How official sponsors have been affected by the activities of ambush - Essay Example

?HOW OFFICIAL SPONSORS HAVE BEEN AFFECTED BY THE ACTIVITIES OF AMBUSH: A CASE STUDY OF INDIA Crimmins and Horn (2001, p. 11) define ambush marketing as the act in which a corporation takes advantage of a well known event like FIVA tournaments in football to popularize itself without an official permit from the concerned party. It is considered to be a form of marketing strategy in which one of the many competing companies associates itself with a particular sporting event, without paying the required fee. The company associates itself directly with the event and it’s participants without an official permit, creating an unfair competition with the official sponsors (O’Sullivan and Murphy, 2000. p.349). The aim of the ambush marketing is to popularize their company by influencing fans to buy their products. They only associate themselves to the event but do not use trademarks of the third party while only suggesting a close connection to the event by creatively alluding themselves to that event. Generally, ambush marketing can be demonstrated in one of the following ways such as through sponsorship of the event’s broadcasting. Lyberger and McCarthy (2001, p. 130) concurs that this will work to their advantage since it will popularize itself among the fans through the televisions covering the event. Secondly, the ambush marketer might also sponsor the event’s subcategories and hence boosting their association through a cost-effective method. Another strategy ambush marketers employ is to buy time to advertise themselves during their competitors’ event. Furthermore they can as well organize for similar but non-sponsored events to run co-currently with the event. Finally, the ambush marketers can opt to buy licenses allowing them to sell their products during the event or offer unsanctioned tickets and hospitality packages to fans of the event. This paper discusses a case study of ambush marketing in India. Case Study Vikrant (2003, p.34) examines India as one of the many countries which have been affected by the activities of the ambush marketers during the 2003 Cricket World cup. One of the cases was triggered by a promotion dubbed Phillips, which was offering Cricket World Cup tickets as prizes. The slogans that were used during the promotion indicated the name “Philips” and they urged interested candidates to buy an audio system from Philips and get one cricket world cup ticket (O’Sullivan and Murphy, 2000, p.366). In addition, the tickets indicated a seating place for someone and the entry number at the gate. This incidence caused a lot of suspicion since the Philips Sponsor had no official recognition among the sponsors of the event. Lyberger and McCarthy (2001, p. 134) explains that during that year the International Cricket Council (ICC) had signed official agreements with nine sponsors who were officially recognized. It came to the attention of the council that the sponsor calling itself Philips was not among the nine sponsors. Consequently, the council presented claims that the Philips Sponsor was trespassing and offering unfair competition to the recognized official sponsors. The sponsors of Phillips were an ambushing marketer and the council filed a suit restraining the sponsor from associating its advertisements to the world tournament (Vikrant, 2003, p. 38). However, this was a belated afterthought as the ambush had already caused a lot of damage to the official sponsors and stopping the adverts could not reverse its gains to Phillips. Matters were further complicated by the fact that a case presented to an Indian court by the council was dismissed on grounds that the information contained in the Philips Slogan was just a form of advertisement (Natal, p. 2003). According to the court, Philips was just looking for a way to attract many people to buy their products, which doesn’t amount to an infringement. It interpreted the information in the slogan as any person purchasing goods form Philips would be awarded a prize, only that the prize was the cricket world cup tickets (McKelvey, 2003, p. 117). The court further noted that Philips had a right to carry out their advertisements freely and that the activities of Philips had no clear chance of creating confusion during the World cup. Natal (2003) concurs with the court’s decision asserting while ambush marking is illegal, one has to understand the difference between passing off and “ambush marketing”. The two are different because in ambush marketing issue of deceit, rather it concerns exploiting commercial opportunities that arise during the event (Vikrant, 2003, p. 40). Examining the court’s view, the conduct by Philips was merely a commercial advertising venture, which is very legal in the law. Furthermore, the court contended that the act favors public interest and cannot be considered illegal. Moreover, there was no usage of the plaintiff’s trademarks. The court further explained that using the words World Cup in association to cricket is just too general. This does not mean that Philips had to get permission from the ICC to do that (Reuters, 2002). Additionally, the words are not protected and thus