MKTG Insights: Leveraging Sponsorship During Global Expansion
This week's edition of MKTG Insights was written by 2014 Summer Intern Thomas Ha, who is currently on exchange from the Queen's School of Business in Copenhagen, Denmark. While overseas, Thomas has been a regular contributor to MKTG's social media channels with a focus on providing international sponsorship industry content.
In today’s increasingly global business climate, many organizations have expanded their operations beyond their home country and into uncharted land. Whether it be due to stiff competition in mature domestic markets, or access to opportunity in new ones, entering a new market is viable path to achieve growth goals. To succeed in these new market expansions, brands must establish themselves by building both brand awareness and educating their target on their brand story. Many of these brands have leveraged sponsorship marketing as a key tool in this effort. If planned and executed effectively, using sponsorship as a market development strategy can help brands build equity in a new region by aligning with local properties that are trusted by community members. Ultimately, sponsorship is about connecting with consumers through shared passions; done well, these investments can give a foreign brand a licence to operate in a new market and expedite the adoption process. However, the challenges that corporations face in global expansion and market entry can also manifest in sponsorship. If a brand appears to misunderstand the market or seem out of touch or disingenuous, sustainable success will be unlikely and reputational risk possible.
When a brand decides to leverage sponsorship in support of their efforts to expand into a new market, there are certain key considerations that can help shape a brand’s development of their strategy:
1) Craft a Sponsorship Strategy Based on Market Insights: Brands should avoid adopting a "cookie-cutter" sponsorship style strategy as no market is identical; each has their own unique tastes and preferences. Understanding these preferences is vital in the development of a customized strategy that will have relevance and meaning. While localized customization has significant merit, brands must also be mindful to not contradict (or stray to far from) what made their domestic sponsorship strategy successful in the first place. This balance can be achieved by focusing on having a well thought out high level strategy for the role of sponsorship that ultimately guides the investment. Knowing why the brand invests in sponsorship and ensuring this insight is applied consistently will bring the investments together in a cohesive fashion. Areas where a brand may want to do more research or understand better are those surrounding political and social issues (human rights, social unrest) in new markets. Such issues often result in consumers, not only those in the local market but globally as well, holding sponsors accountable for their actions. For example, Sochi 2014 proved to be a challenge for various sponsors as anti-LGBT issues and negative perceptions were tied to their respective image.
2) Recruit, Retain & Inspire a Globalized Workforce:
Expanding globally for many firms often results in key organizational leaders relocating to ensure smooth operations and continuity. Whether building up an employee base in a new market, or to ensure current employees are adapting well to such changes, sponsorship can be used as a means of communicating and reinforcing company values and build a rallying cry towards the common goal. Sponsorship is a great platform to build employee morale and unify the company. Understanding what is important to employees and then delivering on those aspects with strategic sponsorship activations can help an organization bring its workforce together to work as one cohesive global unit.
3) Establish Relationships With Local Influencers:
Operating in new country, brands will need to forge relationships and leverage these connections to help them settle in the new market. Sponsorship can act as a bridge for a company to establish connections with local influencers that will be critical to the brand’s success. Even if a brand is predominately a B2C brand, forging B2B relationships are crucial to its success (relationships with agencies, suppliers, properties, and even competitors). Brands should look into securing properties that can provide unique, can’t-buy experiences to solidify these important relationships.
Case Study #2: Peak Sports Product Expansion into North America
Peak, a China-based sporting goods retailer, has been actively signing new deals and endorsing athletes in an attempt to create a global brand in recent years. Having experienced stiff competition back home, the 3rd largest sportswear maker (after Li-Ning and Anta), has been forced to launch their brand in international markets. Peak’s strongest business area was in the area of basketball, but has expanded into covering apparel for other sports such as soccer, volleyball and tennis. To support its global expansion, Peak has leveraged sports sponsorship, and in particular, basketball to drive awareness for their brand. Team and league sponsorships within basketball include the NBA, Miami Heat, Houston Rocket, New Jersey Nets, Toronto Raptors & the WNBL (Australia). Athlete endorsements include Kyle Lowry (Toronto Raptors), Shane Battier (Miami Heat), Javale McGee (Denver Nuggets) and Tony Parker (San Antonio Spurs). Peak has successfully used these sponsorships to not only create preference within the basketball community, but to also support its flagship launches, including a basketball-themed store. Its sponsorship of the Toronto Raptors marks the first time a professional Canadian sports team has been sponsored by a Chinese company. With the help of Toronto Raptors and Kyle Lowry (both sponsored by Peak), Peak has been able to successfully activate and create a name for themselves in Canada. Running youth basketball camps, led by Kyle Lowry, has allowed Peak to enter a consumer’s buying lifecycle early, at a stage where they may not have already chosen a preferred athletics apparel maker. Peak is one of the first Chinese-based companies to have successfully used sponsorship marketing, typically a more Western marketing tactic, to support its growth overseas.