Sport Organisations in the 21st Century: a strategic brand management perspective

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1 Betina Møller Lorenzen Advisor: Jørgen Hansen, TSE Sport Organisations in the 21st Century: a strategic brand management perspective August 2011 Copenhagen Business School Marketing Department Cand.Merc MCM Pages: 81 Characters: 178,038

2 The way to achieve a better reputation is to endeavour to be what you desire to appear Sokrates Page 1

3 Executive Summary The Danish sport industry is changing and with that the demands of sport consumers are changing too. Research shows, that Danish sport consumers are increasingly looking for sport organisations that offers flexible schedules, a variety of sports choices and quality facilities. Although there is a general increase of sport consumption in Denmark, research further shows that self-organised and commercial sport organisation are gaining a greater share of the Danish sport market. The reason for this is that, they are able to accommodate the changes in consumer demands, which traditional sport organisations cannot. The statement of the thesis is that, in order to survive, these sport organisations have to become more professionally oriented. In the thesis, I explore brand management theory for LOs and SMEs, and investigate how smaller sport organisations should incorporate the lessons from my findings onto their own reality. The intention is to see how brand management work within sport organisations. My research has shown that, there are a few obstacles to the implementation of brand management in smaller sport organisations. These are: Lack of resources, lack of product control, fear of turning into a business, not knowing what brand management is, lack of strategy creation and not knowing how to create customer value. But the nature of sport also offers sport organisations two advantages, seeing as the Danish population already has positive associations with sport. In turn this creates opportunities for a high brand attachment. During my analysis, I discovered that smaller sport organisation should focus on strengthening their brand communities, i.e. the relationships between their members. This will not only attract external stakeholders, but it will also help the sport organisations in retaining internal stakeholders. But first and foremost, it is important that the sport managers identify what they believe, should be the brand identity of their sport, and in turn align it with the brand community. Doing this is only one step in a continuous strategic plan, with the intent of reaching organisational objectives. Furthermore, it is imperative that the sport organisations look inwards and ensure, that their product is capable of suiting the demands of Danish sport consumers. Taking the differences between sport organisations, LOs and SMEs, and the obstacles to brand management into consideration, I have identified 8 brand guidelines for smaller sport organisations. These are: (1) Identify your brand identity, (2) Concentrate on building one (or two) strong brands, (3) Conduct research on your stakeholders, (4) Identify the right segments and align the communication with their interests, (5) Focus a creatively developed marketing Page 2

4 program on one or two important brand associations, to serve as the source of brand activity, (6) Cultivate a passion for the brand and create a brand community that works as an enhancer for loyalty, (7) Be logical in your policy and consistent in your communications, and finally (8) Make sure the offer is valuable before focusing on growth. Look inwards and strengthen the organisation before you look for new markets. Throughout my analysis, I have discovered that there are especially 2 implications, which complicate brand management in a sporting context, namely lack of general business knowledge and the democratic structure of national federations. The two implications should not affect the use of brand management in sport organisations to the point, where it becomes impossible to implement. However, they do raise some questions for further research. This thesis shows, that certain issues arise, when transferring a commercially-oriented theory onto organisations, that at their core, are driven by a mind-set, which is nothing but commercial. Page 3

5 Table of Contents EXECUTIVE SUMMARY 1 INTRODUCTION VALUE FOR MONEY EMERGENCE OF SPORT MARKETING THEORY AND SPORT BRANDS PURPOSE AND MOTIVATION PROBLEM STATEMENT AND RESEARCH QUESTIONS 11 2 METHODOLOGY DEFINITION OF A SMALLER SPORT ORGANISATION THEORETICAL SCIENCE DELIMITATIONS DATA COLLECTION Research Design Primary data: Interviews Reliability, generalizability and validity Primary data: Survey Response rate, reliability and validity Secondary literature and data FOCUS AND THESIS STRUCTURE 19 3 STRATEGIC BRAND MANAGEMENT THEORY AND SPORT SPORTS BRANDING THEORETICAL FRAMEWORK Sport marketing theory and branding Relationship Marketing WHY BRANDING IN SPORT? Economic gain Strengthening of brand community Causal Relationship in sport The causal relationship of DSoF Causal relationship and branding BRAND MANAGEMENT THEORY Brand Management model Brand Identity Brand Management Differentiation and Customer Value The consumers own the brand The Value of the Brand Marketing investment Brand identity vs. Brand image Brand Loyalty Brand Community The Brand Strategy Positioning Execution of Brand Strategy Communication Integrated Marketing communications STRATEGIC BRAND MANAGEMENT IN SMEs 37 Page 4

6 3.5.1 SME definition Statistical SME definition The role of the entrepreneur in SMEs Limited resources Brand management guidelines for SMEs 39 4 CASE THE DANISH SPORT MARKET Organisation of sport Consumption changes INTRODUCTION OF CASES Softball in Denmark Vision and Mission of DSoF Membership History Current challenges Stakeholder model for DSoF RESEARCH RESULTS Loyalty How much they love/dislike softball Are they prize sensitive? Community activity Strength of the Danish Softball Community Do they have friends outside softball? Would they recommend others to play in any club? Alignment between board and members Marketing research questions Uniqueness of softball Reasons for starting and stopping Best place to attract members 48 5 ANALYSIS SPORT ORGANISATIONS VS BUSINESS ORGANISATIONS The market Dependency on competitors The product Augmented Products Lack of product control The customers High customer involvement Managerial aspects Limited resources Volunteer work dependency Out-dated approach to marketing BRAND MANAGEMENT MODEL OBSTACLES TO BRAND MANAGEMENT Lack of Resources Tangible resources Intangible resources Product control Fear of turning into a business Not knowing what brand management is Lack of strategy creation Creating value STRENGTHS OF SPORT ORGANISATIONS Positive sport associations High brand attachment 61 Page 5

7 5.5 BRAND MANAGEMENT AND SPORT ORGANISATIONS Brand Identity The Value of the Brand Brand Community Brand Loyalty The Brand Strategy Brand Awareness Brand Associations Positioning Brand Extensions Execution of Brand Strategy 70 6 THEORY DEVELOPMENT COMPARISON OF SME GUIDELINES AND SPORT ORGANISATIONS BRAND MANAGEMENT FOR SMALLER SPORT ORGANISATIONS 75 7 CLOSING POINTS IMPLICATIONS Professionalization of non-profit organisations Democratic umbrella organisation FUTURE RESEARCH CONCLUSION 81 List of literature Appendix Interview with Henriette Gilhøj, Chairman of the Danish Softball Federation 2 Interview with Bo Orla-Jensen, Previous Chairman of the Danish Softball Federation 3 Interview with Per Stærk, Development consultant at the Danish Floorball Union 4 Interview with Niels Nüchel, Development Consultant at the Danish Billiards Union 5 Interview with Lars Pedersen, Board Member of Danish American Football Federation 6 Interview with Thomas Kentorp, Chairman of the Danish Cricket Federation 7 Interview with Brand Expert, Kenneth Cortsen 8 Federation Table 9 Survey results 10 Interview Questions 11 Brand Building Stages 12 Danish Softball Federation Vision Document Page 6

