Visa Olympic Sponsorship Marketing - Term Paper Example

Visa Olympic Sponsorship Marketing Student’s Name: Instructor’s Name: Course Code: Date of Submission: 1.0 Introduction The ultimate aim of any business is get return from their investment. There are various approaches that companies have employed so as to gain market leadership. One aspects of marketing mix that have been applied by companies so as to enhance their corporate or brand image and subsequently improved sales is event sponsorship. In this aspect companies sponsors events in the hope of utilising the platform of marketing mix such as advertising customer contact points and sales outlets. The one major event that has attracted such massive sponsorship deals is the Olympics and its flagship entities like summer Olympics, winter Olympics and Paralympics. In regard to sponsorship, one of active sponsors since 1986 has been Visa International. The company has revolutionised the concept of sponsorship by adopting an integrated approach so as to enhance their reputation and improve sales annually. This paper examines Visa Olympic sponsorship marketing. 2.0 Visa Brand and Attributes making it a Bad Fit or Good Fit 2.1 Visa Brand Brand image differentiates the products and services of a given business organisation from those of its competitors (Ghani, 2012, p.147). For instance, the “differentiation” component of a brand image is used by business companies to provide their products with equity and added value for strength and competitiveness. It is this “differentiation” in a brand image that enables companies to produce products which effectively satisfy the needs and preferences of the customers in a given market segment. Branding is an important exercise in guaranteeing market leadership by enabling business organizations define product oriented market lines for the various market segments. Consistency is critical in this process so as to guarantee customer value (Datta 1996, p.799). Visa ranks as the most identified brand in financial services globally as a result of being recognised by millions of consumers and merchants. Moreover, the brand has been able to gain across board acceptance among numerous cultures and languages while offering payment services. This has seen them grow to be the most trusted payment system as a result of guaranteed security and convenience (Visa, 2012a). Interbrand an influential research institution in brand value offers insightful information about the company. After the company debut in the Interbrand’s list in 2008 where they occupied position 100, the company rose to position 94 in 2009 and 82 in 2010. Lucio (2010) observes that Interbrand ranked the company 82nd in the list of best global brands. The Interbrand by 2010 estimated the value of Visa International to be $ 3.9 billion. These statistics show the value of Visa brand in the global market. 2.2 Attributes making it a Bad Fit or Good Fit For a company to enjoy that positive reputation from their brand image, it is critical for the marketing managers to have mechanisms of achieving the same within the eyes of customers and other prospective clients. To attain a good fit, the company since 1986 has embarked on sponsorship of Olympics games. They do these in the hope of improving brand value, sales and stock returns (Kim, nd, p.2). Sponsoring Olympics has worked in the favour of the company and, hence making it a good fit factor. To show how Olympic sponsorship makes visa brand a good fix, it would be prudent to examine the sales impact it has had on the company from the 2012 London Olympics. Spend on Visa card during the Olympics increased in all sectors that they pay services for (Visa, 2012b, p.1). According to Visa (2012b, p.1), during the opening ceremony of the London Olympic, spend on drink on Visa card grew with 8.3% as compared to the same week of the previous year (£ 30. 4m in week 30 2011 to £ 32. 9m week 30 2012). Further, the sales on sporting goods shops on Visa card grew week by week from £ 44.2 m in week 29 2012 to £48.7m in week 3012 of 2012. The tremendous growth was also recorded for annual basis where the sale grew by 6.2% from £ 45.9m in week 30 2011 to £ 48.7m in week 30 of 2012. This show how engaging in in olypic sponsorship is a good fit. 3.0 Olympic as a Central Part of Visa Strategy and how they have leveraged on the same Abrahamsom, Forsgren & Lundgren (2003, p.4) notes that sponsorship gives a company leeway to enjoy promotion mix. One important aspect of sponsorship is the ability to inform through advertising, supply through sales promotion, create positive lasting image through public relations and interact with customers through personal selling. The other positive aspect of promotion is on the ability to build an image for the company by having psychological effects on consumers (Kim, nd, p.3). According to Kim (nd, p.3), image of a company matters since it allows the consumers to relate with it and thus, creating psychological attachments. Under these approaches then, promotion is able to support company’s product and services by reaching target market and consequently increasing sales. The company has leveraged and exploited the opportunity in numerous ways. How the company has leveraged on being a tier one/ The Olympic Partners can be best explained on how they have utilised the platform through marketing mix so as to expand their market share through sale, advertise and create customer contact points. The first major leverage is by ensuring that they are the only financial system accepted in the games (Kuhn, 2012). Armis & Cornwell (2005, p.187) identifies how Visa has leveraged on the sponsorship opportunity. The first approach they note is that from 2000 has embraced the concept of destination marketing. In this approach, they collaborate with the host country, city and tourism associations to enhance travel and commerce. This kind of approach ensured that Visa recorded additional member revenues of US $ 1.55 billion. The same trend was recorded in 2001 in Salt Lake City where the card volume increased by 30%. Moreover, to enhance their reputation, the company has engaged in corporate social responsibility by sponsoring children to Olympics in 2004. 