Sponsorship in the European automotive market: an Event Study analysis

Sponsorship has become an increasingly important element of a firm‟s communication mix, with many corporations actively pursuing sponsorship as a communication strategy in an attempt to avoid the clutter associated with more traditional marketing communications. (Meenaghan, 1996)

This marketing strategy enables to reach the audience through “a result in image transfer whereby the sponsor and “sponsee” are associated with each other and benefit from that association”. (Madill, 2009) The aim of this collaboration enables to increase “brand (or corporate) value by means of enhancing brand (or corporate) image”. (Miyazaki and Morgan, 2001)

However the involvement of a second party, that is the activity sponsored, distinguishes sponsorship from advertising and the commercial motivation distinguishes sponsorship from altruism. (Speed and Thompson 2000) For example, compared to mass advertising, sponsorship “engages the consumer by bestowing benefit on an activity which the consumer has an intense emotional response to”(Meenaghan 2001), and it is also more accepted, since people know that many events would not exist without sponsorships.

In other words, this factor makes the “consumer‟s defense mechanisms” lower and this is why they attract so many founds. In fact sponsorship expenditures have risen worldwide from $2 billion in 1984 to $28 billion in 2004. (Carrillat et al., 2005; Koo et al., 2006) In Europe, it has been reported that $7.4 billion were invested on sponsorship programs in 2004. (Seguin et al., 2005)

Due to these high costs managers have to set an accurate sponsorship decision and a development of the sponsorship strategy in order to fulfil the outcomes forecasted. Marketing scholars have proposed that brand image should be considered as a major sponsorship outcome (Stipp and Schiavone, 1996), but in the paper of Tsiotsou and Alexandris (2007) they suggest to include purchase intention and word-of-mouth as well.

The results of the study point out the importance of these outcomes “providing evidence that sponsors should not use solely exposure and awareness as evaluation criteria of sponsorship”. Even if enhancing image and increasing awareness for brands and/or companies have traditionally been the most important sponsorship objectives (Walliser 2003), several other effects have been studied by researchers in the sponsorship field.

From the work conducted by Cornwell, Maignan and Irwin (1997) clearly appears how it is really important to understand that the association sponsor - event sponsored not always achieves the recall effects forecasted by the company. The authors point out how “there must be at least recognition that a company is involved as a sponsor by its target market if any commercial return is to be generated from the sponsor‟s investment”. For this reason the survey conducted by Humphreys, Cornwell, Weeks and McAlister (2003) underlines the importance to distinguish the recall effects from the point of view of the event and of the brand, because they can lead to different images in the consumer‟s mind.

In their study Dees, Bennett and Villegas (2008) focus on the attitude and the goodwill toward the sponsor displayed by the event attendees. The sponsor that develops positive attitudes among fans can have a significant advantage among competitors, “because consumers' beliefs and perceived level of importance regarding event sponsorship influence their level of support for involved corporations”. On the other hand the study assesses that goodwill represents the real “key to transform avid fan into loyal consumers”. Result suggests focusing more on it, because “goodwill variable had the most impact on consumers' intentions to support the corporate sponsors via purchasing behaviors”.

According to Meenaghan (2001), goodwill is what distinguishes sponsorship from various forms of traditional advertising, and consumers recognize and reward companies that contribute to and improve their favorite events. Despite sponsorship literature focused on numerous sponsorship effects, increased sales are often seen as the ultimate sponsorship outcome. (Wilson, 1997) According to Popes and Voges (2000), purchase intention is predicated on two influences: positive attitude toward the brand and brand familiarity. Marketers have to create positive feelings in the consumer‟s attitude, understanding that a positive attitude could be affected negatively by attitudes toward other brands in the choice (Larochee et all. 1989).