Role and purpose of sponsorship

Role and purpose of sponsorship Sponsorship is defined as a cash and/or in-kind fee paid to a property (typically a sports, entertainment, non-profit event or organization) in return for access to the exploitable commercial potential associated with that property (International Events Group (IEG) Glossary, 2010). Sponsorship can be beneficial to companies for many reasons but the two main reasons for a firm to enter a sponsorship are: (1) to increase brand awareness, and (2) to establish, strengthen, or change brand image (Cornwell and Maignan 1998; Crowley 1991; Gwinner 1997; Gwinner and Eaton 1999; Marshall and Cook 1992; Meenaghan 1991; Meerabeau et al. 1991). Sponsorship is now one of the most significant parts of marketing mix and all marketers consider it a major factor of a successful marketing campaign. The most popular medium of sponsorship is sport sponsorship and accounts for more than half of all sponsorship spending in UK and US (Thwaites, 1995). In UK the estimated value of sponsorship market is  £871 million with sport sponsorship accounting for 51% of all sponsorship expenditures in 2005, broadcast following with 27% and arts with 14% (Mintel, 2006). It is important to label the difference between event sponsorship and event marketing. Event sponsorship involves payment from the sponsors side in contrast to event marketing which refers to staging of an event from a firm with or without paying a sponsorship fee (Close et al, 2006). Sponsorship is also different from patronage. In patronage the financial support is given without any expectation of returns in terms of advertising or publicity, in sponsorship the main reason of financial contribution is brand awareness (Bennett, 1999). According to Meenaghan (2001) sponsorship is more beneficial than advertising for two main reasons: Firstly, consumers can develop an intense emotional response toward sponsorship and this leads to higher levels of involvement in the event. Moreover, sponsorship is an indirect attempt to persuade consumers compared to advertising which is direct. Therefore, sponsorship can influence consumer on a subconscious level. A diagnostic measure, used to make decisions concerning sponsorship and advertising is public awareness of sponsorship (Tripodi et al, 2003). As Gwinner and Bennett (2008) mention a lot of research was conducted on the effects of sponsorship on brand awareness (Cornwell Coote 2005; Gwinner Swanson, 2003; Madrigal, 2000, 2001; Pham Johar, 2001; Rifon, Choi, Trimble, Li, 2004), thus, the most recent studies on sponsorship focused on other element in order to measure the effectiveness of the sponsored events. As the authors state recent studies focus on the consumer attitude toward sponsorship (McDaniel 1999; Speed Thompson, 2000; Stipp, 1998), (Dean, 2002; Gwinner Eaton, 1999; McDaniel 1999; Rifon et al., 2004; Rodgers, 2004; Szykman, Bloom, Blazing, 2004), goodwill (Meenaghan, 1991, 2001), fan involvement (Fisher Wakefield, 1998; Madrigal, 2001; Meenaghan, 2001; Schurr, Wittig, Ruble, Ellen, 1988; Wann Branscombe, 1993), image transfer (Gwinner, 1997; Gwinner Eaton, 1999), and behavioral intentions like purchase intent, positive word-of-mouth, and actual purchase behavior because of sponsorship (Madrigal, 2001; McDaniel, 1999). Sports sponsorship is the most studied type of sponsorship and the majority of studies had shown a positive influence of sponsorship on brand recall and recognition, image transfer and purchasing intentions (Kim and Choi, 2007). However, no research has conducted on how brand awareness, eventà ¢Ã‹â€ Ã¢â‚¬â„¢sponsor fit, attitude toward the sponsors, fan involvement and purchasing intention can be effective in a music festival surrounding. All the above studies mainly focus on sports events because sports sponsorship is more popular than others types of sponsorship (Mintel, 2009). According to BBC News the sales of albums dropped by 3.5% in 2009 to 128.9 million, this was the fifth year in a row that sales of album have fallen. On the other side, music digital downloading increased (BBC News, 2010). Therefore, the music industry should determine other methods in order to increase its profits. Music festivals and concerts are becoming a major source of income for artists and generally the music industry (Campaign, 2008). This is a great opportunity for brands to sponsor music event. According to Mintel (2008) the total number of concert goers is forecast to continue rising to 2013, but at a much slower rate that over the last five years: just under 25 million people are forecast to attend a concert in one of the major categories in 2013, compared with an estimated 23 million in 2008 and 17 million in 2003. Furthermore, a research commissioned from Target Media (executed from Eyebal) shows that many different sectors choose to associate with music festivals, but those with the most potential for success are alcoholic drinks, with 75% of festival goers spotting booze ads at festivals and 77% believing alcohol brand advertising would work best at festivals. Fashion brand advertising has been spotted by 36% of those attending festivals and 41% believe this kind of advertising would work best in a festival environment. (cited in Roberts,2009). According to a research made on sponsorship of music festivals, brand sponsorship has an impact on brand recall, awareness and attitude towards the brand (Rowley and Williams, 2008). Although sponsorship of music festival from alcoholic drinks looks very promising as a marketing communication tool health issues can impede this process. According to Campaign (2009) the governments health committee will recommend changes to advertising codes to prevent alcohol companies sponsoring music or sports events if a proportion of the audience would be too young to buy alcohol. On the other hand, a research made from The Cardiff Business School, published by the International Journal of Sports Marketing Sponsorship, found that there are no significant statistical correlations between sports sponsorship awareness and attitudes to alcohol use among underage drinkers. (cited in Parson,2010). This study aims to provide a better understanding of brand sponsorship on music events. The main purpose of the research is to investigate how sponsorship in music festivals can influence the beliefs and attitudes of the participants. Through the analysis of the impact of music sponsorship on consumers perception of brands it will be easier for firms to target their customers more efficiently. Music concerts and festivals that use alcoholic drinks as sponsors will be investigated in order to examine the behavior of the consumers. The research will focus on alcoholic drinks (Tuborg beer) because alcohol brands are the most common sponsors of music events. The objectives of this research are: Examine the levels of brand awareness in music festivals Investigate the level of fan involvement of music festival participants Determine the congruence between music festivals and alcoholic drinks as perceived from the consumers Examine the attitude of participants toward the sponsors of music festivals Investigate if attitude towards the sponsor, fan involvement and sponsor / event fit influence the buying intentions of music event participants The first chapter will provide the academic background of sponsorship especially in sports events because most previous studies are related to sports. However, the variables that were used from previous researchers in order to measure different aspects of sponsorship effectiveness will be adapted to our study on music events. Variables such as brand awareness, fan involvement, sponsor and event congruence, attitude towards the sponsor and purchasing intention will be explained at this stage of the research. Every variable will be defined and the results from previous studies will be presented. In this way, we will determine our objectives and define the measurement that will be used throughout the report. In the second chapter the methodology will be presented. Due to the scope of our research and based on previous studies only quantitative research will be conducted. The collection of the data will be based on questionnaires. Questionnaires will be distributed in a popular music festival (Latitude Festival 2010) in order to test the impact of sponsorship in music events. Research instruments and data collection method will be part of this chapter as well as the way that our survey was conducted. In the next chapter, the results of the entire research will be presented. SPSS will be used in order to analyze the collected data and to evaluate the level of significance of our results. Descriptive statistics as well as correlation and regression analysis will be conducted in order to check the validity of our results. Tables and graphs will also be concluded in this part of the study. In the last chapter, the conclusions will be drawn and compared to the results of previous studies. The conclusions will be used as a guide in order to advise marketing managers in their future marketing campaigns. Limitation of the study as well as ideas for future research will be concluded in this part. Brand awareness This study will investigate how sponsorship in music festivals can influence the beliefs and attitudes of the participants; hence all types of branding should be defined. Brands can influence consumers in many different ways. According to De Chernatony and McDonald (2003) brand awareness reflects the salience of a brand and facilitates consumers abilities to identify the brand with a specific product category. Brand awareness consists of brand recognition and brand recall (Keller, 1993, Keller 2001). Recall is the ability to name (typically unprompted) the brands involved in a given sponsorship. On the other hand, Brand recognition develops the notion of knowledge by adding the ability to recognize the product category of the brands involved (Smith, 2004). For instance everybody knows that AIG is the sponsor of Manchester United but fewer people recognize that AIG is an insurance company. In addition, brand image reflects the consumers perception of a brands characteristics and can be gauged by associations they hold in their memory (De Chernatony and McDonald, 2003). According to Keller (2001) positive perception of the brand is likely to affect the cognitive (eg brand recognition, awareness and recall), affective (eg liking or preference for the brand) and conative (eg intention to buy, brand purchase and loyalty) dimensions of consumer behavior and create strong brands which yield marketing advantages, such as lower vulnerability to competitive actions or market crises, the ability to earn higher margins and increased marketing communication effectiveness. In addition, Gà ¼Ãƒ §là ¼ Sà ¶zer and Vardar