anyone can use them. Since Philips restricted itself to the words and avoided using protected symbols such as the logos and mascots, no infringement was committed. Natal (2003) affirms that the handling of this case did not go well with the ICC since they felt betrayed by the judicial system. To them they saw it as legalizing ambush marketing to the detriment of official sponsors. The way the judicial systems all round the world have been handling cases presented to them by the complaints has killed the morale of many sponsors. Since they base their arguments on ethical grounds, ambush activities are considered to be legitimate. Reuters (2002) asserts that instead of complaining, event organizers and official sponsors should seek legal redress if they feel that their rights have been infringed by an ambusher. This is simply because by complaining they will not achieve much progress since their cases will always be dismissed (Lyberger and McCarthy, 2001, p. 137). Official sponsors can as well device ways of reducing the available opportunities used by ambushers hence protecting investments in a particular event. We can all agree that the activities of ambush marketing are unethical as it allows culprits to earn undue returns from what genuine sponsors have invested in. Other people may argue that every business has a right to advertise itself during a major event (Reuters, 2002). That may be true though it is very important for every party to follow the right procedure to do that in order to avoid conflicts. Furthermore, it can only be fair to pay a cost in order to get such association since the benefits, which will be realized would be far much higher as compared to the cost. Such ambushing activities have been on the rise and have posed a major threat to the official sponsorship activities (McKelvey, 2003, p. 118). Ambushing activities may be considered to affect official sponsorship in the ways discussed below. Trademark Infringement A trademark is very important in any corporation as it bears all rights and privileges reserved to its rightful owner (Bean, 2001, p.1099). Consequently, it is an illegal act to use a person or corporate trademark without their consent. The case of ambush marketing is very complicated because they do not exactly use the trade mark of the events’ organizer. They only creatively associate themselves with the event but use trademarks and names of their own. By doing this, it is hard for the aggrieved party to take any action to them because you will not have anything to accuse them of (Reuters, 2002). The Indian Cricket event where Philips- the ambusher went scot-free is a classic example of just how complex it is to tackle ambush marketing. According to Bean (2001, p. 1134) and Falconer (2003), such infringement may cause the ambushed (official sponsor) to lose most of their potential audience to the ambusher. This will be a great disadvantage to the official sponsor since he will have paid the rights fee and still doesn’t get the actual benefits anticipated (Hoek and Gendall, 2002, p. 383). The official sponsors end up spending so much on the event but the party reaping the benefits is the ambusher, which effectively kills the morale of such sponsors. Moreover, the organizers of such events have complained that ambush marketing has threatened their capability of sponsoring such events. This is because they are unable to retain sponsors causing a great problem in the field of sports. False Advertising Hoek and Gendall (2002, p. 398) explain that this is done by the ambusher when they popularize themselves using the close association they portray with the event. They sell their tickets and hospitality packages to the fans without the fans knowing that they are not authorized to do so. As earlier discussed in the case of India, Philips popularized their products by merely taking advantage of the Cricket World Cup. Fans were purchased tickets indicating their seats with a gate pass. By so doing they were able to sell their products, nourish their reputation and advertise what they offer (Natal, 2003). This is the primary aim of any sponsor but it is discouraging when it is through unorthodox means. The practice of ambush marketing has been seen to discourage many official sponsors. In some extreme cases, official sponsors have been forced to pull out of the sponsored activities (Natal, 2003). This has been worsened by the fact that they are unable to sue the ambusher since they have no grounds to do that as in indicated in the Philips’ case. The biggest questions then are, “What will happen if they decide to pull out of sponsoring activities completely?” and “Who will be willing to sponsor the games when the cost of sponsoring will be outweighs the expected benefits?” Official sponsors are arguing for the illegalization of ambushing activities, which seems unachievable given the legal technicalities (Hoek and Gendall, 2002, p. 402). Dilution Dilution has to do with reputation of sponsor’s trade mark. The duplicated trademark complicates the consumers’ effort of differentiating the almost similar trademarks. The ambushers in this situation, use almost similar brand trademarks to the one used by the official sponsors