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Review & Critical Thinking Questions • • • • • ANSWER EACH QUESTION CLEAR AND WELL DEVELOPED. NO CITES OR PLAGARISM READ THE OTHER ATTACHMENT TO BE ABLE TO ANSWER CORRECTLY Minimun of 5 lines each Sport and marketing language to be used 1. Why would a potential sponsor be interested in an organization's market reach? 2. Why do you think people in general are affected by celebrity endorsements? 3. Discuss three factors a company must consider when attempting to find an endorser for their products. 4. Name a celebrity who you think would make a good endorser. Why would this person be a good spokesperson, and for what product(s)? 5. Why might an endorser want to limit the term of an endorsement contract with a company? 6. Why do you think the FTC creates laws governing celebrity endorsements? Whom do these laws benefit? 7. Explain why celebrity endorsements are risky agreements for companies. 8. Do you think the fact that Lance Armstrong has raised nearly half a billion dollars for a cancer foundation makes what he did any less immoral? Should his sponsors have considered this fact before pulling their contracts with him? 9. Why do you think Nike continued its contract with Tiger Woods but not Lance Armstrong? 10. Do you think the brands that were previously associated with Lance Armstrong will suffer as a result of their past sponsorship? Should they? UNIT 7 SPORT Sponsorships vs. Endorsements: What's the Difference? It's easy to make the mistake of interchanging the words "sponsorship" and "endorsement," but in reality they are two very separate elements of the sports and entertainment marketing world. If you'll recall, we briefly discussed these terms in the second unit of this course. We'll review the definitions of each word now before we delve deeper into their meanings and applications. A sponsorship is a form of advertising that consists of supporting an event, entertainer, or sports team in exchange for publicity. This support can come in the form of monetary donations, or a sponsor may choose to supply the venue for the event, the uniforms for the athletes, or other commodities that benefit the team or entertainer. On the other hand, an endorsement is an individual's public support for a commodity. Famous athletes and entertainers are often paid for their statements of support for a particular product because it creates awareness for the product and may drive fans to purchase the product or refer it to their friends or family members. Benefits of Sponsorship In the best-case scenarios, sponsorships create win-win situations for the business or corporation acting as the sponsor and the team, athlete, or entertainer receiving the sponsorship. From the sponsor's perspective, the sponsorship is a promotional opportunity. The bigger the event or the more popular the team, athlete, or entertainer, the more potential there is to build brand awareness and get their logos, advertisements, and products in the limelight. In essence, sponsors are piggy-backing on the appeal of the individual, organization, or event they're sponsoring in order to get in on some of the publicity. Sponsorships can also distinguish a company from its competitors and establish them as good citizens in the eyes of the organization's supporters. Companies sponsor competitors and sporting events in order to increase their brand awareness. The benefits of a sponsorship for athletes, entertainers, or teams are pretty clear. The sponsor sees value in their popularity and, therefore, is willing to pay or provide tangible goods and/or services in exchange for the opportunity to showcase their brand alongside them. This support often enables an event such as a concert or sporting event to take place, whereas it would otherwise be impossible to pull off. In other cases, the sponsorship may help to fund training or materials for future events or programs. This is the case with college sports, for instance. Of course, football is by far the most popular sport within the college landscape, and the bowl games present the biggest opportunities for corporate sponsors to get their brands in the forefront of the public eye. Sponsorship Proposals Organizations may seek out funding by submitting sponsorship proposals to various corporations. Athletes, entertainers, teams, and organizations looking for funding to hold a specific event or in order to accomplish a certain goal will actively seek out sponsorships. This can often be an intensive, time-consuming process, but when done correctly can pay off in the form of valuable corporate sponsorships. Typically, sponsorship proposals will be written and delivered to those companies identified as being a good match for the organization. A good match would be a company that has the necessary funds to be a sponsor and one that shares a similar target market as the team or organization seeking funding. Once an organization has identified several potential sponsors, they will need to create the sponsorship proposal. This document details the needs of the organization as well as the benefits of sponsorship for the company. Although sponsorship proposals can be quite diverse depending upon the organization seeking sponsorship as well as the