The economics of marketing tools in non-profit sports organizations

Introduction [1]

The relevance of research. According to the United Nations, the global sports industry accounts for approximately 3% of global economic activity [12]. According to a PWC report (2021), the sports market will be worth $145 billion by 2025 [13]. Consequently, sport is seen as large-scale business by many people, including academic researchers. Sport continues to serve an important sociocultural role around the world, focusing on communities, health initiatives, etc. There is no doubt that sport is central to the lives and activities of countless people and organizations – fans at the stadium, runners taking part in a race, sponsors or local residents benefiting from a sports club's community engagement program. For non-profit organizations that predominate in the sports industry of the Russian Federation, the issue of attracting additional funds with marketing tools is important, since the lack of funding, the independence of sports organizations in market conditions, the complication of the nature of the work non-profit organizations perform and the increase in the volume of activity require a significant expansion of the sphere of economic knowledge.

Coverage of the problem. Authors of the paper studied and used the scientific works in the field of economics and the functioning of non-profit organizations: Kotler F. [7] (Kotler, 2011), Malygin A.V. [8] (Malygin, 2018), Pochinkina A.V. [10] (Pochinkin, 2006), etc. Analytical articles on the research topic were also examined.

Feasibility of the study. New methods are formed in the management of non-profit organizations in the modern world. The economics of a non-profit organization remains an insufficiently studied subject. While in recent years, an important part of the work of specialists in the field of physical culture and sports has become the provision of a variety of health services, provided, as a rule, on a commercial basis in competition with similar organizations. In order to operate successfully in modern conditions, specialists in the field of physical culture and sports services are required to have economic knowledge of various aspects of the organization’s activities in a competitive environment, therefore the formation of marketing tools for a non-profit organization becomes a necessary element of attracting resources and promoting the organization in the market of physical culture and sports services.

The purpose of the study is to develop recommendations for improving the system of using new marketing tools and linking them with the economic opportunities of sports non-profit organizations.

To achieve this goal, the following tasks were identified:

– analyze the marketing tools used by sports organizations in their activities;

– highlight the main technologies for activating sponsors in the sports organizations’ activities.

The scientific novelty of this study lies in the substantiation of the author's concept of the development of economic features of marketing tools formation in non-profit sports organizations.

The theoretical significance of the study is reflected in the results of the study, which include consideration of technologies for attracting sponsors and additional financing for the further formation of marketing tools in non-profit sports organizations.

The practical significance of the proposed research is presented by an analysis of modern features of the development of the Russian sports organizations market and the formation of a new approach to attracting additional financial resources for the functioning and development of non-profit sports organizations.

This material was first published in the Russian scientific journal “Creative Economy” [15]. Due to the significance of the research, the article was translated into English for publication in a specialized international scientific journal.

This article presents directions, approaches and methods of research, general scientific methods, as well as special economic techniques and methods.

Sports are widely covered in the media. Publicity is defined as an important communication technique used in PR to create and report news in the media, usually newspapers, television, radio and magazines. Promotion is viewed as the process by which messages are conveyed to the target market to induce them to buy a product or gain favor with an organization.

In the sporting environment, media relations are used to ensure a regular positive presence in the media, to promote new sporting products and services and to assist athletes and enhance their reputation.

The limited amount of research that analyzes the role of media relations in the sporting environment emphasizes the use of the PR function as a means of conveying positive messages to the public in order to influence their opinions. Media relations tactics used by sports organizations should be aimed at providing opportunities for journalists to cover events, providing access to staff and players, and ensuring television programs reach key audiences [1] (Alekseev, 2015). Although this seems to be an effective approach, organizations’ emphasis on establishing relationships with the media often fails to include public opinion in the communication process.

Thus, sports organizations appear to be primarily interested in shaping public opinion rather than receiving feedback and interacting with the public.

Research examining the relationship between public relations and the marketing function is limited, and further analysis will provide further insight into the manner in which these tools coexist within sport organizations.

