Understanding the Impact of Sports Sponsorship: A Case Study on Pepsi and the Indian Premier League
Introduction
Recently, PepsiCo has announced that they will no longer sponsor the Indian Premier League (IPL). This decision comes with a financial loss of approximately Rs. 396 crore, spread over 5 years. This article will delve into the benefits that companies like Pepsi aim to achieve through sports sponsorship and will also explore the reasons behind Pepsi's withdrawal from such a lucrative sponsorship deal.
The Benefits of Sports Sponsorship
Building Brand Value
One of the primary reasons a company like Pepsi spends millions on sports sponsorship is to build brand value. Continuous exposure through the IPL would help consumers associate Pepsi with the premier cricket tournament, thereby enhancing brand recognition.
Daily Association and Brand Loyalty
Consider the famous slogan: "Pepsi-Pepsi-Pepsi" repeated 10 times a day. Gradually, the repetition would make one prefer Pepsi as a beverage option. The same principle applies to sports sponsorship. When consumers are exposed to the brand name repeatedly, it reinforces brand loyalty and makes them favor Pepsi when choosing a drink.
Case Study: Pepsi and the Indian Premier League
Pepsi's IPL Sponsorship
Pepsi was the official sponsoring company of the Indian Premier League for several years, paying a hefty sum of Rs. 396 crore for 5 years. Despite the significant investment, the results have not been as favorable as expected.
No Positive Sales Impact
According to the latest update, Pepsi's marketing division is undergoing rebranding. The IPL sponsorship might not have significantly contributed to sales growth. This could be due to the negative publicity and controversies surrounding the IPL in recent years, which consumers may have avoided due to the association with Pepsi.
The New Sponsor: Vivo
Vivo's Entry
As of now, Vivo, a mobile company, is the new sponsor of the Indian Premier League. This shift in sponsorship may indicate a different approach to sports marketing. Unlike Pepsi, which has a strong focus on soft drinks, Vivo could be focusing on a different demographic or market segment.
Key Factors and Implications
Controversy and Brand Perception
The IPL has been marred by controversies over the years, including financial irregularities and performance issues. These factors could have negatively impacted Pepsi's brand perception. Sponsorship in such a context can be risky, as consumers might associate the brand with the negative aspects of the event.
Marketing Strategy and Rebranding
The decision to rebrand Pepsi's marketing division suggests that the company might be revisiting its overall marketing strategy. The IPL sponsorship might have been part of this strategic review, leading to its withdrawal.
Market Dynamics
The dynamics of the sports sponsorship market are constantly evolving. New entrants like Vivo with their specific market focus may offer more targeted and effective marketing strategies compared to long-term, broad-based sponsorships like Pepsi's.
Conclusion
While sports sponsorship is a powerful tool for building brand value, the decision to sponsor such an event must be carefully considered. Companies need to weigh the potential benefits against any negative publicity or market conditions. The case of Pepsi and the IPL highlights the complexity of sports sponsorship and the importance of strategic decision-making.