Events and Organizational Buying Behaviour - Coursework Example

Events and Organizational Buying Behaviour Name Course Tutor Date Mud Map Introduction The phenomenal growth of event sponsorship (particularly sport sponsorship) in the recent past raises questions as to just how the entire sport sponsorship process is carried out. Event sponsorship involves the provision of resources by corporations to individuals or groups which participate in public entertainment events, such as sports, music performances, art and so on. Both the sponsoring corporation and the sponsored individual or groups derive benefits from the arrangement. The individual or group receives funding for its activities, while the sponsoring organization benefits in the form of marketing opportunities and increased brand name recognition through advertising. Consequently, event sponsorship can be considered as a form of business service, in much the same way that legal advice and insurance are considered as business services. The reason for this concept of event sponsorship is that, in the same way that corporations have to purchase legal and insurance services, they also have to purchase sponsorships from individuals and groups, such as sportsmen and sports teams. However, unlike the purchase of other forms of business services, there is no uniform system of measuring companies’ benefits from event sponsorships. While a sportsmen or sports teams receive quantifiable sums of money from corporations, it is hard to measure exactly what corporations receive in return. Furthermore, there is no uniform process that companies use to select individuals or groups from whom to purchase sponsorship opportunities. Companies are often overwhelmed by requests by event organizers selling sponsorship, and so they have to choose from among a wide variety of potential opportunities. The literature on event sponsorship is mainly descriptive in nature. Therefore this paper aims at coming up with conceptual guidelines on how organizational buying behaviour is used to purchase event sponsorship. Background Information Buying Centre One way in which the process of organizational buying behaviour in event management is understood is through the concept of the buying centre (Arthur, Scott and Woods 1997). According to the authors, the buying centre is comprised of all the individuals and/or groups within an organization who are involved in the process of selecting and deciding which event sponsorship opportunity the organization should purchase, and who perform the actual purchasing of such opportunities. However, the buying centre is not a single, discrete body that makes all sponsorship purchasing decisions. Instead, it is made up of people from different departments within an organization who all share in the task of purchasing sponsorship. Indeed, different individuals in the buying centre may engage in the buying process at different times. For instance, the individuals charged with screening potential applicants for sponsorship are likely to be different from the individuals who make the final decision whether the organization will purchase a particular event sponsorship. Arthur, Scott, and Woods (1997) also demonstrate that different departments within an organization will have to collaborate. The authors cited research showing that the buying centre is usually made up of individuals who perform different roles. Gatekeepers screen out unwanted sponsorship opportunities, influencers affect the parameters of the purchasing decision, deciders make the final choice and buyers handle the actual purchase. These roles overlap and they may conflict each other, so the purchasing process takes time to complete. Decision making process Even though the concept of the buying centre clarifies our understanding of the purchase of event sponsorship, the buying centre is still made up of individuals. Therefore, apart from the organizational processes at work in any sponsorship purchasing decision, we also need to know what selection criteria are important to the people involved in the buying decision. Thus it is important to examine the evaluation of event sponsorship opportunities, as was done by Johnston and Paulsen (2007). The authors claimed that marketing managers often did not have empirical criteria for determining whether one event sponsorship opportunity was more viable than another. According to the authors, most marketing managers simply relied on their intuition to tell them whether a marketing opportunity was viable or not. Such vague selection criteria, in conjunction with the absence of tangible methods of determining the benefits of event sponsorship to sponsoring organizations, suggest that companies may be spending large sums on event sponsorship without knowing whether they are getting a good return on their money. The authors suggest that some of the intuition which marketing managers use to select sponsorship opportunities is based on prior experience with an event organizer. Thus marketing managers are more likely to purchase sponsorship form an event organizer if their previous experience of working with that organizer was beneficial to the company’s marketing objectives. However, the question arises of which criteria marketing managers will use when confronted with an event organizer who they have never worked with before. The authors answer this by saying that marketing managers ask if a new organizer’s event conforms with the company’s own marketing requirements. Time taken to make a decision The fluid nature of the buying centre and the subjectivity of the decision making process referred to above suggest that the decision to purchase an event sponsorship opportunity is likely to take a considerable period of time, as the various parties deliberate and consult with one another. This is discussed by McCook, Turco and Riley (1997) in their discussion of the corporate sponsorship decision making process. The authors state that the time taken to reach an event sponsorship decision is affected by the goals of the company concerned. In their study, the authors identified seven different goals that a company would intend to achieve through purchasing an event sponsorship opportunity. They listed these goals as image enhancement, increased sales, increased brand awareness, community goodwill, favourable media interest, sampling opportunity and employee/sales force goodwill. Thus, one company in the authors study valued increased sales as its main goal in sponsoring events, while other companies gave priority to image enhancement and increased brand name awareness. From the findings of McCook, Turco and Riley (1997), it can be inferred that there may be an element of rivalry between different company departments in the decision making process. For instance, the goals of increased sales and community goodwill are the responsibilities of the sales department and the public relations department respectively, and so they will have to decide which department will take priority in a sponsored event. Consequently, the decision making process may take between 3 to 6 weeks, as departments negotiate to achieve their differing objectives. Rising Sponsorship Costs Another issue that companies should address in the area of event sponsorship is the increasing cost of event sponsorship, as articulated by