of an event. This creates confusion among the audience on the identification of the genuine official sponsor of the event. The ambushers facilitate this through imitating the trademark of the official sponsors or by using the sponsor expression that can mislead the audience (Russell, 2007, p. 9). The main element of dilution is association, where the audience tries to create connection between the signs and the brand and consideration of signs to be similar with the trade mark. There are various conflicting laws and regulations relating to dilution of the trademark. The law protects the purpose of advertising using the trademark because trademark owners’ use a lot of their resources and time in improving the value and credibility of the trademark. The public are also protected by the dilution law although there is no sufficient proof to justify how the law protects the public from brand confusion. The dilution law is also justified as free riding but it is still contradictory since the companies which have spent resources and time in promoting the trademark are not compensated by the law after duplication of their trademark. Nevertheless, for the brand owners to be protected, they have to meet certain conditions and standards (Crow, 1995, p. 234). Ambush marketers use dilution to be acknowledged by the public as the official sponsor of an event. The genuine sponsor invests a lot of their resources to make their brand popular but their efforts are continuously underrated by the ambush marketers (Vassallo 2002, p. 90). Additionally, there is no distinctive law to regulate the dilution activities of the ambusher. All the factors which relate to dilution delimits companies which intend to be the official sponsor in big events from using huge amount of resources to be named as official sponsors. On the contrary, the ambushers should not be the hindering factor towards companies officiating big events. Dilution should be taken by the official sponsor as a challenge towards improving their trademark image to their customers. They should not allow the ambush marketers to benefit from their trademark. On the other hand, the ambushers’ use of almost similar trade mark with the official sponsor enhances quality in service delivery as well as the products sold in the market. Therefore, official sponsors should ensure their trademark is very popular to overweigh the ambusher counterfeit trademark (Christopher 2001, p99). Reverse Confusion This is the scenario where a junior user overuses the market and outdoes the senior user instead of relying on the official sponsor’s reputation. Junior users make this practical by spending much of their time in advertising their brand in the market through using the media, posters, and physical campaigns. The ambushers do not use the sponsor’s brand name but associate their brand with the sponsors’ brand hence escalating their product popularity among the public. The other facilitating factor for reverse confusion is the buying of large number of airtime in the media to overshadow the sponsors’ image in an event. The junior users are also known for using flyer and other simple means of promotion to ensure they color the event for their benefit. In most situations, the so called junior users popularize their brand in big events through explaining to the public how their product can be used alongside with the official sponsors’ products (Edward, 2005, p. 55). The junior users are always a threat to the big official sponsor initiative. This can be substantiated by the fact that, the junior user brand creates confusion to the audience on the identity of the true official sponsors. They are in a position to outweigh the official sponsors because the official sponsor use most of their promotion resources in claiming the sponsorship of the event while the junior users uses their resources to intimidate the sponsors effort. Due to this, most of the senior sponsors are opting to redefine their effort of officiating events for fair and just market competition with the ambush marketers. They do not get the intended 100% outcome of the benefits they expect from the funds they use in sponsoring these activities (Kerry 1995, p. 89). On the other hand, it’s very unethical for big companies which have attained the respect of sponsoring important event to accept humiliation from their juniors. This should be a wakeup call but should not be a justification for regression. The promotion management should ensure they spent their promotion resources wisely to grantee them maximum control of the event. They are also expected to conduct market research before floundering to sponsor any activity to identify and come up with coherent strategies of dealing with those opportunistic ambush marketers which benefit from their brands (Bhattacharje 2006, p. 230). Tort of Interference with Contract and Perspectives Advantages The case in which companies interferes with the agreed contracts for their own self defined benefits is what is referred to as tort of interference. The common elements of tort of interference includes; the availability of the existence of contractual relationship, the awareness of such kind of relationship for the party which