specific circumstances, it will typically consist of several key components. EXECUTIVE SUMMARY The executive summary is the very first section of the sponsorship proposal. It should identify the organization seeking sponsorship as well as its achievements and market reach, or estimated number of consumers the organization is able to market to. For instance, a college football team seeking sponsors might detail the number of games they won during the past season and how many viewers typically tune in to watch them play. This information will give the company a good idea of the potential they will have for increasing their brand awareness through a sponsorship with the organization. The executive summary should also detail the amount of funding the organization is seeking and summarize the benefits of sponsorship for the organization. Because many companies receive numerous sponsorship proposals, the executive summary gives them a quick overview of the proposal. After reading this section, the company representative in charge of sponsorships should have a good idea of whether or not the proposal is worth further consideration. The objectives section of a sponsorship proposal details the goals the organization will accomplish with the sponsor's funding. OBJECTIVES Obviously, any potential sponsor is going to want to know how their funds will be put to use. The objectives section of the sponsorship proposal details exactly what the organization hopes to accomplish through the sponsorship and precisely how the money will be spent in an effort to accomplish these goals. For example, a basketball team may want to invest in new training equipment to help them improve their game or make improvements to their arena to attract more fans. In the objectives section, each goal will be listed and aligned with an estimated dollar amount that it will cost to achieve each goal. SPONSORSHIP BENEFITS Although many sponsors genuinely want sports and entertainment organizations to succeed, from a business perspective, their primary concern is what's in it for them—that is, how will they benefit as a company as a result of sponsoring the organization? The sponsorship benefits section of the sponsorship proposal will help the company answer this all-important question by outlining exactly what they will receive in exchange for funding the organization's objectives. This can include any number of promotional opportunities including the right to use the organization's name on the company's commodities and marketing materials, media coverage at the organization's events, and the right to place their company logo on the organization's uniforms and ancillary products. EXCLUSIVITY How beneficial do you think it would be for Pepsi to enter into a sponsorship agreement with American Idol? Because Coca-Cola is already a major sponsor of this hit talent show, it wouldn't be advantageous for Pepsi to partner with them as well. That's why sponsorship proposals typically include an exclusivity section which lists all other sponsors who have signed on with the organization. That way, companies can ensure that they're not sponsoring the same organization as one of their competitors. EVALUATION STRATEGY Sponsors often want to have the ability to evaluate the results of a sponsorship agreement. Thus, a sponsorship proposal often lists some options as to how the results might be best measured. For example, consumer surveys distributed after an event could give the company the opportunity to determine how their brand awareness increases as a result of sponsoring the event. Evaluation strategies such as these can help a company determine whether they want to amend the sponsorship agreement or continue the sponsorship according to the original plans. Endorsements Like sponsorships, celebrity endorsements are big business as well. According to Business Insider, corporations collectively spend about $50 billion a year on these big-name endorsement deals, and apparently, they pay off a good portion of the time. Harvard Business School studies conducted in 2010 revealed that celebrity endorsements can increase sales of some products by up to 20 percent. Companies have a pool of athletes, musicians, and actors to choose from, so just how do they go about choosing which one will endorse their commodities? The answer is a complex one. WHAT MAKES A GOOD ENDORSER? Because of their popularity, entertainers, athletes, and even coaches often make good endorsers for a particular company's product or services. Endorsements are a risky business, however. They have the potential to increase brand awareness, sales, and revenue for a company, but on the other hand, when they seek endorsements, companies are placing their brand in the hands of the endorser, at least to some extent. Therefore, the sales of the product being endorsed as well as the reputation of the brand or company itself are on the line. As a result, companies must take many factors into careful consideration when choosing an endorser. Some agencies have pared the decisionmaking process down to an exact science. For instance, Celebrity DBI is an index which determines a celebrity's ability to influence consumer purchasing decisions. In 2011, the index ranked the top 10 celebrity