8 Introduction Methodology Theory Case Analysis Theory Development Closing points 1 INTRODUCTION In Denmark, as in many other countries around the world, sport has always been an important part of everyday life. Since the formation of Danmarks Idræts Forbund (DIF) in 1898 sport on grass root level has been viewed as an integral part of Danish society (Pilgaard 2009:7). But times are ever changing and the world of sport is no exception. The national and local sport associations have dominated for centuries, but as in all other countries, the Danish sport industry has seen an increase in commercial and self-organised sports (Pilgaard 2009:15, Kenneth Cortsen appendix 7). In their book on sport in the Danish Experience Economy, Rasmus Storm and Henrik Brandt define the commercial sport organisations as privately managed sport activities, that are offered according to market conditions, and are thus shaped by their business objective of creating a profit (Storm & Brandt 2008:184). As follows the commercial sport organisations are opposite to traditional sport organisations that are community based and have a non-profit objective (Storm & Brandt 2008: 184). The increasing competition from the self-organised and commercial sport organisations has come about due to general changes in Danish sport consumption. Consumers today are increasingly demanding flexibility, premium facilities and more variety in sport activities, which these organisations have managed to embrace (Pilgaard 2009: ). That is why sport academics agree, that the Danish sport industry is at a cross road where sport organisations are facing increasing competition, not only from each other, but also from other sport sectors, such as the fitness industry (Pilgaard 2009: ). However, the tendency goes further. Lars Pedersen from the Danish American Football Federation (DAFF) argues that the general public has changed their view on sport. There has been a bit of a general cultural change in the association life in Denmark. I believe that the active participant of the association life views himself as a consumer. They pay and then they expect a service and then that s about it, whereas previously it was all about the community and you would enter something if you could contribute to it. Lars Steen Pedersen, board member of DAFF, appendix 5, line Page 7

9 In my view, this tendency described by Lars Pedersen is similar to what Maja Pilgaard has gathered from her analysis of the Danish sport industry. Namely that, instead of having a traditional mind-set where sport was awarded for its social abilities, consumers today have adopted a mind-set that regards sport from a commercial point of view, where focus is on achievements rather than social coherence (Pilgaard 2009:16). The tendency is also visible in the statistics. Although the older generations are more active in sport than they have ever been, there is a clear decrease among the younger generation and their participation in sport (Pilgaard 2009:26). Furthermore, once the sport active children reach their teenage years, research shows that, especially girls leave the traditional sport organisations for commercial organisations (Pilgaard 2009:28). Consequently, if the smaller sports federations are not ready to embrace these changes in consumer demands, they risk a situation where the commercial and self-driven sports organisations are getting ahead of competition because they provide users with a value, that non-profit sport organisations cannot. But the increasing call for professionalism is twofold. 1.1 VALUE FOR MONEY Brand expert, Kenneth Cortsen, argues that the Danish sports industry has been affected negatively by the international financial crisis. Because of the crisis many sports organisations, both smaller and large, face economic challenges. Hence, in order to stay economically healthy, they are forced to change their approach to management. it is necessary to be capable of speaking the language of business organisations in order to get a hold of the economic funds that the business organisations obviously possess in relation to gaining a greater economic support in some way or another Kenneth Cortsen, brand expert, appendix 7, line In other words, business organisations expect something in return for their money, e.g. brand exposure. What Kenneth Cortsen talks about, when he mentions funds, is money raised through sponsorships, something which is rarely relevant to smaller sport organisations. However, his point is still important because, it relates to other businesses as well. Team Denmark leads a policy in which they only fund those elite programs, which they regard capable of delivering medals in international tournaments (Team Danmarks Støttekoncept ). Page 8

10 What is more is that, the very basic economic foundation on which sport organisations within DIF exists, seems to be threatened. On the last general assembly the chairman of DIF, Niels Nyggard, expressed concerns over talks in EU that could potentially lead to a change in the Danish gambling laws. If these are enforced, they can have devastating effects on the funding of all member federations in DIF. The problem is that these federations receive funding from DIF that in turn relies heavily on the profit of Danske Spil A/S 1, currently the only gambling provider in Denmark. DIF themselves, have created a development project, where they will distribute 40 million DKK over a 4-year period with the intention of increasing membership numbers 2. However, in this period, focus is on the bigger sport organisations, because these are believed to have a better potential of increasing their membership numbers. In other words, DIF believes that the bigger sport organisations, currently, provide better value for the 40 million DKK. In essence, what we are witnessing now is a break from the traditional way of running sport organisations, which in turn might increase demand for managerial skills, even within sport organisations that only have a few members. If smaller sport organisations fail to accommodate these changes, they risk losing their members to other sport organisations. 1.2 EMERGENCE OF SPORT MARKETING THEORY AND SPORT BRANDS The increasing call for professionalism and business orientation within sport is not a new issue to international sports organisations. Over the last few decades sport marketing theory has proven to be a useful management tool, especially for big international for-profit sport organisations (Beech & Chadwick 2007:5, Ferrand & McCarthy 2009:8, Shank 2005:3, Shilbury et al. 2009:3). Brand management is another field of study which is fairly recent, but has proven successful for businesses that operate outside the world of sport. It is now beginning to be accepted as a management tool for sport organisations as well (Beech & Chadwick 2007:187, Kenneth Cortsen appendix 7). FC Barcelona, The New York Yankees, and David Beckham are all international examples of how branding can play an important role in the world of sport. In Denmark an example is the handball club, AG Copenhagen.But there are still many sport organisations that underestimate the power and value that comes with having a strong brand 1 As of July 24th As of July 24th 2011 Page 9

11 (Beech & Chadwick 2007:12). As a result, these organisations risk falling behind other organisations in terms of membership numbers, coaches, volunteers, fans and so forth. The table below shows membership numbers for 9 Danish sport federations from the years The federations are all members of DIF and represent large- and medium sized federations in Denmark, as well as the 5 federations interviewed for this thesis. Out of the 9 federations, only 3 have had an increase in their membership. Table 1.1: Federations membership numbers from Source: As of July 16th 2011 The notion of this thesis is that, whichever organisation is able to embrace the changes within the sport industry, and adapt to the latest consumer demands, will stand a better chance of surviving in the future. 1.3 PURPOSE AND MOTIVATION In my examination of brand management literature, I was unable to find any brand management theory that directly deals with sport organisations. Knowledge on this area is therefore very limited and the smaller sport organisations organisations are left in a theoretical grey zone. This paper seeks to shed light on this grey zone and clarify if, and how, a smaller sport organisation can utilize general brand management theory and brand theory developed for SMEs, in order to survive in an increasingly commercialized sport environment? The thought behind this question is that, if brand theory for big corporate companies can be transferred to big professional sport organisations, then why should it not be possible to transfer brand theory to smaller non-profit sport organisations? Consequently, the motivation behind writing this thesis is to help leaders of smaller sport organisations that are caught in between the need to manage their organisations professionally, while dealing with lack of resources. Page 10