Along with advertising and promotion, scholars also recognize that there is a direct correlation between the amount of news a sports organization can generate and its success in attracting sponsors. It is also argued that the media relied on sports to attract audiences and obtain sponsorship [3] (Perfileva, Belikova, Borisenko, 2020).

In addition to helping sports organizations achieve their sponsorship goals, media relations remains an important function in sports celebrity management. As media and fan attention grows, athletes themselves become celebrities.

Athletes are considered an integral business asset to sports organizations, attracting fans, sponsors and media, which in turn justified the large salaries they receive as part of the team. As an example, football player Cristiano Ronaldo is the highest paid athlete in the world with an annual salary of 120 million US dollars [14]. Celebrities such as Ronaldo are considered the face of their sports organizations and are used to promote the sport. Consequently, it appears that the media remains an important means through which athletes can promote themselves to the masses.

Such correlation between the media and sports has led to the creation of a specific position within sports organizations dedicated to media coverage.

Sports public relations experts agree that there is a need to encourage sports managers to consider other important public relations functions, such as crisis management, issues management, and government relations. In addition, by focusing on the media, experts ignore the issues of determining the target audience of a sports organization and providing feedback to their audience. Public relations is considered to be more than just relations with the media, and deals with a wider range of functions for managing the audience involved in the activities of a sports organization [2] (Polyakova, Belikova, 2020).

Two-way communication involves listening and engaging the public rather than simply passing it on. Two-way communication is becoming increasingly important as the public expects the organization to take their views into account. Additionally, scholars recommend that organizations move away from one-way communication methods that seek to control messages and persuade the public, and instead adopt communication methods that encourage open communication.

It could be argued that this approach is particularly important in the sports industry, given that audiences are considered different from other companies and their customers due to their high sense of loyalty, and sometimes irrational commitment, to their teams. Research on sports organizations and two-way communication suggests that it can be used to successfully build relationships with the public [4] (Ivanov, 2013).

Increased competition from the entertainment industry has forced sports event organizers to strive for long-term sustainability by developing a more strategic approach to brands. This led to the application of some elements of brand development to the field of spectator sports, modeled in three stages: identity, positioning and strategic planning. While revenue growth may be the bottom line benefit that can be derived from a strong brand, effective brand management provides four key benefits (Figure 1).

Figure 1. Benefits of Strategic Brand Management

Source: Compiled by the authors.

The concept of brand equity has received particular attention in the marketing and public relations sector. Numerous academic studies highlight the complexity of the concept of brand equity, particularly its multidimensional nature and the current lack of consensus regarding its conceptualization and measurement.

Brand equity is mainly measured using the variable “brand awareness”, understood as either “brand awareness” or “brand image”. Assessing brand impact, awareness of the various elements of the marketing mix can also inform the level of brand equity. The higher the equity of a sports brand, the easier it is to differentiate it [5] (Kandaurova, Lobanov, 2013).

“Strong” brand equity also helps a brand expand beyond the sporting context by creating a “brand community” based on a structured set of social relationships among the brand's fans. This connection can have different origins. First, it may be explained by self-identification in relation to the sports brand and why spectators buy, consume and wear different team-related products and ultimately contribute to the brand equity of the sports team.

The main brand associations used in advertising and PR activities include: non-playing personnel associated with a particular sport; quality, productivity or team success; history of a specific sports team; the stadium and community the team calls “home”; specific characteristics that the team demonstrates on the field of play (characteristics of team play); identification marks associated with a specific sports team (brand name); the organization's dedication to the team's fans; food and drinks at the stadium (concessions); communication with others, such as friends and other fans of the team; competition between teams known to be historically significant competitors (rivalry); a person’s stable affiliation with a particular sports team (commitment).

Marketing activities also increase the value of the club's brand, in particular by increasing brand awareness and creating and managing the brand image in relation to end customers (fans and spectators) [6] (Kochina, Zaytseva, 2020).

Thus, authors can conclud that spectator-based brand equity in sports ultimately consists of brand awareness and brand associations, and these brand components can have a significant impact on the sports organization’s operations, its advertising campaign and the formation of its PR plan. activities.