4.0 Rationale for Additional Outlays “Activating” a sponsorship is a central issue to Visa. In realisation of this important factor, the company might be lured to shore up their spending on the same. The aim of this sector would then would be show if would be prudent if Visa spent twice of what they are doing now as sponsorship so as to maximise the value of the sponsorship. The first approach to this question would be NO answer. The reason being that the fee of $ 100 million they are currently paying to IOC is for TOP and this is the highest category. This implies that it wouldn’t make sense since IOC will not give them extra conditions and leverages so as to continue locking out competitors. If increasing the amount given to IOC will give them more leverage and turn into expanded market share and ability to lock out competitors it would be good decision to invest in the same considering that by investing in Olympics their market share has grown from 33% in 1986 to 53 % in 2004. However, while doing this, return on investments and marginal returns on investment should be considered. The first reason is that the process is expensive as it cost approximately $100 million. The second reason behind this argument is based on the fact that to ward off competitors who would wish to topple them in financial service category. A case example for supporting this is how Samsung managed to topple Motorola in 1997 and what Visa themselves did to American express in 1988 (The Economist, 2012). 5.0 Challenges The challenges that Visa is facing in extracting value from sporting related sponsorship are numerous. The first is in the hope of locking other competitors so as to have their ATMs within the vicinity can lead negative perception of discrimination of other card holders. A case example is the London Olympics where temporary visa ATMs were allowed to operate while those of competitors were switched off. The next challenge is the ability of other competitors to use sport themed advertisement on other platforms without necessarily forking huge sums of money to IOC or how unofficial brands align themselves with the games. This trend should worry Visa because they can suffer the consequences that Adidas has suffered as a result of Nike having related adverts which do not infringe on IP rights. In addition they have decided to sponsor athletes directly. However visa also has realised this potential is sponsoring athletes directly (New Legal Review, 2012). 6.0 Conclusion The emerging theme out of the questions is that by accepting to be top sponsor of Olympics in financial services category has given Visa Company to leverage on various opportunities so as to lock out competitors and increase their market share. However, challenges like discrimination and how unofficial brands align themselves with the games is an issue. References Abrahamsom, J., Forsgren, T. & Lundgren, H. 2003. Sport sponsorship as a marketing communication tool. Lulea University of Technology. Retrieved on 13 November, 2012 from: http://epubl.ltu.se/1404-5508/2003/133/LTU- SHU-EX-03133-SE.pdf Amis, J. & Cornwell, T. B. eds. 2005. Global sport and sponsorship. Oxford: Berg. Datta, Y. 1996. “Market Segmentation: an Integrated Framework.” Long Range Planning 29(6): 797-811. Ghani, N.H. 2012. “Relationship marketing in Branding: The Automobile Authorized Independent Dealers in Malaysia.” International Journal of Business and Social Science 3(5), 144-154. Kim, J. nd. The worth of sport event sponsorship: an event study. Journal of management and marketing research. Retrieved on 13 November, 2012 from: http://www.aabri.com/manuscripts/09382.pdf. Kuhn, K. 2012. Transmedia: the 2012 approach to sponsoring the Olympics. Retrieved on 13 November, 2012 from: http://blogs.imediaconnection.com/blog/2012/07/30/transmedia- the-2012-approach-to-sponsoring-the-olympics/. Lucio, A. 2010. Visa viewpoints: Visa ranks #82 on Interbrand’s best global brand list. Retrieved on 13 November, 2012 from: http://blog.visa.com/2010/09/15/visa-ranks-82- on-interbrand-best-global-brands-list/. New Legal Review, 2012. The Olympic struggle to guard brands during the 2012 games. Retrieved on 13 November, 2012 from: http://www.cpaglobal.com/newlegalreview/5283/the_olympic_struggle_to_guard_. The Economist, 2012. Victors and spoils: the Olympic Games are big business. Who wins, and who loses? Retrieved on 13 November, 2012 from: http://www.economist.com/node/21559326. Visa, 2012a. About Visa: Brand and Sponsorship. Retrieved on 13 November, 2012 from: http://corporate.visa.com/about-visa/brand-and-sponsorships-index.shtml. Visa, 2012b. News: United in Olympic fever. Retrieved on 13 November, 2012 from: http://www.visaeurope.com/en/newsroom/news/articles/2012/united_in_olympic_fever.a spx. Read More