12 1.4 PROBLEM STATEMENT AND RESEARCH QUESTIONS Due to the lack of brand theory applied to smaller sport organisations, the problem statement of this thesis is: How can smaller non-profit sport organisations utilize strategic brand management in order to strengthen their positions in the Danish Sport market? In order to answer this question it is necessary to answer some underlying questions beforehand. 1 - How can branding be a solution to a sport organisation? This question seeks to answer the implicit hypothesis in this thesis, i.e. that branding is a useful tool for sport organisations. If this hypothesis was false, there would be no basis for writing the thesis. 2 - How does Strategic Brand Management work? Before transferring and aligning strategic brand management theory with sport organisations, it is necessary to know how this theory works in its original form. 4 - What distinguishes the sport market from the products and services market? The whole thesis deals with the linkage between sport and business, and how theory can be transferred between them. In order to transfer theory from the business world and align it with the sport industry, it is important to know, not only how they are similar, but also what separates them. Page 11

13 Introduction Methodology Theory Case Analysis Theory Development Closing points 2 METHODOLOGY In this chapter, the empirical studies employed for this thesis will be related to the methodological approach used to producing the knowledge, needed in order to answer the problem statement. Furthermore, the theoretical method guiding the thesis will be outlined and discussed in terms of its scientific relevancy to the problem statement. Consequently, the reader will be presented to theory of science, my choice of theory, my delimitation choices and how empirical data has been collected for use in the analysis. Finally, this will be followed by a description of the thesis structure. But first, I will define sport organisations. 2.1 DEFINITION OF A SMALLER SPORT ORGANISATION Ferrand and McCarthy define sport organisations as organisations that: provide services that allow participation in sort and activities directly linked to entertainment provided by sport (e.g. clubs, federations etc.). (Ferrand & McCarthy 2009, p. 4, line 21-23). This definition is very broad and includes both for-profit and non-profit organisations. The sport organisations that are the focus of this thesis are smaller non-profit sport organisations. The term association is used when the subject is a local club or team, whereas federation is used for the national bodies that are comprised of local associations. When talking about something that applies to both sport associations and federations, the term sport organisation will be used. The non-profit sport organisation as a whole can be defined as:... one [non-profit sport organisation] that, after wages and expenses have been taken into account is prohibited from dispersing any additional revenue to management or any other controlling personnel such as trustees. (Beech & Chadwick, 2007, p.27, line 18-20). Furthermore, non-profit sport organisations can be classified into commercial and donative non-profit sport organisations. The classifications are distinguished by how the organisations receive their income. The revenue of commercial non-profit sport organisations comes from sale of goods and services and make out the majority of the income. On the other hand donative non-profit sport organisations receive most of their income from public funding or Page 12

14 donations (Beech & Chadwick, 2007:27). It is in this category that smaller sport organisations, mentioned in this thesis, belong. 2.2 THEORETICAL SCIENCE Before moving on to the methodological approach used to answer the problem statement, I will present the epistemological and ontological considerations when writing this thesis. The basis for all understanding in this thesis is the social constructivist perspective. This perspective implies that all knowledge is created through social relations that provide a common appreciation within our social networks (Rønn 2006:108). Social constructivism is partly inspired by the American historian Thomas S. Kuhn, who argued that science is the result of social ties between scientists, who then decide what real knowledge is (Holm 2011:59). With this argument in mind, social constructivism takes the standpoint that, the world itself is socially constructed (Holm 2011:123). This perspective is relevant to the thesis, because of its connection and contribution to knowledge production of the common socially created understanding that exists within organisations (Rønn 2006:104), something which relates to social relations that exists within a brand community. The process of creating knowledge is based on both the deductive as well as the inductive method, however not simultaneously (Andersen 2008:35). Instead my use of the two methods is quite similar to an hour glass. Firstly the deductive method is used to infer brand management theory onto the Danish Softball Federation, as well as a few other smaller sport organisations. I use the deductive method in the first half of the thesis, because of its ability to enlighten how brand management can be transferred onto sport organisations. Secondly, the findings from aligning brand theory with DSoF and the other national sport federations are used to create a new and more suitable brand theory for all smaller sport organisations (induction). The inductive method enables me to work with a sample of 5 cases and still infer my research finding onto all smaller sport organisations (Andersen 2008:35). 2.3 DELIMITATIONS Just as it is important to analyse the knowledge attained in this thesis, it is also important to be aware of the aspects which has been somewhat disregarded in the process of writing this thesis. Page 13

15 As the reader will find, this thesis is solely dedicated towards an identification of how brand management can act as a guiding tool in establishing a stronger position for sport organisations. It is, therefore, not the intent of this thesis to discard other views on how a sport organisation should be marketed and managed. I do recognize that other factors influence the stability and competitiveness of any sport organisation, but in accordance with the problem statement, I have not considered these. This thesis is predominantly a theoretical thesis in the sense that, my motive is to create a thesis that is normative and allows for a future intervention-oriented analysis (Andersen 2008:23-24). With this I mean, that my intention is to further develop brand management theory, not to investigate whether my findings work in practise. This means that, I have not applied my findings of this thesis onto the federations. My intention was mainly to discover how brand management can be applied to smaller sport organisations. Whether my findings are applicable in practice and have the expected positive results, is yet to be analysed. This thesis deals a lot with the concept of volunteer work. However, it does not seek to investigate how sport organisations can get more volunteers to work in the clubs. The role of volunteer work is strictly analysed from a branding perspective and how a strong brand may strengthen the volunteer base. 2.4 DATA COLLECTION In order to fully investigate sport organisations, and brand management as a combined concept, I have drawn on the findings from both primary and secondary sources. In the following sections the methods for collecting these data are presented. In chapter 4, the findings from my primary research are presented further Research Design In obtaining primary data, I used a mixed research method, meaning that I have conducted both qualitative as well as quantitative research. My motive for using the mixed method is that, qualitative and quantitative methods are compatible rather than opposing methods (Johnson & Onwuegbuzie 2006:14-15). Accordingly, by employing the mixed research method, I have gained a more comprehensive appreciation of sport organisations, their brand community and the Danish sport industry as a whole. With the qualitative research I wanted to gain insight into the conditions of the sport organisations and their view on brand management. At the same time, I also wanted to Page 14

16 understand the environment that exists within a sport organisation, which required that I conducted quantitative research. The quantitative research was carried out within the community of the DSoF, and I chose this particular federation for two reasons. Firstly, because it is the one sport, which I actively play myself, and therefore have a great interest in. Secondly, because I, owing to my membership of DSoF, was able to gain a deeper access to the community. However, because this thesis deals with untested theory it is based on multiple cases, as the reader will see in the next section Primary data: Interviews All in all, I have interviewed 6 people. 5 of them represent different national federations, which are all members of DIF. The federations were chosen because they in membership numbers are relatively smaller compared to other national federations, e.g. the Danish Handball Federation. Another common characteristic is that, none of these sports federations are currently receiving any financial support from Team Denmark 3. The 6 th interview is with Kenneth Cortsen, who is a sport management researcher and strategist at University College of Northern Denmark and a PhD. student in sports branding at Aarhus University 4. His main areas of expertise include sports marketing, sports branding, sports management, sports economics, CSR, corporate communication and the experience economy. I interviewed Kenneth Cortsen, because I wanted to gain insight into how an expert within the field of sports branding, view the conditions for smaller sport organisations. Additionally, I was interested in learning about his practical experience with sport organisations and brand management. The interviews were all conducted in Danish. The idea behind this was not to pressure or intimidate the interviewees by making them speak a different language. My concern was that, if they had to express themselves in a foreign language, they would be limited in expressing their opinions. Whenever I have used quotations in the thesis, I therefore had to translate the sentences from Danish to English. I have done so to the best of my abilities, but cannot guarantee that some meanings have been lost in translation. Nevertheless, the general arguments should shine through EDC F2C8 as of 26th of July as of 26 th of July 2011 Page 15