Several factors can influence the effectiveness of sponsorship. One important factor is congruence between the sponsor and the sponsored. This fit may be perceived in terms of the sponsor's product relevance or functional benefit, as well as in terms of personality or image.

Sponsorship deals can represent an important part of the income of sports teams, which have benefited from their great success and their on-field performance.

However, despite all the successes, sponsorship is currently undergoing significant changes. Evolution is about operationalizing and leveraging new marketing opportunities available to sponsors. In addition, sports sponsorship research has often focused on operational practices and performance and has long neglected the use and impact of public relations, as well as the potential for brand activation and civic initiatives.

The term "activation" is often used to refer to situations where the public has any opportunity to interact with the sponsor.

Table 1

Sponsorship activation tools

Thus, activation is a concept originating from sponsorship marketing, which can be defined as the operational methods of implementing sponsorship in event management with the goal of connecting fans (or direct audiences) with sponsors’ brands.

Going forward, multiple event communication tools can be used to encourage connections between direct audiences and the sponsor's brand. Initially focused on brand awareness, sponsorship has gradually evolved into a more complex interaction where the sponsored organization becomes an advocate for the strategy of managing customer-supplier relationships as well as internal human relationships.

Research results

Analysis of research showed that activation tools show the range of possible events, communication offers used to activate the brand and achieve marketing goals. From the point of view of the event organizer, personalization of the sponsorship offer is an important aspect for setting up an optimal activation system that meets the marketing needs of the client (sponsor). In practice, sponsors often hire specialist agencies to develop their activation programs. Later they will be able to accurately determine the needs of their customers, i.e. future partner, and agree on the desired actions with the offeror.

The question now is whether the financial and human investment in activating programs will be profitable. Although measurement is a thriving area of academic research, the impact of sponsorship often remains, at a practical level, limited to measuring the impact of media and similar advertising. Beyond the barely quantifiable stated goals and expected returns, finding or maintaining a competitive advantage is the primary goal of partner brands. For brands like Coca-Cola that primarily target individuals, activation methods aimed at maximizing interaction between the sponsor's brand and the public often use media and digital tools.

The goals of service brands are different and are often focused on the public perception of the reputation of partner companies. The selection of activation programs and their deployment integrates internal and external activities, where the search for interpersonal interactions remains central. Therefore, performance measurements must capture relational goals rather than the mere appearance of an activity.

In most cases, sponsors turn to sports and event marketing agencies to develop and implement activation programs. The advantage of this is its ability to accurately identify the interests of the sponsor.

Thus, the classic concept of sponsorship was quickly replaced by the concept of “sponsorship activation”, where the goal of uniting fans of a club, event or athletes to sponsor brands became a top priority.

Activation is integrated into programs developed by advertisers to develop engagement with those participating in sporting events. Various tools are available to advertisers to attract and interact with fans or companies and institutions.

Conclusion

In accordance with the purpose of the study, based on an analysis of the sports services market, authors identified new marketing tools available for sports organizations and the economic opportunities of non-profit sports organizations to form marketing tools for promoting the organization.

Thus, the classic concept of sponsorship was quickly replaced by the concept of “sponsorship activation”, where the goal of uniting fans of a club, events or athletes to sponsor brands became a top priority.

Activation is integrated into programs developed by advertisers to develop engagement with those participating in sporting events. Various tools are available to advertisers to attract and interact with fans or companies and institutions.

It could be argued that this approach is particularly important in the sports industry, given that audiences are considered different from other companies and their customers due to their high sense of loyalty, and sometimes irrational commitment, to their teams. Research on sports organizations and two-way communication suggests that it can be used to successfully build relationships with the public.

[1] Based on previously published paper in Russian by Belikova, E.V., Stepanyan, V.M., Selivanova, S.R., & Perfileva, I.V. (2022) The economics of marketing tools in non-profit sports organisations. Kreativnaya ekonomika, 16(12), 5119-5132. (in Russian). doi: 10.18334/ce.16.12.116755