support this statement on their journal. According to the authors the positive effect of sponsorship is mainly on the cognitive dimensions of brand equity. Cognitive dimensions of brand equity, which are brand awareness and perceived quality, represent lower levels of consumer-brand relations. The main reason for brands to sponsor events is increased brand awareness and improved brand image (Gwinner and Eaton, 1999). Moreover, sponsorship is the main medium for art festivals to raise money (Hume et al., 2007). According to Alexandris et al (2008) potential sponsors who target events with young and more educated spectators might have an easier task in sponsorship promotion and in achieving sponsorship objectives, than sponsors who target events with older and less educated spectators, who are probably less informed about sponsorship issues. These spectators need more focused marketing approaches in sponsorship promotion, if awareness is to be achieved. Therefore, sponsorship of music festivals can be more effective on reaching the sponsorship objectives due to the target audience of music festivals. The audience of rock/indie festivals is mainly male between 16-34 and their social status is ABC1 (Mintel, 2008). The first stage of sponsorship benefits is awareness, without it, the sponsors cannot meet their subsequent objectives such as image enhancement, positive behavioral intentions and increased sales (Crompton, 2004). The actual use of the product in the sponsorship event is of major importance for the awareness of both the product and the brand. In events that sponsors provided a specific souvenir item and allowed product sampling the recall and recognition levels of the sponsor were higher (Miloch and Lambrecht, 2006). The mean recognition rates for these sponsors were twice as high compared to those sponsors that did not activate their sponsorships (Miloch and Lambrecht, 2006). It is also interesting enough that the recall levels change during the event. Before and during the event the recall levels of the sponsor are relatively high but after the event they fall again in the initial levels, the communication effort of the sponsor is what determines the effectiveness and the duration of the sponsorship awareness (Walliser, 2003). Moreover, Grohs et al (2004) support that people who are aware of the sponsor before the event, they are more aware after it. Brand equity of sponsor plays a major role in the fit that consumers perceive between the sponsor and the event. Even if the events sponsored are identical, high brand equity sponsors are perceived more congruent than low brand equity ones (Roy and Cornwell, 2003). Higher recall and recognition levels can be achieved when people are interested on the event (Miloch and Lambrecht, 2006). This means that when the participants are more involved with the event higher brand awareness can be achieved for the sponsor. According to the results from a survey conducted from Vale et al (2009) the level of investment is related to the level of awareness. Consequently, the sponsors that invest more in the sponsorship were more evoked. The results also suggest that sponsorship when considered in isolation from other complementary communicative policies positively affects the awareness of the sponsoring brands through exposure (Vale et al, 2009). The relationship between exposure and recall is generally positive and not an inverted U as many researchers supposed (Zajonc, 1968 ; Bennett, 1999). Therefore, a repeated exposure to stimuli (e.g. the logo of the sponsor) will lead to a more favorable opinion towards the stimulus (Bennett, 1999). If the spectator frequently visits the area of sponsorship (e.g. a football stadium) it is more likely to be aware of the sponsors perimeter posters (Bennett, 1999). However, consumers get confused about the official sponsor of the event (Grohs, 2004). Ambush marketing can be the reason for the misunderstanding of the official sponsor. It is common in sponsored events brands that are not the official sponsor and do not have a direct connection to the event to try to exploit the commercial opportunities that appear (Burton and Chadwick, 2009). In order to predict sponsor recall many parameters of sponsorship should be determined. According to Grohs et al (2004) sponsor-property fit, event in volvement and exposure are the main factors to be considered. According to the research of Boshoff and Gerber (2007) both brand recall and brand recognition of the sponsor of the event increased significantly but brand recall and brand recognition of non sponsor did not increase at all. Therefore, sponsorship has a positive direct impact on brand awareness of the sponsor. Although, field-sponsorship stimuli as well as television-sponsorship stimuli are effective as far as memorization is concerned, they are not equally effective (Lardinoit and Derbaix, 2001). According to the research of Lardinoit and Derbaix (2001) television-sponsorship stimuli influence both unaided recall and recognition; on the other hand, field sponsorship can lead to a superficial memory trace in the mind of the consumer. Fan Involvement According to Meenaghan (2001) fan involvement refers specifically to the extent to which consumers identify with, and are motivated by, their engagement and affiliation with particular leisure activities. Enduring involvement corresponds to a kind of genuine enthusiasm, a strong