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Why companies, already big and famous (like Pepsi), need to sponsor a tournament for marketing their product?
Pepsi is the title sponsor of the popular Indian domestic sports tournament IPL or Indian Premier League. For being the title sponsorship, they are paying Rs.397 crore (over five years) (or USD 72.4 Million) [Also, the PPP would take the cost higher].
Since they are already famous and popular, why do they need to promote their brands? Aren't they too generous with their money as they can easily save their this cost of creating a brand?
Brands like Pepsi, coke, Nike, Adidas...are household names, but they became this through omni present marketing and branding. the answer to your question has two sides:
- On the one hand these sponsorship create brand awareness, constantly reminding people to drink Pepsi. Of course, if they ceased all such activities people would not immediately stop drinking Pepsi but their sales would decline with time. Humans' attention spam is getting shorter and shorter, in large part due to being constantly exposed to so much information, so if Pepsi stopped being so present, someone would take their place and with time we would not think of drinking Pepsi so much.
- Secondly, from a brand point of view, it is important for Pepsi and other brands to constantly reinforce their brand values. In this case their associations with sports. Nike and Adidas are indisputably the most popular sports brands, but if they stopped sponsoring events and sports teams , and say Under Armour did instead, then Under Armour would gradually gain market share at the expense of Nike and Adidas. Similarly, if Pepsi stopped promising the IPL of Premier League then maybe Mountain Dew would, and people would drink mountain dew instead because that is the brand that would be in their mind after watching the events.
So to sum up, whilst it may seem crazy , huge global brands remain highly active in marketing in order to maintain their position atop the brand world.
Source(s):12 months ago