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John Fahy is the Professor of Marketing in the University of Limerick and Adjunct Professor of Marketing at the University of Adelaide. He is an award winning author and speaker on marketing issues around the world.

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Entries in Emotional Value (2)

Friday
Jun072013

Does Sports Sponsorship Lead to Increased Alcohol Consumption?

The current debate on whether the sponsorship of sporting events by alcohol brands leads to increased consumption is interesting in that it demonstrates how both sides are being somewhat selective with the facts. This is perhaps not surprising as the stakes are high. The Irish government’s proposed Public Health (Alcohol) Act may see the removal of alcohol sponsorship from major sporting events by 2020 with significant implications for both the brands and the events themselves.

 

 

As of now though we just have the debate, and the related fuzzy arguments on both sides. The main proponents of the ban are the Steering Group advising the Dept. of Health who claim that alcohol’s involvement with sport leads to increased consumption. However so far, no specific research studies are being identified so these claims are difficult to verify. The medical profession is on much firmer ground when it talks about the increased health problems, particularly among young people, that are being caused by excessive alcohol consumption. The statistics support this position but the extent to which sports sponsorship is a key driver remains difficult to pin down.

 

On the other side are the sporting organisations who worry about potential loss of revenues as well as the drinks brands who have been somewhat less vociferous so far. Drinks companies tend to argue that marketing communications does not lead to increased consumption and that the impositions of bans will have a negative impact on both the events and jobs. They are also likely to point to their drinkaware campaigns that seek to promote responsible drinking. But this position is hardly credible either. The Irish rugby football union (IRFU) indicated that it generates €9m annually in sponsorship. Are companies likely to spend this kind of money and not expect a return on their investment?      

 

As politicians and other ‘experts’ weigh into the debate, the confusion merely increases. A better approach is to answer some specific questions. First, does sport sponsorship increase the sales of the sponsor’s brands? The evidence is that it certainly can. For example, when Budweiser sponsored the Winnipeg Jets in the Canadian hockey league in 2012, it set itself a target of a five per cent sales increase. With a budget of just $500,000 for the sponsorship, it generated a sales increase of 15 per cent. While this is just one example, it shows that a well-run sponsorship can lead to increased sales and this is the commercial imperative that most brands are working to anyway.

 

Second does sponsorship lead to increase brand awareness and brand preferences. Again, these would be normal objectives of marketing communications. For example, it would be very interesting to study how many drinks brands are eight year old boys familiar with and did this familiarity arise from a sporting connection? In terms of brand preference, sport is full of appealing emotions – success, fun, camaraderie and so on and it occupies a big part of the lives of young males, a key target market for drinks brands. Embracing these positive emotions is very appealing for drinks companies as well as for other brands.

 

But any claim that sports sponsorship is giving rise to excessive drinking by young people would be much harder to substantiate. Such behaviour is likely to be the outcome of a wide variety of factors ranging from all kinds of marketing activities by different drinks brands right through to changing social norms among young people. Disentangling such a multiplicity of factors is difficult. The debate is likely to rumble on but sports organisations should not underestimate how valuable their events are to potential sponsors. Consumer goods marketers are always on the lookout for positive emotions to connect their brands with!

 

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TV's Enduring Appeal

Monday
Jul232012

The Demise of Lucozade Energy Cola

Well that didn’t take long! Launched with some fanfare in October 2011, Lucozade Energy Cola was the latest in the long line of pretenders to the throne jointly occupied by Coke and Pepsi. But in recent months it has quietly slipped off the shelves and into a Cola hospital to hang out with the likes of Virgin Cola, Red Bull Cola and others, though it is still available online. Two questions are worth looking at in this case. Why did Lucozade enter a space where so many others have tried and failed and what explains the enduring dominance of Coke and Pepsi?

 

 

It would have been fun to have been a fly on the wall when the good people at GSK were discussing this possible brand extension. Was it all gung-ho and groupthink or were there dissenting voices? Only a select few know the real answer. We did have some seemingly compelling arguments to accompany the brand’s launch. It had apparantly compared very favourably in taste tests! The Cola market in the UK is worth £3 billion and even getting just 2 per cent of that would grow Lucozade’s annual sales by 50 percent! But there also seemed to be some doubts. It was initially a ‘limited edition’ and it wasn’t always clear whether it was going to be positioned beside colas or other energy drinks in the shops.

 

So why did it all go wrong? Well for a start, if the primary rationale for the launch was that this brand tasted better, then it was doomed from the word go. Cola has never been about taste no matter what consumers might tell you. Even Coca Cola themselves proved that way back in 1985 with their disastrous decision to launch New Coke which bombed despite extensive testing. Colas are pretty horrible sugary drinks but they sell so well because they are connected in the consumer’s minds with positive images like youth, fun, happiness and good times through years and years of powerful advertising and imagery from the leading brands. This level of emotional value takes a long time and lots of creative effort to build which explains why the big two stay strong while the pretenders fall by the wayside.