bridges the agreement, well planed intention of breaking the relationship, and the expected damages after the termination of the relationship (Bean 1995, p. 54). Additionally, the elements of tortuous that interference with the prospective economic advantages entails; the existence of the relationship, the expected future benefit of the relationship, the ideas of the benefit which will accommodate the relationship, the process of ensuring the relationship is terminated, and the result of the termination of the relationship (Bean 1995, p. 54) With the knowledge of all the tort of interference, most companies decide to withdraw from their relationship to benefit in certain activities. This is a common scenario in big companies who have reached into an agreement with smaller companies which cannot sponsor an activity on their own. The factors which motivate the withdrawal are the greed and inward orientation of big companies. In such cases, the smaller companies undergo a very severe negative impact in their ambition to sponsor big activities (Miller 2010, p 33). In the worst case scenario, the affected companies opt to abandon their effort of sponsorship. Tort of interference mostly occurs just sometimes prior to the time a company is expected to sponsor an activity or at the beginning of an activity or an event. On the other hand, there are some companies which withdraw for economic benefit. They find it more economically benefiting to sponsor an activity without the concomitant of their partners. All these separations are mostly intuited by the ambushers who anticipate benefiting from the activities sponsored by other companies or organizations (Miller 2010, p. 34). Tort of interference with contract and the perspective advantage have been a threat to companies which feel they have the obligation of sponsoring prominent activities and events. They are always inconvenienced when an organization or accompany withdraws from an agreement. They spent a lot of resources as they try to deal with the inconveniences to an extent they don’t benefit from sponsoring the activities (Owen 2003, p. 239). In most cases, being labeled an official sponsor is very expensive and demanding therefore, inconveniences at the eleventh hour are very humiliating and conspicuous. There should be well structured and defined laws to control and protect the companies which are in such agreements and contracts. Contrary, withdraw from the contract should be a motivator of the affected company and should not be an alarm for threat to the big companies initiative of sponsoring big events. Companies with the aim of sponsoring big events should have reserve resources to deal with such complications. Lack of profound management is the cause for threat of sponsorship in the event of termination of a contract but not the actual withdraw (Owen 2003, p. 240) Conclusion Ambush marketers should not be a threat to the entire arena of sponsorship. Sponsoring companies play a very significant role in promoting sporting activities and should be embraced rather than discouraged. The protection of these companies is inevitable and timely. Legislators and other policy makers have dearly failed the world economy due to lack of consistency and well defined regulations to curb ambush marketers. False advertisement confuses the audience and it is tantamount to wrong consumption of products from the ambush marketers. Consumers have a fundamental right to accurate and correct information from the advertisers, which should not be infringed by any unscrupulous marketers. Additionally, sponsors spend a lot of their resources in sponsoring activities and events. They should be assured of their full benefit of their invested resources. On the other hand, to show the important of an activity, the organizations, institution or a company which have facilitated the activity should be paramount. This will hike competition level among organizations seeking events and activities to sponsor. References Bean, L 1995. Ambush market: sports sponsorship confusion: Interference with prospective. London ABC-CLIO Publisher. Bean, L 2001, Ambush marketing: Sports sponsorship confusion and the Lanham Act Advertising Age; Vol.75 (2), 1099-1134. 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International Journal of Sports Marketing & Sponsorship; 3 (4), P383-402. Kerry, L 1995, The increasing strength of the first amendment as a defensive to trademark infringement and dilution, Washington: The Well International Inc. McKelvey, S 2003, Unauthorized use of event tickets in promotion campaign may create new Legal strategies to combat ambush marketing: NCAA v Coors, Sport Marketing Quarterly; Vol.12 (2), 117-118. Miller, N 2010, Events marks: A necessary form of protection against ambush, Vancouver: Whistler Olympic Publishers. Natal, W 2003, Ambush marketing fight at World Cup sinks to new lows, Retrieved March 9, 2012 from: http://www.legalbrief.co.za/view_1.php?artnum=9133. O’Sullivan, P & Murphy, P 2000, Ambush marketing: The ethical issues, Psychology and Marketing; Vol. 15 (4), 349-366. Owen, H 2003, Avoid ambush by abusive marketers. Washington, Bulletin, Inc. 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