999). Balmer and Dinnie also propose that there are three virtues which are carried across in the formation of a co brand;

Communicate clearly and consistently the co-brand promise

Differentiate the co-brand from its competitors

Enhance the esteem and loyalty of its customers and stakeholder groups and networks.

The difference between Sponsorship and Co Branding

In order to differentiate between sponsorship and co branding an understanding of both topics must first be held. Sponsorship as previously defined by Meenahan (1991) is the investment of cash or kind in an activity, so that they can then exploit the commercial potential of activity. Whereas Co branding is, the branding of a product or service by two or more established brands with significant customer recognition” (Baumgarth 2000; 117p).

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A distinction between the two is key to this investigation and Blackett and Boad (199, cited by Motion et al 2001) were able to draw a clear distinction of the two. They felt that sponsorship was an association entered into for the simple exchange of money to enhance brand image. Co branding allows for a development of a traditional sponsorship relationship and moves from a transactional process of a financial exchange, to a process whereby each organisation in the agreement will extract the values of the others forming a new unique brand offering.

Co brands occur when there is a opportunity arises to develop a long term relationship and as noted by Chadwick and Thwaites (2004) that this has helped sporting events in allowing them to secure the necessary funds to become viable over a long period of time. Therefore the emergence of a number of co brands in the sporting sector as they see the potential to develop long term successful relationships, beneficial to both parties.

It is important though not only to consider the benefits if these long term agreement but also the potential dangers and how they can have a negative effect on the parties involved. The negative results of co branding are caused by the lack of a fit between the two companies (Shocker 1995). There is also the possibility that there was just not enough commonality between the parties and as a result one party’s values had a negative effect on the other as consumers related the negative values of one brand to the other. There is also the theory that co branding can confuse the consumer as they don’t get the message of the new product brought to market by the co brand as they are distracted by the individuality of the individual brands. This all leads back to Shockers’s theory that there must be a fit between the two organisations.

Self Image concept

The self image concept is in relation to the image which a consumer relates to them self and has a strong power over there purchasing behaviour (Onkvisit and Shaw 1987). This means that decision made by a consumer can be affected by factors such as where the product was made and whether that is consistent with the image they perceive themselves in (Scott and Heath 1997).

This is highly applicable for companies entering into a co brand relationship; both parties must have taken into account the impact that this partnership will have not only on the new joint brand but also their own original brands. The work of Sirgy (1986 Cited in Heath and Scott, 1997) states the importance of self concept theory in relation to behaviour of consumers, he related it to the fact that consumers are more motivated to purchase when they feel the products image matches their own self concept. This theory basically stated that the image held by a consumer of themselves is highly apparent and effective in their purchasing decisions. This is therefore in co branding as perception of both brands must be accounted for before entering into an agreement as to ensure not to isolate their current market by changing their image. In the application to a company it would be assumed that their goal is to match their brand image to an exact chosen market, as to be able to target a specific audience (Kapferer 1992).

Methodology

Research

Within this study the use of qualative empirical research was decided upon to be the most appropriate method of data collection. This method was detrermined to most aprropraite for the study in question and would alow the researcher to develop the study to the depth required for this study. There is support as to why qualative research is aprropraite for this study, rather than quantative. Denzin et al (2005) states that qualitative researchers seek to answer questions which stress how socials experiences are formed and they are developed.

There would also been a number of constraints to have been considered in a quantative study, such as the cost, time and location. As a result of these considerations the decision was taken to complete two forms of research, focus groups and a literature review, both of which will now be discussed. There was also an attempt made by the researcher to gain some research material from the two companies in question directly. However neither company returned any information and this meant that the information on Nike and Manchester United was sourced from various alternative sources.

Literature review

The literature review was performed as a tool to gather relevant information on the chosen topics (Sekeran 2003) and is essential to the study. This is a highly important part of the research process and allows the researcher to build his knowledge of the subject and the subject specific research questions. The information was gathered from topic specific websites and books and online academic journals. These were all used to build up the information base on the topic of co branding for the study. A literature review can reveal the answers to the research questions set (Bryman 2001) however in this specific study it is highly unlikely and the lietature review provides the foundations for further research into the given topic.

Focus groups

Morgan (1997) states that the role of a focus group is to develop social interaction and self discolosure of the participants withing an environment which is structured into a group to utilise all participants and encourage interaction between all participants to generate higher input of there views, experiences and feelings. They have been around since the late 1920’s having been used in the social sciences, but they did not come to the for front of the marketing world until the 1980’s (Ruyter 1996). As focus groups are a qualative data collection technique they allow for the use of a group to generate information and this is achived through high levels of interaction and each member building on each other ideas to develop a more in deopth discussion.