Pope (1998). The author attributes these rising costs to increased competition between corporate players, causing congestion in the marketing arena, which means that companies are ever on the look out for new marketing vehicles. Once public events had been recognized as opportunities for companies to market their products, they began to compete with each other to secure sponsorship opportunities. It is not unusual for rival firms to sponsor rival sports teams, thus getting the goodwill of the fans which had already been developed by the teams. It must be recalled that any corporate event sponsorship involves two parties, namely the sponsoring organization and the event organizer. As event organizers have become more aware of the business rivalry between firms which could be potential sponsors of their events, the sums of money they ask for in terms of sponsorship have increased. In terms of sponsoring sports teams, such sponsorships are exclusive, so a company will be willing to pay huge sums to prevent a rival from gaining a lucrative sponsorship opportunity. However, even sports events which allow an unlimited number of sponsorships, such as global sports events like the Olympics, can capitalize on business rivalries. Since competitors will want to use a global event as a marketing platform, they will pay whatever the organizers ask for, as they know that their competitors will probably be thinking along the same lines. Pope (1998) cites the example of the 1996 Summer Olympic games, at which the major sponsors were required to pay a sum of US$ 40 million each, a sevenfold increase from the sponsorship figures which corporate sponsors were required to pay during the Summer Olympics of 1984. Sponsorship as Strategy Finally, the importance of strategy in the running of any business cannot be overemphasized. Companies have to develop and implement a wide range of corporate, marketing and public relations strategies, among others. However, the importance of strategy in the selection and purchasing of event sponsorship opportunities has not been sufficiently addressed by academicians, and this prompted a study on the strategic role of sponsorship by Dolphin (2003). The author states that sponsorship can no longer be considered as a purely philanthropic activity, and that event sponsorship has to be brought into the heart of every company’s strategic goals. Of course, it is the goal of every company to make profits, and so it is necessary to show that event sponsorship by a company will contribute to the fulfillment of this strategic objective. Unfortunately, due to the lack of a common framework to measure the success of event sponsorships, for the foreseeable future, companies will continue to purchase sponsorships without being able to state the extent to which the sponsorships achieve strategic goals. In order for both sponsors and event organizers to reap maximum mutual benefit from an event sponsorship, they must make sure that they have a number of mutual goals which they can both achieve through the sponsorship. Therefore, the best approach that an event organizer can use to acquire sponsorship from a company is to identify the company’s goals and to align its event with those goals (McCook, Turco and Riley 1997). Academic and Managerial Contributions So far, in the discussion on event sponsorship, it is clear that the concepts developed by academic research have tended to be based on practical examples developed by management in real life situations. In this sense, it can be said that management is at the forefront of developing new ideas and approaches to the sponsorship of public events. The contribution by management is clear in the prioritizing of goals which they intend to achieve from an event sponsorship, such as increased sales, favourable media interest, sampling opportunities and so on. In addition, marketing management must be commended for putting money into event sponsorship, even when the tangible benefits could not be predicted with any degree of certainty. Nevertheless, a cursory examination of corporate event sponsorship as a whole would suggest that both event sponsors and event organizers are benefitting from it. The most significant problem that remains is how to quantify these benefits. Academicians have made significant contributions to the study of corporate event sponsorship. For example, the concept of the buying centre and the buying grid have greatly increased our understanding of the way in which companies function when they are looking for an event sponsorship to buy. The next step in event sponsorship that should be researched is how to quantify the benefits of sponsorship, particularly the benefits that accrue to the sponsoring organization. While few would argue that event sponsorships can boost profits, it is not known how much of the additional profit is due to the event sponsorship and how much of it is due to other forms of marketing. Thus academicians can add significantly to the available knowledge on this area of study, which will assist the functioning of managers in real life corporate event sponsorship purchasing decisions, and enable them to save time in doing so. Recommendations The findings of various authors suggest that the complexity of the event sponsorship purchase and selection process requires considerable resources which could be profitably put to other uses. Therefore it is recommended that event sponsorship should be considered as a separate corporate activity in its own right. In this way, staff tasked with event sponsorship can focus on collecting relevant information and on coordinating the activities of other departments, who will be free to continue performing their core duties, without being distracted by the complex process of selecting and purchasing event sponsorship opportunities. Such an approach is necessary because of the large sums of money that are invested into sponsorship opportunities, and because of the considerable time that is required to work with different departments to reach a final decision. It is hoped that such an approach will improve company efficiency in this area, and help in the development of a more accountable assessment system of the benefits of event sponsorship. Bibliography Dolphin, R. 2003. Sponsorship: perspectives on its strategic role. Corporate Communications: An International Journal 8 (3): 173-186. Arthur, D., D. Scott, and T. Woods. 1997. “A Conceptual model of the corporate decision making process.” Journal of Sport Management 11: 223-233. Johnston, M., and N. Paulsen. 2007. The relative importance of sponsorship selection criteria: A choice-based conjoint experiment using hierarchical Bayes analysis. In: Thyne, M., “Deans, K. R. and Gnoth, J., ANZMAC 2007 Reputation, Responsibility, Relevance: Conference Proceedings”. “Australian and New Zealand Marketing Academy (ANZMAC) Conference 2007”. Dunedin, New Zealand, (468-475). 3-5 December, 2007. McCook, K., D. Turco, and R. Riley. 1998. A Look at the corporate sponsorship decision- making process. The Cyber-Journal of Sport Marketing 1 (2): 50-65. http://www.cjsm.com ( accessed October 28, 2010). Pope, N. 1998. Overview of Current sponsorship thought. The Cyber Journal of Sport Marketing. http://fulltext.ausport.gov.au/fulltext/1998/cjsm/v2n1/pope21.htm (accessed October 28, 2010). Read More