17 In order to better compare and analyse on my data, I decided to semi-structure my interviews, meaning that I wrote down my questions prior to the interviews (Kvale & Brinkmann 2008:156). When needed, I would ask follow up questions. All the interviews have been transcribed and are attached as appendixes in their full length. Whenever I have quoted from an interview, the lines have been highlighted with grey in the appendix. The questions, from which I carried out my interviews, are attached as appendix Reliability, generalizability and validity Seeing as the findings presented in chapter 6 are based on inductive methodology, it was of importance to me that the reliability of the interviews was high. Accordingly, in order to be able to generalize, I expanded my initial case examples from DSoF to include another 4 federations. Of course 5 smaller federations in the whole of Denmark is not a big case study. Nevertheless, I base my generalizability on the understanding that theory development is a continuous process and thus a few case studies provide sufficient data and knowledge to certain steps within this process (Kvale & Brinkmann 2009: 292). The question of objectivity is essential to the qualitative data, seeing as I myself, am a member of one of the interviewed federations and know two of the interviewees personally. In accordance to the social constructivist approach, from which this thesis is written, my concern was that reality is created through our interactions and our way of communicating (Holm 2011:126) and that I unintended would affect the interviews. Nonetheless, I concur with the statement that our own experiences and understanding form the base for comprehension (Kvale & Brinkmann 2009:268, Holm 2011:92). With this in mind the validity of the interviews is enhanced by my knowledge of both sport organisations and brand management prior to my interviews, because I was able to ask the right questions Primary data: Survey In order to conduct the survey within DSoF, I created a profile at which provided me with the tools to carry out the survey as professionally as possible. The survey was sent from the chairman of the federation to the respective club representatives, who in turn were asked to send it to their members. Each person could only answer the survey once. The questions were divided into two parts. One was for current club members while the other was for previous club members. The idea behind this separation was to get an accurate and up to date image of the community strength, while also investigating how others had experienced Page 16

18 the community and why they had decided to quit. The survey is attached in its full length as appendix Response rate, reliability and validity Despite my personal connection with DSoF, I was not able to generate a desirable response rate. An estimated number is that the reached about 500 members of which 164, representing 8 clubs out of 13, answered the questionnaire. The response rate thus amounts to 33 %.Despite the low response rate, I do not believe that it has had damaging impacts on the reliability of the survey. In her book Spørgeskemaundersøgelser Merete Watt Boolsen (2008:125) argues that, if the non-responders have the same composition as those, who answered the survey, one can expect that the low response rate is caused by factors, which are of no concern to the survey result. Consequently, the responses given are still representative for the whole community (Boolsen 2008:126). From question 2-3, I can see that my survey has an equal representation of seniors, juniors, super-seniors and passive members. This leads me to conclude that, the people, who have responded, corresponds to the composition of the whole community and thereby applies to Boolsen s argument above. It was important to me that the questions asked, helped in clarifying the intent of the survey (Boolsen 2008:37), that is, the strength of the social relations within the community and the correlation between the community members and the federation board. Therefore, my approach to designing the survey was positivistic in the sense that my intention was to disclose the different dynamic relations within the community and analyse upon these. (Boolsen 2008:41). The validity of the survey was in focus from the process of writing the questions, to the final stage of analysing the responses. Hence, the questions were formulated and arranged in accordance with the intent of the survey. The questions were continuously evaluated and those that were found unnecessary were discarded (Boolsen 2008:45) Secondary literature and data In some of the sections, the reader will notice, that in order to underline my arguments, I have replicated Kenneth Cortsen s research findings as secondary data. Seeing as I have interviewed him on the basis of his expertise within the subject of my thesis, I have not questioned the reliability and validity of his research. Page 17

19 From the beginning of my own research, I searched for books that would deal directly with brand management within sport. After having been continuously unsuccessful, I expanded my search to include standard brand management books and sport marketing books. The one book, which has laid the foundation for most of my writing in chapter 3, is Strategic Brand Management by Kevin lane Keller (2008). Kevin Lane Keller is the author of several text books on marketing, advertising and branding 5 and is currently, the E. B. Osborn Professor of Marketing at the Tuck School of Business at Dartmouth College. Here he teaches MBA courses on marketing management and strategic brand management and lectures in executive programs. Among the universities, which he has previously lectured at, are Stanford and Berkeley 6. Although, the book does not have any sport focus, it has still been a great contribution to my understanding of brand management as a subject on its own. However, in order to gain a comprehensive overview of brand management, I have also drawn on the work of brand academics such as David Aaker and Eric Joachimstaler (2002), Jean-Noël Kapferer (2008) and Schnoor and Pedersen (2009). Within the sport marketing context, I have drawn on the expertise of academics such as Alain Ferrand and Scott McCarthy. Ferrand and McCarthy are, respectively, a lecturer at and graduate from the Executive Masters of Sport Organisations Management programme at University of Lausanne. Their book Marketing the sport organisation (2009) has been helpful in identifying the social network for sport organisations and analysing relationship theory in relation to sport organisations. John Beech and Simon Chadwick and their book Marketing of Sport (2007) has been another great contributor to my knowledge of the sport industry and the conditions under which many sport organisations operate. Beech teaches the MBA (Sports Management) at Coventry Business School and Chadwick is editor of International Journal of Sports Marketing and Sponsorship. The guidelines presented in chapter 6 are based on the work of Kevin Lane Keller and Frank Krake. Frank Krake himself is the CEO of an SME 7 and is the author of a report in the Journal of Product and Brand Management, which was published in Hence, the article is not 5 As of 24th of July As of 24th of July As of 24th of July 2011 Page 18

20 new, but its findings have helped laid the path for recent authors within the field of SME branding (Spence & Essoussi 2010, Ojasalo et. al. 2008, Khan & Ede 2009). Other secondary sources include websites, reports and articles and have all provided information on the world of sport and brand management. Sometimes they have been used as simple information sources and at other times they have been used to back up my arguments. 2.5 FOCUS AND THESIS STRUCTURE The target group for this thesis are managers as well as regular members of smaller sport organisations that for different reasons are struggling with various challenges, e.g. decreasing membership numbers. The idea is that the findings presented later will work as guiding tools for those, who wish to actively brand their sport organisation. Furthermore, the thesis will also be relevant to business managers of smaller SME s that are struggling with some of the same issues as smaller sport organisations. Finally the thesis is targeted towards sport academics that have an interest in combining sport with brand management. The thesis is divided into 7 main chapters. In chapter 1, I introduced the problem area on which, I have formulated the problem statement. Chapter 2 concerns my methodological choices in terms of data collection and research analysis. The theoretical framework is introduced and discussed in chapter 3, which also touches upon the relevancy of branding within sport. Once the theory pertaining to the thesis has been presented, I introduce the 5 cases and the results of my survey in chapter 4. In chapter 5, I bring all the findings from the previous chapters together and analyse on the basis of my problem statement. My own theory development is presented in chapter 6. The very last chapter is preserved for the implications, that I have experienced and a conclusion on my learnings from the process of writing this thesis. At the beginning of each chapter is a bar, which indicates how far along the reader, is in the thesis. Page 19