Focus groups have been defined by many theorists over the years Barbour et al (199) for example defined a focus group as discussions to explore specific issues. Although a focus group is a similar to a group interview it is a far more in depth study and allows for interation between the participants to create data which is unlike other group interviews. This is furthered by Greenbaum who states that focus group are designed to have people from similar social dempgraphics with similar buying attitudes, they are then invited to join into discussion on a particular topix. The aim of the study is therefore to develop an understanding of why these choices are made by consumers and discover what drives there beliefs.

There has been some debate about the ideal size of a focus group with different academics suggesting different sizes. It was suggested by Greenbaum (2000) that the ideal size of a group would be between seven and ten members. This was similarly supported by Merton (1990) who suggested a lower minimum of five but the same maximum of ten. There is arguments for both large groups and small groups and these must be considered in the choice of size. Krueger (1988) for example argues that a smaller group of participant would allow for a greater understanding of the topic and also would see a greater gain from the group in terms of input per person. However the maximum and appropriate number of participant is in most dictated by the situation and time constraints of the study (Bloor, Thomas, Frankland and Robson 2001). In the case of this study the decision was taken to perform three focus groups each of which will involve the participation of five or six people.

There are thought to be four main objectives of a focus group, to understrand the consumer vocabulary, to generate ideas, to unearth what consumers needs, attitudes and perceptions are and also to ensure that the finding of quatative studies are understood (Burns and Bush). There are viewed to be an appropriate method of data collection for a study of this sort based on the literature reviewed so far. The ultimate benefit of this type of data collection if the quatity of and quality of data that can be collected in such an efficient manner ( Crabtree and Miller 1999). It is not only this but it is also the fact that focus groups are extremely cost effective and in term of time are very efficient manner in which to collect high quality qualative date (Stewart et al 2006). Rather than the alternatives which could have taken much more time and incurred significant cost for example through the use of personal interviews.

(Morgan 1997) The main advantages of focus groups come from the two major factors which define a focus group, these come from the research method and the disticly unique factors which are the focus being on the researcher and there ineraction with the group aswell as the actuall interaction of the group members. The discussion which occurs between the group creates the opportunity to generate large amounts of data and also allows a platform for communal knowledge to be shared and developed further to create a more in depth response to the focus group.

As with all research method focus groups does have a number of flaws. The first of which is the simple logistical factor of getting the correct number of people in the same room at the same time(Crabtree et al 1993). This was a big consideration in the design of the researchers focus groups and lead to the choice to use a venue where it could be ensured a large congreagation of people at one point. There is also the fact that as with all quatative studies the information gathered is limiting in accuracy and not as accurate or reliable as that which a quantative study may offer. There is also the obvious fact that because the group discussion is lead by the researcher himself the discussion could be pushed in certain directions which would bias the results.

However the benefits of focus groups far outweigh the disadvantages and therefore for this study it has been decided appropriate to use focus groups group for the purpose of primary data collection. This is further supported by Greenbaum’s view that focus group are highly effective due to there ability to change and evolve from group to group to help answer the research questions posed.

Sampling

The sampling for the focus groups was selected primarily from three different areas of country, Durham, Sheffield and Stockton. This was down to restrictions on time and money, therefore it was easier to construct the focus groups with local participants to the location of the researcher. A more conclusive study with a more wide spread reach would have perhaps been more appropriate but was impractical due to the restrictions faced by the researcher.

Three focus groups was decided upon and was felt to be appropriate for this study, this decision was also based on the restrictions of time which were placed on the study. This is however not a drawback as there is no set amount of focus groups which must be conducted (Bloor et al 200) and these three groups will produce a significant amount of highly relevant information.

There were two main drivers in the recruitment stage of the focus group participants, these were based on two main objectives. The two objectives which were identified were that the participants should firstly have a background knowledge and understanding of the company Nike and Manchester United as a football club. The second of objective lead in a different direction, rather than knowledgable participants it was deemed to be worthwhile including participant who had limited knowledge of the two companies and would therefore bring a exterior viewpoint, this would allow for analysis of the impact which the two companies have creteated upon people outside the traditional markets which they operate in. Knowing that each group required a balance of people with varied knowledge of the subject it was then possible to send out emails inviting selected indivuals based on the knowledge of the companies. It was deemed appropriate to select a number of participant who were Manchester united fans as they would have strong views on the company, however carefull action was taken to not over balance the groups with Manchester united fans as not to gain a bias insight. The final groups were chosen based on knowledge of subject and location and three groups were designed to bring a balanced argument and insight into the subject.

The only drawback which was encountered was in the inability to gain a direct input from Nike or Manchester United. This was despite numerous attempts to gain contact but there lack of reply to emails and letters meant that information had to be sources from other avenues of information. This could be viewed as a barrier to the study but it meant that the information which was recovered from the journals, websites and newspapers was highly applicable to the study.

 

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