and solid interest that comes from the relevance of an object or subject for the individual ( Lardinoit and Derbaix,2001). On the other hand, team identification is spectators perceived connectedness to a team and its performance and represents the final mechanism of fan attachment (Smith et al, 2008). Consequently, fan involvement is used to measure the attachment of an individual towards a social or leisure activity and team identification to measure attachment towards a team. Individual that are more involved towards an activity, they are capable to comprehend the values of the event and to associate these values to the sponsor of the event (Meenaghan, 2001). Fans who attend football matches in order to support their team they share the same norms and images with other fans and their involvement to the whole event generates positive feeling towards the group of fans (Bennett, 1999). According to Lardinoit and Derbaix (2001) it is of major importance for the success of sponsorship to reach high levels of involvement because involvement attracts the consumers to watch the sponsored event, for longer periods of time and more frequently. The authors also mention that involvement leads to extensive exposure to the sponsors message. Purchasing intention can also change when the attendant is highly involved in the activity (Meenaghan, 2001). Fan involvement has an impact on brand awareness and brand image of the sponsor. As Pitts and Slattery (2004) state highly committed viewers and individuals who are more aware of the event it is more likely to recognize the sponsor compared to less committed spectators. This also supported from the research of Lascu et al (1995) which was based on golf fans. According to the finding high involved golf fan were more likely to remember the name of the sponsor. In addition, the greater the interest of the participant for the event, the greater the sympathy toward the sponsor and this lead to more positive image for the sponsor (Alexandris et al, 2007; DAstous and Bitz, 1995). This is also supported from Close et al (2006) survey: An event attendee who is more active in the area of the event (e.g., sports) is more likely to appreciate a sponsors community involvement. According to Alexandris et al (2007) highly involved attendants of basketball were more likely to engage in positive word -of-mouth. According to Wann Branscombe, (1995) an individual can feel more secure and strengthen its self esteem by belonging to a group. They also mention that a person emphasize on the positive aspects of the group and try to avoid any negative associations. The above behavior strengthens their identity as team members (Madrigal, 2001). Loyal and dedicated fans of a team or an event (as described from the research) were much more likely to purchase or consider purchasing from sponsors of the event than those who were not as avid supporters of the team or the event (Dees et al, 2008; Fisher and Wakefield, 1998; Madrigal 2000; Schurr et al, 1988; Smith et al, 2008; Wann and Branscombe, 1993). Moreover, highly identified sports fans are also more likely to be aware of the sponsor and to form a positive attitude (Gwinner and Swanson, 2003; Madrigal,2001). Highly identified fans also attend games (Fisher Wakefield, 1998; Schurr et al, 1988, Smith et al, 2008), spend more on tickets and products , and remain loyal (Smith et al, 2008). The development of an emotional relationship between the consumer and the social activity can also be a result of an effective sponsorship (Meenaghan, 2001). It is interesting, that fan involvement did not have the same impact as other variables as attitude toward the sponsor and goodwill. According to Dees et al (2008) attitude toward sponsor and goodwill have greater impact than fan involvement on purchasing intentions. In order to understand the behavior of attendants of performing arts it is very useful to determine the relationship between subscription and involvement and the relationship between the quality of the event and the purchasing intentions of the attendants (Hume et al, 2007). Sponsor and event fit It is of major importance for the success of an event the consumer perception of congruence between the event and the sponsor, accordingly sponsor brands need to be close to the event participants and try to communicate with them during the event( Gà ¼Ãƒ §là ¼ Sà ¶zer and Vardar, 2009). In image sponsoring, the sponsoring company attempts to identify itself or one or more of its products with the positive images of the event held by the events consumers (spectators, viewers) (Ferrand and Pages, 1996). Therefore, the sponsor should consider how the image of its brand can be congruent to the image of the event. Gwinner and Eaton (1999) in their study about sponsorship and image transfer found that if consumers perceive similarities between the event and the sponsors brand the image transfer was enhanced. This statement was also supported from a latter research made from Gwinner et al (2009) on team identification and event sponsorship. Speed and Thomson research (2000) found that a good fit between event and sponsor can have a positive influence on attitude toward the sponsor and in the intention of using the sponsors product. An example of good category-level fit would be a sports clothing company sponsoring tennis. If there is category-fit consumers next consider fit at the level of the brand, Adidas, for