21 Introduction Methodology Theory Case Analysis Theory Development Closing points 3 STRATEGIC BRAND MANAGEMENT THEORY AND SPORT By now the reader has been introduced to the thesis and its methodology. In the following, the reader will be introduced to brand management theory and how it has had only little focus on sport organisations. Brand management theory is a wide reaching theory and has many concepts and subcategories attached to it. In my interviews with the sport federations, it became apparent that brand management theory is not a very well-known subject.... I think it is very interesting all this with branding... I just need to have it brought down to earth. Niels Nüchel, development consultant of the Danish Billiards Union, appendix 4, line For that reason, presenting brand management theory had to become a central part of the thesis. Nonetheless, this thesis is not about simply repeating the theory, which is why only some of the more important aspects of the theory will be described. The chapter will have a descriptive touch to it, as I will not apply the theory to my data, until analysis section. But first, before touching upon general brand management theory, one significant issue must be clarified. 3.1 SPORTS BRANDING An important question when writing this thesis has been, whether it is possible to brand a sport organisation at all. Brand management expert, Kevin Lane Keller (2008:27) argues that everything can be branded, including sport. In his book, Strategic Brand Management Keller uses only one page, out of nearly 700, on brand management within sport. According to Keller, sport management has become increasingly sophisticated in its way of attempting to be more professional in its management efforts. Consequently sport teams, clubs and federations are becoming more aware of the positive financial aspects of managing sport, with a greater focus on branding, advertisement, sponsorships, and so forth (Keller 2008:23). So, according to Keller, the question is not if a sport organisation can be branded but rather how it can be branded. Page 20

22 3.2 THEORETICAL FRAMEWORK In this section, the reader will be presented to the theoretical framework that surrounds branding of sport organisations. Despite the fact that any one organisation can be branded, most brand management theory deals only very little with sport. In fact Keller is the only author on brand management, who mentions brand management in a sport organisational context (Keller 2008:23). Other writers, such as Aaker and Joachimstaler (2002) and Kapferer (2008), are only concerned about sport sponsorships and the use of these in product branding. Schnoor and Pedersen (2009) completely neglect to mention branding within a sporting context. Furthermore most books on brand management theory only use large organisations (LOs) such as Coca-Cola and Apple to describe how brand management tools work (Berthon, Ewing, and Napoli 2008:28). The problem with the sole attention towards LOs is that, not only do they already have an existing brand, they also have huge marketing budgets to spend on advertising (Krake, 2005:228), something which most of the smaller sport organisations do not Sport marketing theory and branding Just as sport receives only some attention in brand management theory, branding as a subject on its own, receives only little attention from sports marketers. Most sport marketers devote their time, and attention, to more general marketing theory and how sport organisations should plan, strategize and manage around the traditional marketing mix (Shank 2009, Beech & Chadwick 2007). There are two directions within sport marketing. One is concentrated around sponsorship of teams and how companies can benefit from these sponsorships. In that sense the perspective is that of the business organisation (Beech & Chadwick 2007:69; Shank 2009:15), the same perspective as we see in brand management books. The other direction takes on the perspective of the sport organisation and investigates how sport organisations can market themselves. It is in this direction that branding of sport organisations is included. However, in many sport marketing books branding plays only a smaller part and they only describe brand management, and give examples of how classic clubs have an already existing brand. None of the books analyses how brand management is used as a management tool by Page 21

23 smaller sport organisations (Beech & Chadwick 2007:186, Ferrand & McCarthy 2009:90, Shank 2009:228). I have created a matrix with the intention of showing, what I have identified to be grey zones in both brand management theory and sport marketing theory. Matrix 3.1: Theoretical Framework in relation to branding. But sport marketing is still a fairly recent field of study (Beech & Chadwick 2007:3) and perhaps lack of branding within sport marketing theory is an expression of its young age, rather than a lack of interest. Essentially, sport branding is but a small fraction within sport marketing that has yet to be fully explored Relationship Marketing However, sport marketing does suggest one theory that can act as reinforcement for brand management, namely Relationship Marketing. Although the theory was not originally intended for sport organisations, it carries elements that are suitable for explaining and analysing the network in which practically all sport organisations work (Ferrand & McCarthy 2009:8). For many years general marketing theory was based on the exchange process in which two or more parties exchange value for a given product (Gummesson 2002:17). This was termed transactional marketing (Ferrand & McCarthy 2009:7). Like traditional marketing theory, sport marketing has been developed from this transactional point of view (Ferrand & McCarthy 2009:7, Beech & Chadwick 2007:51). However, some sport organisations are now embracing the notion of relationship marketing in which the relationship between the parties is in focus, rather than the exchange of goods (Ferrand & McCarthy 2009:7). Ferrand and McCarthy argue that the relationship approach to marketing is more suitable for sport organisations, because these are network based and operate in a stakeholder environment. Page 22

24 The model below is a visual depiction of a stakeholder network for a given sport organisation. It is based on the works of Gummesson, who argues that all organisations have 3 types of marketing relationships, specifically nano, market, and mega relationships (Gummesson 2002:30). The idea of the model is to distinguish the stakeholders by dividing them into which Model 3.1: Stakeholder model. Source: Gummesson (2002) type of relationship they have with the sport organisation, and by that enable the organisation to strategize on each stakeholder relationship (Gummesson 2002:30, Ferrand & McCarthy 2009:9). The nano relationships are those that are found within the federation, i.e. its structure, systems, and processes. They are especially important because they provide the basis for which the marketing activities are implemented, and so determine whether these are successful or not. The important note to make about nano relationships is that, the sport organisation should not be seen as a single entity, but a network of internal stakeholders who all have their own interactions with external stakeholders. This is of particular importance to the traditional sport organisations and I will deal with this further in chapter 5. The external stakeholders are found in market and mega relationships. The stakeholders in the market relationships consist of those that operate in the same market sphere along with the organisation, whereas the relations in the mega relationships are those that set conditions for the market relationships (Gummesson 2002:147). For instance to DSoF, DIF constitutes as being in the market relationship, whereas the local councils are in the mega relationship sphere. In chapter 4, I have identified the full stakeholder environment for DSoF. Now that I have introduced the reader to the limited literature on brand management within smaller sport organisations, I will devote some pages on why branding is a relevant management tool for sport organisations. Page 23

