Brand sponsoring and valuation effects on brand equity : case study renault sponsorship in formula one and the impact on brand equity

Abstract

Brands have become a major player in modern society. They are everywhere and we can find them in all spheres of our life: economic, social, cultural, sports. Since brands are now recognized as a part of the company's capital as intangible assets, it is important to acknowledge the added benefits for the business. A brand has value if it can translate itself into profit, achieved through consumption of a product or service, given its meaning by marketing and advertising. One way to make the brand well known is to sponsor in !pOrts events. Brand sponsoring in sports events is a worldwide phenomenon, yet it is poorly understood about how it works in reality. There is a gap between how marketing strategy works for sponsoring purposes and the financial aspect, e.g. how do we secure maximum profits and how to value the success of the marketing/brand strategy in financial terms. The impact of communicating brands through sponsoring is clearly visible for marketing purposes and therefore lead to whether the brand has more value by placing it in such events. However, the valuation behind the sponsoring activities itself may not be obvious, even more, the company's strategy to put their brands in the sports events. However, the trend for brand sponsoring becomes an essential part of the business nowadays, especially in sports, which sponsoring should help the business in generating revenue and re-enforcing the sense of brand identity and belonging. The first chapter provides a background about brand sponsoring, the trends in brand sponsoring, identifying the relationship of brand sponsoring with the financing aspect, i.e. the valuation of brand sponsoring in sports events, and also the relationship with the marketing aspects, i.e. the perceived quality of the brand through sponsoring. It also includes the background or Renault, the outline of the framework or the research and the objective established by the researcher, and also constraints that might be encountered further in the case study. The hypothesis is set in this chapter and the emphasis wilt be made to answer the key questions through the research and generating expected results. The second chapter will formalize the data coming from different sources and literature review. This can be obtained from primary resources such as interviews, graphs, statistics, or original documents as well as secondary resources such as websites, reports, academic journals, marketing and finance textbooks, etc. This chapter also includes the history of sponsoring and the origins of Formula One to give guidelines for the research. The third chapter provides the experimental details and theoretical framework, to describe the drivers that maximize the value of brand sponsoring, what are the standards of valuation as to make it a success both for the company who possess the brand and for the sports event by putting it as means of promotion. To assess the quality of data obtained, a comparison with theories would be appropriate to provide a scientific base. In this chapter it also mentioned that some assumptions have to be set in order to simplify the process and methods used for the case study. The fourth chapter provides the results of the research, with tables, graphs, and calculations to support the research. It also includes the discussion about the research, which lays out the assessment for the quality of the data obtained and to obtain the justifications of the qualitative research through focus group discussion. The fifth chapter is the conclusion and summary about the research, whether the objectives stated in the research has been achieved. This chapter also explains limitations encountered in the research, the managerial implications, the opportunity for further research and also recommendations.