endorsers in terms of influencing potential as follows: 1. Oprah Winfrey 2. Will Smith 3. Bill Gates 4. Morgan Freeman 5. Bill Cosby 6. Betty White 7. Tom Hanks 8. Denzel Washington 9. Robin Williams 10. Sandra Bullock Popularity Because of her immense popularity, Taylor Swift receives multi-million dollar endorsement deals. First and foremost, in order to be an effective endorser, the individual must be popular. The primary purpose of endorsements is to increase the visibility and appeal of the product or service being endorsed. Therefore, the more popular the endorser, the more favorable publicity the commodity will receive. Thus, an actor who appeared in a single movie 20 years ago who few people remember probably wouldn't get many endorsement offers. However, celebrities who are current household names might get paid millions of dollars to endorse a single product or product line. Taylor Swift, for instance, ranked number one on Forbes' list of top-paid celebrities under 30, bringing home approximately $57 million between 2010 and 2011, thanks in part to her endorsement of CoverGirl's NatureLuxe cosmetic line. Likeability Popularity alone isn't enough for a star entertainer or athlete to attract big endorsement offers from companies looking to promote their commodities, however. Another important factor companies consider is the individual's likeability. Someone who is popular but either lacks charisma or has been ostracized by a large portion of the company's target market, for instance, would not make a good endorser for the company's commodities. Take, for example, the case of Justin Bieber. Although he has managed to gain immense popularity among pre-teen girls, he has earned just as much disdain from pre-teen boys (who are likely just jealous) as well as from music critics who question whether he truly has the vocal chops to be a deserving chart-topper or if it's really just innovations in digital music technology that allow him to sound like he can sing. Thus, while Bieber might make a good endorser for companies targeting tween girls, he won't likely receive many endorsement offers from brands outside that narrow market. Companies must weigh the risks and benefits to their reputations before signing on with celebrity endorsers. The Risk Factor As we discussed earlier, putting their reputation in the hands of a celebrity endorser is a big risk for companies. After all, a celebrity's popularity waxes and wanes by the minute, and a celebrity who is extremely popular one day might fall from grace the next, taking the company's product and name down with him. Therefore, companies try to minimize this risk by choosing celebrity endorsers who are least likely to experience a drastic drop in fan approval. For instance, when considering a celebrity, a company may take into account the individual's past behavior. After all, the past is the best predictor of the future; if a star has been arrested or sent to rehab multiple times, then the odds are pretty good that these types of incidents may occur again in the future. That's why stars like Robert Downey, Jr., who has battled drug addiction on a very public stage, and Lindsay Lohan, who has gone to jail multiple times for driving while intoxicated, won't likely be receiving any endorsement offers any time soon—if ever. CASE STUDY: LANCE ARMSTRONG Professional cyclist Lance Armstrong lost all of his endorsement deals in 2012 after admitting to taking performance-enhancing drugs. Lance Armstrong is the most recent and possibly one of the most shocking examples of a celebrity endorsement gone wrong. The famous cyclist and former seven-time Tour de France winner has been stripped of all of his titles and endorsements after being accused of taking performance-enhancing drugs and then covering it up by giving himself blood transfusions. Just one week after a scathing report by the International Cycling Unit was released, Armstrong lost all of his major endorsements including Nike, 24-hr Fitness, and sunglass brand Oakley, the last to disconnect itself from the fallen athlete. Initial estimates indicated that Armstrong will lose at least $30 million a year as a result of these lost endorsements, but he will likely get to keep the earnings from past endorsements. RELATIONSHIP WITH THE PRODUCT Of course, just because a celebrity is über-popular, likeable, and stable doesn't mean that he or she will make a good endorser for every brand or commodity. The celebrity's relationship with the brand must also be taken into consideration. For instance, Taylor Swift makes an excellent spokesperson for CoverGirl because it's pretty obvious to anyone who is the least bit observant that the star wears makeup. The celebrity pop star would probably not make a good spokesperson for Craftsman tools, however. While it may make for a fun commercial for the rest of us, Craftsman's target market (i.e., men who need reliable tools) won't likely be convinced that a dainty 22-year old billionaire has any knowledge whatsoever of what makes a good skill-saw. In order to be effective, an endorser must have a believable relationship to the product he or she is endorsing. Furthermore, a recent study by Margaret Campbell, professor at the Leeds School of Business, found that