25 3.3 WHY BRANDING IN SPORT? One of the barriers to utilizing branding within the sport federations has been the thought that it was very expensive. Many of the federations were not against doing branding, but argued that they simply do not have the resources (appendix 8) Economic gain In the introduction, I outlined one of the most important reasons for implementing brand management in sport organisations, namely the economic rewards that come from having a positive brand. More directly, branding makes organisations successful because of the concept brand equity. According to Aaker and Joachimstaler (2002:17) brand equity is a set of assets and liabilities linked to a brand s name and symbol that adds to or subtracts from the value provided by a product or service to a firm and/or that firm s customers. Thus brand equity should be understood in financial terms and companies must invest in their brands in order to enhance and create these assets. In essence, companies with a strong brand will have high brand equity, while companies with a weak brand will have low brand equity (Schnoor & Petersen 2009:156). It is the concept of brand equity that Kenneth Cortsen talks about, when he argues that sport organisations, too, can gain economic rewards from having a strong brand a national federation also has a need to get money and branding is quite important in relation to create an economic foundation. So I believe it is very decisive for a future economic development of the federations. Kenneth Cortsen, brand expert, appendix 7, line and Strengthening of brand community Another important reason for utilizing brand management within sport is its ability to strengthen the social relations among admirers of a certain brand (Ferrand and McCarthy 2009: 91). In other words, branding is a valuable tool because it plays a vital role in building loyalty among current members, i.e. the brand community. In chapter 5, I will analyse the role of brand communities more thoroughly. I have now given two reasons for why sports organisations should utilize brand management; one is the economic gain that having a strong brand will generate and the second is the strengthening of the internal brand community. Page 24

26 But these are only two specific examples of the positive aspects of having a strong brand. A strong brand affects many more parts of an organisation. This brings us on to the notion of the Causal Relationship in sport Causal Relationship in sport A causal relationship is defined by the cause-and-effect notion, which in the dictionary is defined by: noting a relationship between actions or events such that one or more are the result of the other or others 8. Causal relationship in sport deals with the question of what area a sport organisation should focus on in order to reach its objective. In the case of smaller sport organisations, the objectives will be to ensure that the given sport can be played or carried out by its members (Ferrand & McCarthy 2009:13). Because the activity, i.e. the sport, is dependent on people, especially in team-sports, the crucial objective for smaller sport organisations is recruiting new members (or retaining current members). Furthermore, the sport federations are responsible for ensuring that members have facilities, equipment and provide associated services that enable participation of the sport. These then become goals of sport federations, which also became apparent in the interviews conducted for this thesis (appendix 8). This will become more apparent later, when I introduce the cases. But setting goals and objectives are somewhat easy. The challenge is to uncover how the objectives and goals are achieved, as each organisation is individual and thus the conditions for one organisation may not be so for another. In other words, every sport organisation face different challenges when it comes to issues such as market share, segments, fan numbers, participant numbers, sponsorships, and so forth. Consequently, depending on the conditions, each sport organisation must identify the right strategic path to follow. This is what makes the notion of the causal relationship so complex. For instance, the objective for DSoF is to increase its membership base with 20% (appendix 8). In order to reach this objective, the federation must take some actions that they believe will eventually lead them to this point? But the questions is which actions will have the right effect on membership numbers and which ones will affect other areas in the organisation or maybe have no affect at all. 8 As of June 15th 2011 Page 25

27 3.3.4 The causal relationship of DSoF There are many different opinions on what constitutes a causal relationship in sport (Kenneth Cortsen, appendix 7), something which also became obvious during my interviews. For instance Lars Pedersen from the Danish American Football Federation believed that having a lot of TV time has helped increase interest for the sport, which in turn has increased membership (appendix 5). Henriette Gilhøj, on the other hand, mentions that another solution is having a top athlete, who is able to attract media attention (appendix 1). But according to brand expert Kenneth Cortsen, it is a combination of many factors such as the sport itself, national culture and tradition (appendix 7). Needless to say, this is a very complex question, and as of now, no one has been able to definitely determine what is needed for sports organisations to increase their membership numbers (Kenneth Cortsen, appendix 7). Nonetheless, I have attempted to create a model with the intent of visually depicting what a causal relationship could be in terms of attracting new members. It is not at all comprehensive and there may be many more elements that are not included in the model, for instance it could also focus on retaining members. But the idea of the model is simply to show, how branding can have an Model 3.2: Causal Relationship model. Own design. overarching effect on all elements of a causal relationship. In the model, I have used DSoF as an example; however, it is possible to create models over the causal relationships for all federations, large or smaller. As the arrows in the model indicate, all components will have some effect on another and vice versa. I have started the model with the suggestion that DSoF focus on either the juniors or the seniors. In reality they could just as well focus on women, certain clubs or perhaps the elite. What it all comes down to is the objective and the strategy. If we follow the junior focus, this could lead to more public funding, as junior activities as a rule give more funding Page 26

28 from local councils 9. More public funding could lead to more coaches, as these can now be awarded with a salary. Once the coaches are given a salary, they can be expected to improve performance, which in turn could lead to better practices and more members. The arrows pointing upwards indicate that the model should not be seen as a linear process, but rather as a continuous circle. For instance once DSoF has increased membership numbers, they also increase the possibility of having a better competition. By the now the reader should have a more clear impression of the complexity of causal relationships. The important thing to take away from this section is that, each federation face different challenges and guided by their objectives, they should identify a strategy, which they believe will lead them towards their goals Causal relationship and branding In this section, I will introduce brand management in relation to the causal relationship and make it clear that, no matter how the causal relationship may appear; having a strong brand will positively affect and enforce all elements. In order to clarify this argument, I will reintroduce general business organisations into the concept of causal relationships. To a business organisation, the overall objective is to be profitable but, like sport organisations, the ways in which companies reach this objective can be very different depending on each their specific situation. Some, for instance, are faced with increasing competition in terms of product simulations or growth in competitors, while others are faced with empowered retailers and consumers (Aaker & Joachimstaler 2002:17). In the business world, branding has become a popular marketing approach because it has an overall effect on each component in the causal relationship (Keller 2008:48). Essentially, the effect lies in how a strong brand enables companies to better compete in a given marketplace by providing them with a competitive advantage. This advantage is found in the loyalty that consumers have to certain brands (Keller 2008:8). Brand loyalty comes from the fact that consumers are more inclined to buy products they know and trust, because in that way consumers believe they minimize the risk associated with any buying decision (Keller 2008:8). 9 https://www.retsinformation.dk/forms/r0710.aspx?id=24314#k3, As of 19 th of July, Page 27

29 When consumers know and trust a certain brand, the company behind it will have an easier time getting their messages across than those companies who have a weaker brand. This is what is called customer-based brand equity 10 (Keller 2008:48). Consequently, customer-based brand equity helps business organisations in achieving their objectives. Now that this has been established, I will return my attention towards sports organisations to clarify how this is no different for them. The concept of customer-based brand equity is also what affects the components in the causal Model 3.3: Causal Relationship with Branding effect. Own design. relationship for smaller sport organisations. For instance, imagine how much easier it would be for DSoF to attract volunteers and new coaches if softball had a strong brand in Denmark. As of now the Danish softball brand is weak (no one really knows about it (appendix 1, 2 and 9)) and it is difficult for them to attract enough people that are willing to do volunteer work or coach. According to brand expert Kenneth Cortsen, branding helps by making it easier for sport organisations to instigate initiatives that will eventually, not only create hype around the sport, but also establish itself in Danish society and culture. they [branded sport organisations] have an easier time starting initiatives that can generate some PR, but which will also manifest itself in Danish society and culture on a wider scale. Kenneth Cortsen, brand expert, appendix 7, line The intention of the causal relationship model is to take this argument further, by visually showing how having a strong brand, makes it easier for smaller sport organisations to argue for better facilities, more public funding, media coverage, sponsors and ultimately new members. For that reason, brand management has a relevant role to play in all sport organisations, no matter how small they are. 10 Not to be confused with brand equity, which has a financial element to it. Page 28