example is a global sportswear brand that would fit with a top-level tennis brand such as Wimbledon(Gwinner and Eaton, 2009). In order to determine the influence of sponsorship we should take into account similarities. There two types of similarities according to Gwinner (1997): Functional similarity occurs when the participants of an event use the product of the sponsor and image related similarity occurs when the image of brand and event are interrelated. An example of the above theory is given by Donald and Cornwell (2003), Mountain Dew has successfully developed brand associations of over the edge and extreme by sponsoring sports such as skateboarding and snowboarding that have similar associations attached to them. Brand knowledge is also a factor that it should be considered when we evaluate sponsorship techniques. High levels of brand knowledge can lead to brand cohesiveness and make the individual able to find a fit between the brand and the event (Gwinner and Bennett, 2008). If the participant of an event is aware of the sponsoring brand (brand knowledge) he can easier conceptualize the similarity between the brand and the event. In addition, it is crucial to take into consideration sponsor-property fit, event involvement and exposure when we want to predict sponsor recall (Grohs et al, 2004). According to Becker-Olsen and Simmons (2002) participant who are exposed to sponsorships with low fit generated less favorable thoughts, formed a less favorable attitude toward the sponsorship, saw the firms positioning as less clear, and engendered less favorable affective and behavioral responses to the firm. If there is a relationship between the product and the event consumers can easier recognize the sponsoring brand than if there is no relationship (Pham Johar, 2001). Therefore, it is more effective in awareness terms if a guitar manufacturer sponsor a music event than a sport event. There is a connection gap (lack of congruence) between the event and the sponsor if the event is over commercialized (Gwinner and Bennett, 2008). According to the authors this is due to the feeling of exploitation that that participant develops toward over commercialized brands. This is also supported from Speed and Thomson (2000) who state that the positive association found between perceived sincerity and response to sponsorship suggests that consumers do not perceive sponsorship to be just another form of commercial activity but are sensitive to the potential philanthropic dimension that a sponsorship may have The way the congruence or fit between the conditioned and unconditioned stimuli is perceived from the individuals influence the conditioned response (Speed and Thomson, 2000). The consumer response is stronger when there is a fit between the sponsor and the sponsored event (Crinmiins and Horn 1996; Otker and Hayes 1987; Speed and Thomson, 2000; Stipp and Schiavone 1996;). Therefore, the fit between the sponsor and the sponsored event is of major importance for the success of event. In addition, the combination of personal liking from the consumers side and a good fit between the event and the sponsor will lead to a more positive respond toward the sponsor of the event (Speed and Thomson, 2000). According to Roy (2000) student that perceived that there was a high level of congruence between the brand and the sport event transfer this positive association to the corporate image of sponsor. He also mentions that the attitude of the students toward the sponsor; due to the fit between brand/event, was also positive. Positive cognitive and affective responses from the consumer are the result of fit between the event and the sponsor (Koo et al, 2006). Fit is also important in order for the brand to reach its target market and instigate the affective associations (McDaniel, 1999) Attitude towards the sponsor One of the major objectives of sponsorship is the development of positive attitude and feeling toward the sponsor of the event (Gwinner Swanson, 2003; Harvey, 2001). According to Lee and Sandler (2007) the effectiveness of sponsorship in terms of reaching the desired objectives is related to the different attitudes that consumer have towards different events. Attitude is a psychological tendency that is expressed by evaluating a particular entity with some degree of favor or disfavor (Eagly and Chaiken, 1993). Therefore, the attitude toward the sponsor can be either positive or negative. The positive attitude toward the sponsor can be the result of favorable beliefs about the benefits of corporate sponsorship (Madrigal, 2001). If the corporate sponsorship is perceived as important from people their attitude is more positive toward the sponsor of the event (Madrigal, 2001). According to Mason (2005) attitudes are comprised of enduring cognitive (beliefs), affective (evaluative emotional attachments) and behavior tendencies towards an object . He also mentions that sponsorship influence the affective components of attitude and generate positive link between the event and the sponsors brand. Attitude toward an object is based on the beliefs that the individual has about that object and the behavioral intentions toward the object are determined from the attitude of the individual (Fishbein and Ajzen, 1975). Therefore, attitude toward the brand is a relatively enduring, unidimensional summary evaluation of the brand that presumably energizes behavior (Spears