celebrities' negative attributes were underscored when they attempted to endorse an item they had little perceived knowledge of. For instance, when asked what they thought of celebrity Jessica Simpson, respondents had both positive and negative opinions. On one hand, they thought she was fun, but they also reported that they found her to be a bit ditsy. When these same respondents viewed advertisements featuring Jessica Simpson as a product's endorser, they associated both the positive and negative associations with products that the star seemed compatible with, but only the negative associations with products that she seemed incompatible with. For example, the respondents may have thought a perfume brand was both fun and ditsy when endorsed by Simpson, but they perceived a pocketknife brand as only ditsy, not fun. LAWS REGARDING ENDORSEMENTS FTC laws prohibit endorsers from making false claims about a product. In addition to considering a potential endorser's influence on their brand, a company must also take into account the laws governing endorsements and other testimonials. According to the Federal Trade Commission (FTC), statements made by celebrity endorsers must be factual and must be based on personal experience with the product or service. As of 2009, revisions made to the FTC guidelines also state that both the company and the celebrity may be held liable if advertisements make false or deceptive claims. Furthermore, any "material connections" (i.e., money or items exchanged between the company and the celebrity) must be clearly disclosed. In other words, it must be made clear to the audience that the celebrity is being paid or otherwise compensated for endorsing the product or service. ENDORSEMENT CONTRACTS Once a company has agreed to hire a celebrity entertainer or athlete to endorse one or more of their products and/or services, an endorsement contract must be drawn up by an attorney for both parties to sign. There may be a period of negotiation prior to the signing of the contract during which both parties (i.e., the company and the endorser) discuss what they hope to gain from the endorsement agreement and decide upon details such as exactly which commodities the celebrity will endorse and precisely how much compensation he or she will receive in exchange for doing so. Although each endorsement contract is unique, in general, these contracts will contain the following elements and clauses: Due Diligence Typically, the Due Diligence clause states that the contract will be reviewed prior to signing to ensure that it is not in violation or contradiction of the FTC laws, the sport's governing body (when applicable), or any other contract that the endorser is currently bound to. The due diligence clause guarantees that the contract is legal and binding. Term The term of the endorsement contract refers to the length of time that the celebrity will endorse the company's specified products and/or services. There are many considerations that must be made when determining the proposed term of the agreement. For instance, if the celebrity is young and there is the potential for him or her to have a long and successful career, then it would be advantageous for the company to pursue a long-term agreement and lock in a figure for annual compensation. However, if the endorser believes that he or she might have greater endorsement opportunities in the future as a result of increased fame, then he or she may want to limit the term of the contract or include a clause that allows for increased compensation relative to his or success. Celebrities may be required to make public appearances to comply with their endorsement contracts. Services The services clause of the endorsement contract clearly states what the athlete is expected to do to fulfill the terms of the endorsement agreement. This could include any number of promotional services such as giving speeches; making public appearances; participating in radio, television, or print advertisements; wearing the company's logo; or using the company's products or services. Name and Likeness Th ...
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School: UIUC




Sports Marketing
Student Name



Sports Marketing
1. Why would a potential sponsor be interested in an organization's market reach?
From the perspective point of a sponsor, sponsorship is usually a venue to promote. When the
event is bigger, this increases the chances of sponsors coming in. However, sponsors may be
attracted by the popularity of the athlete. In case the entertainer is widely known, high chances
are that sponsors will be available. Popular teams say a football team that is very popular will
keep attracting potential sponsors. This is because the sponsors would like to involve in a winwin situation.
2. Why do you think people, in general, are affected by celebrity endorsements?
They are a big business just like sponsorships. Corporations tend to spend heavily on
endorsements of big names. They pay off a good amount of money at a particular time.
Furthermore, celebrity endorsements can rise of some goods or services up to twenty percent.
Companies have particular celebrities that endorse their products.



3. Di...

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