30 What the reader should take away from this section is that, attracting new members is a strategic process, in which the managers must identify the right strategy that will lead them to their objective(s). Brand management should be a part of this strategic process, and when the brand is positively established, it will have affirmative effects on all other elements in the causal relationship for any sport organisation. By now there should not be any doubts as to why branding is a valuable tool for smaller sports organisations, and consequently, I will move on to how brand management works in theory. 3.4 BRAND MANAGEMENT THEORY As an academic field of study, brand management contains many elements and can seem quite complex and many people struggle to understand what branding really means. This became apparent in my interviews, where none of the representatives of the 5 federations knew what brand management entails (appendix 8) Brand Management model In order to introduce brand management theory to the reader, I have made a model that seeks to organize the many elements of the theory, and present it in a simple and straightforward manner. The model Model 3.4: Brand Management model. Own design. is created with inspiration from several brand management academics, such as Keller (2008), Aaker and Joachimstaler (2002), Kapferer (2008) and Schnoor & Schmidt (2009). It will be used to describe general brand management theory, but also to help transfer the findings and conclusions onto the branding of smaller sport organisations in the analysis. Page 29

31 The blue square represents the change that has occurred in marketing within the last decades. The 3 other squares should be understood as components that together make out the continuous process that brand management really is. These components are: the Brand Value Chain, the Brand Strategy, and the Execution of the Brand Strategy. In the centre of the model is the one element, which is the fundamental part of any brand management process, namely Brand Identity Brand Identity The main lesson from brand management theory is that companies must identify a brand identity, either for the company (Corporate Branding) or a given product (Product Branding). In order to do so, it can be useful to think of oneself and one s own identity. What you, as a person, do in life and how you interact with other people is very much guided by your values, your opinions, and how you wish to be perceived by the people you share relationships with. In that sense your identity serves as a direction, purpose, and meaning for you (Aaker and Joachimstaler 2002:19). It is in the same way that companies must consider and decide upon their values, reason to be, and how they wish to be perceived by their stakeholders. For that reason, identifying and developing a brand identity, becomes an important driver in the branding process for any organisation (Aaker and Joachimstaler 2002:19, Kapferer 2008:171, Keller 2008:60) Brand Management The blue square in the model shows the development that has occurred within marketing, and how brand management theory slowly came about. The greatest importance is a shift in focus from product- to brand differentiation Differentiation and Customer Value In the world of business, it has long been known that product differentiation is an excellent way of gaining competitive advantage over one s competitors (Kunde et al, 2008:96). As a result, marketing theory and marketers have been advising companies to concentrate on communicating their Unique Selling Points (USPs). However, due to shorter product lifecycles and increasing product imitations, companies are now falling short when competing on product elements only (Kunde et al, 2008:96). Instead in order to gain a sustainable competitive advantage companies are forced to bring their differentiation to an emotional Page 30

32 level. Consequently, image and reputation of products/companies have now become the differentiating factor (Kunde et al, 2008:96; Schnoor & Pedersen, 2009:22; Keller, 2008:56). The move from product to brand differentiation has also meant that, companies have had to change their management focus from products, and making a profit, to their customers (Keller 2008:79). This does not mean that companies do not care about their profit anymore. Companies have simply come to understand that, in order to be successful; they need to bring value to their customers. If they to do so, they will be unable to sell their products and thus they will seize to exist (Keller, 2008:79). Previously, this value has been created around the products sold, however today customer value is much more intangible and goes beyond what the products offer. This is what branding seeks to accomplish as brands compete on both the functional level but also the emotional and self-expressive levels (Schnoor & Pedersen 2009:28). Consumers buy their products because they solve a functional problem, but also because they express something about whom we are. In that sense we create our identities through brands (Schnoor & Petersen 2009:13, Kapferer 2008:19) The consumers own the brand Like advertising and marketing, branding and Brands have a somewhat bad reputation among some consumer groups, because they are believed to be manipulative (Beech & Chadwick 2007:7). However, the paradox is that brands are intrinsic and consequently companies do not own their brands, and in reality have no real control over them (Keller, 2008:79, Schnoor & Pedersen, 2009:13). Instead, brands resides in the minds of consumers and is the result of what consumers have learned, felt, seen, and heard about the brand (Keller 2008:79). Companies can seek to guide how consumers perceive a certain brand by use of brand management tools, but they can never fully control them The Value of the Brand In this section, I move on to the value of the brand and how this brand value is created. Identifying where the value of the brand is created is important because, it is through brand value analyses, that companies are able to evaluate past strategic decisions and uncover future strategic possibilities (Schnoor and Petersen 2009:33). Page 31

33 As the brand management model indicates, doing branding is a never-ending process. New companies should start by identifying a specific brand identity; however even big corporations with already existing brands, such as Coca Cola, have to reassess their brand identity from time to time (Keller 2008:325). It is important to ensure that the brand, and what it signifies, is consistent with time. In cases where companies fail to reassess and readjust their brand, developing a completely new brand strategy may be necessary Marketing investment A common misunderstanding when it comes to marketing investment is that when spending money on marketing they should all go to advertising (Thomas Kentorp, appendix 6). It is true that LOs usually spend a great deal of their marketing budgets on advertising, however an equally great deal goes to product research, product development, design and market analyses (Schnoor & Petersen 2009:36) Brand identity vs. Brand image One of the most powerful tools in brand management is communication. However, sometimes a gap may occur between what a given company communicates about their brand, and how consumers actually perceive the brand (Schnoor & Pedersen 2009:22, Cornelissen 2008:71). It is these cases that make it important to distinguish between brand identity (what the company seeks to project about the brand) and brand image (how the consumers actually perceive the brand). Although companies do not own their brands, they can take actions towards building and managing a brand by strategically linking tangible and intangible associations between the customers and the brand (Keller, 2008:59). In other words make sure that the brand identity and brand image are aligned. In other cases, the company may not communicate a brand identity at all; however, this does not mean that a brand image does not exist. It merely means that the given company, for several possible reasons, has left it in the hands of chance to decide, what their brand should signify. In these two scenarios, one might ask what the real brand is. Whether it is perceived positively or negatively the brand is always how the customers view it (Schnoor and Petersen 2009:21) Brand Loyalty Within marketing, brand loyalty is defined as customer s repurchase. Again this concept can be linked back to customer-based brand equity. If a certain company enjoys high customer- Page 32

34 based brand equity they will most likely also have a high degree of brand loyalty (Keller ). A reason why loyalty is an important driver of brand value and brand equity can be found in the law of Pareto. The Pareto law states that 80 % of a company s profit is derived from 20 % of its customers (Stone & Jacobs 2008:549). So does that mean that building customer loyalty is the path to success? Unfortunately the link between loyalty and profitability is not that simple. If the company only focuses on building loyalty among existing customers, with time the company will be less profitable. The reason for this is due to the churn in customers that no company can avoid. A churn in customers arises when for instance a company loses customers to competitors or because at one point the customers will seize to have a need for the product or service. Having high customer loyalty may reduce churn, however, companies will never be able to completely prevent it. This has an effect on companies and how they must focus their efforts. It is not simply enough to have a high focus on creating loyal customers; they must also focus on acquiring new customers (Stone & Jacobs 2008:57). However, acquiring new customers is not simply a matter of growing your customer base. If the customers you are selling to are not very profitable all the effort you put into acquiring them will be in vain. Hence companies must put time into segmenting their customer groups and identify which customers are of most value and which ones are most costly (Stone & Jacobs 2008:57). By doing this, companies will have a healthy positive relationship between loyalty, growth, and profitability Brand Community Previously it was mentioned how relationship marketing can act as a reinforcement of branding. It is especially within the notion of brand communities that, the linkage between the two theories shows. Stockburger-Sauer (2010) defines a brand community as: Groups of consumers with a shared enthusiasm for the brand and a well-developed social identity, whose members engage jointly in group actions to accomplish collective goals and/or express mutual sentiment and commitments. Stockburger-Sauer (2010: p. 347, line and p. 348, line 1-3) Page 33

35 With this definition in mind, it is clear that a brand community is similar to brand loyalty. The only difference is that, in brand communities, the relationship between the customer and the brand extends to a network of customers, sharing their loyalty towards the brand (Thurston et al. 2009:34). A brand community is a powerful asset to any organisation, because it works as an enhancer of Model 3.5: Brand Resonance Pyramid. Source: Kevin Lane Keller (2008). brand loyalty by integrating its members into a social unity, where sense of belonging is more important than product satisfaction (Thurston et al. 2009:35). Furthermore, the notion of a brand community is important because it includes the internal aspect of branding. Internal branding in turn is important because the overall brand message (brand identity) will lose its credibility if it is not supported by the internal stakeholders (Ferrand & McCarthy 2009:6) The Brand Strategy The next part in the brand management model is identifying the brand strategy. In his book Strategic Brand Management Keller (2008:61) presents the Brand Resonance Pyramid which depicts 4 steps to build a brand. Together the 4 stages make out the 5 dimensions represented earlier (two of the dimensions are both included in the last stage). In order to be successful companies must consecutively excel at each dimension in order to finally reach the top of the pyramid and obtain brand equity. The dimensions are respectively: 1) Brand Awareness. 2) Brand Associations. 3) Brand Attitude. 4) Brand Attachment. 5) Brand Activity. Due to limit in space, I will not go further into each dimension here. For further explanation of each dimension, please see appendix Positioning It should now be obvious that brand management theory consists of concepts that are closely linked, which the brand management model also indicates. Positioning is another concept, Page 34

36 Chart 3.1: Positioning Chart over supermarkets in Denmark. Own design. which is closely linked to points of difference and points of parity brand associations. In essence companies use positioning strategies, to position their brands in the minds of customers by help of points of difference and points of parity. So when following a positioning strategy, the company is identifying a gap in consumers mindset and trying to make their brand fill that gap (Keller 2008:97). To illustrate this, I have created my own suggestion to what the Positioning Model shows is a given customer s mind-set over supermarkets in Denmark. The brand associations in this model are divided into price vs. quality and are solely a reflection of my own personal opinion of what constitutes quality and value in each supermarket. Other people may have different opinions and consequently the model must not be seen as an ultimate illustration of the Danish Supermarket Industry. Instead, it is intended as a means to give the reader a visual idea of what the concept positioning means. Some supermarkets such as Netto, Fakta, Aldi, and Lidl belong to the low price/low quality category whereas Føtex, SuperBest, and Kvickly are in the high price/high quality category. Irma is in a category of itself where the associations are premium price/premium quality. As one can see there are two gaps in this consumer s mind-set, where one is the low price/high quality and the other is the high price/low quality category. Obviously, no one would want to be categorised into the latter category, however, the low price/high quality category is quite desirable because there, they would be the only supermarket in that category. As previously explained, perceived quality is one of the main drivers of brand equity because empirical evidence shows, that it directly affects profitability (Aaker & Joachimstaler 2002:19). The reason for this is that, when customers have a high perception of quality they are less sensitive to price and hence companies are able to charge a higher price for their products (Keller 2008:195). Consequently, it is important that companies know their customers perception of what constitutes good quality (Schnoor & Petersen 2009:37). Again, Page 35

37 the judgement is in the hands of the customers. For example, a company may produce a technical product with many features that enable it to perform various functions. The company may have spent a lot of money in developing these product features, and marketed it as a high quality product. However, a customer who does not need these features will most likely not include these in his or her overall judgement of the product, and thus the perceived quality is lower than the actual quality. So a positioning strategy includes looking at the competitors, and identifying how we are similar to them and how are we different. The answer to this will then determine how to position the brand in the most desirable consumer mind-set category (Keller 2008:98, Schnoor & Petersen 2009:77) Execution of Brand Strategy The green square in the brand management model represents the implementation of the brand strategy. All brand strategy implementation is connected to communication (Schnoor & Petersen 2009:193) Communication Communication is the underlying basis for all branding. Without communication there simply is no brand (Schnoor & Petersen 2009:197). This is also highlighted in the Brand Resonance Pyramid presented earlier, where the first step in any brand building strategy is to create awareness. But what exactly is communication. To many people outside the marketing world communication simply means advertising (Schnoor & Petersen 2009:197) However, communication comes in many forms and through many channels. As private people we communicate not only through what we say, but also through what we do. What kind of clothing we wear, what products we buy, and even what car we drive is a communication to others about who we are and what we stand for and it is no different for companies. Just think of uniforms. To many patients a doctor in a shiny pink uniform would signal unprofessionalism Integrated Marketing communications In integrated marketing communications, the company identifies all their possible communication channels and ensures that they all project the same message (Belch & Belch Page 36

38 2008:12). The advantage of using integrated marketing communication is that, by conveying the same message in different ways and through different communication channels, the meaning of the message will be clearer and more effective (Schnoor & Pedersen 2009:194). This last section finishes my description of the most important elements of general brand management theory. Next, I will introduce the reader to how brand management theory has been further developed to include micro and smaller to medium enterprises (SMEs). 3.5 STRATEGIC BRAND MANAGEMENT IN SMEs As previously mentioned, brand management theory only deals with LOs. For that reason it is not surprising that Keller, Aaker and the other brand theorists have been criticized for not including SMEs into their work (Krake 2005:228, Kunde et al. 2008:92, Berthon et al. 2008:28, Spence & Essoussi 2010:1037). The reason why I include it into this thesis is due to the fact that SMEs, in some areas, provide a better base for comparison with smaller sport organisations than LOs. Consequently, this chapter will also focus on brand Model 3.6: Brand Management model for SMEs. Own design. management theory in relation to SMEs. Like sport marketing, it is a field of study in its infancy, and most of the theory is derived from general brand management theory. In an article Krake (2005:232) identifies a set of brand guidelines for SMEs, which will be the focus of this section. It is also based on these guidelines, that I have made a model that assembles and depicts the elements of brand management for SMEs. However, taking the differences between SMEs Page 37

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