and Singh, 2004). It is interesting enough that even when the sponsorship awareness of the sponsored event is low, spectators of the event developed positive attitude toward sponsorship in general (Alexandris et al, 2008). According to Alexandris et al (2008) the sponsorship campaign should not over commercialize the event in order to maintain the positive feelings of the participants toward the sponsor. As already mention over commercialization has also a negative impact on the consumers perception of event/sponsor fit (Gwinner and Bennett, 2008). According to the authors this is due to the feeling of exploitation that that participant develops toward over commercialized brands. Attitude toward the sponsor is important in order to predict the purchasing intention of attendants (Alexandris et al, 2007; Lee et al, 1997; Speed and Thomson, 2000). In addition, sport activity involvement, and beliefs about sponsorship play an important role on the prediction of sponsorship outcomes such as image, word of mouth, and purchase intentions (Alexandris et al, 2007). Positive attitudes toward a sponsor have further been positively associated with favorable perceptions and intentions to purchase a sponsors product (Speed and Thompson, 2000). Brand image of the sponsor can also be improved from repeat attendance of the event (Lacey et al, 2007). Purchasing intention Purchase intentions are an individuals conscious plan to make an effort to purchase a brand » (Spears Singh, 2004). Consumers purchase intention is based on two main influences: first, a positive attitude towards the brand; and second, brand familiarity, which is obtained from brand exposure and prior use (Pope and Voges, 2000). The enhanced company and brand awareness that sponsorship can cause is only a part of its effectiveness. According to Smith et al (2008) sponsorship can also create the desirability to the attendants of the event to buy the sponsored products. This is also supported from previous researches on consumer purchasing intentions (Faircloth, Capella and Alford, 2001; Koo et al 2006; Lee et al., 1997; Madrigal, 2001; Meenaghan, 2001; Terry and Hogg, 1996). It is also interesting that congruency between sponsor and event is influenced from brand equity. As Roy and Cornwell (2003) mentioned sponsors with high brand equity sponsors are perceived from participants of the events as more congruent than those with low brand equity. The link between personal attitude toward an object and the actual behavior is called behavioral intention (Fishbein and Ajzen, 1975). Therefore, when we want to predict the influence of sponsorship, attitude toward the sponsor is of major importance. Speed and Thomson (2000) state that positive attitudes toward the sponsor can motivate the participant to purchase the sponsors product. This occurs because generally consumers positive attitude towards the brand will lead to purchase intention before the actual purchase of the brand (Spears and Singh, 2004). However, celebrity advertisement may not be as effective as sponsorship. According to the experimental study of Tripp et al (1994) when celebrity advertisement increases the intention of consumer to purchase the product decreases. Three variables that lead to higher purchase intentions according to Smith et al (2004) are: Team support Sponsor receptiveness (openness to further information, interest in learning more about the sponsor and knowledge of the sponsors business) Sponsor integrity (is a composite measure of respondents views about the relationship between the sponsor and the sponsored sporting team) Some interesting finding from the research of Smith et al (2004) is that the purchase intentions are positively influenced from sponsorship if the participants are passionate supporters of the sport team or the event. In support to the above statement, Spears and Singh (2004) mention that avid supporters (loyal and dedicated fans) and those who hold positive views of the corporate sponsors its more likely to buy the sponsors product than non fans. On the contrary, the frequent match attendance did not have an impact on purchase intentions (Smith et al, 2004). According to Dees et al (2008) the pleasant atmosphere of an event is what influences the consumer to purchase the product of the sponsor. During the event the marketing message is introduced to the consumer. Therefore, the consumer will buy the product of the sponsor in order to experience the same feeling that he had during the event. According to the research conducted from MacDonald and Sharp (2000) on consume

Morrisons Swot Essay

Richard Hammond, use of familiar face to advertise the company in a celebrity obsessive society. †¢Emphasis on procuring and distribution of quality British product at competitive price compared to competitors †¢Acquisition of new stores and expansion of the company, steady rise in company profits in recent years Weakness: †¢Company focus mostly on food products while the market share for daily goods, accessories and pharmaceutical are being over taken by competitors . i. e. Tesco, Asda †¢The economic crisis- means possible customers cannot afford to spend their income quickly and will prefer for a better value before making sale †¢The company as many other major supermarkets are essentially working in a negative working capital meaning its always in debt †¢Company lagging behind in implementing its digital services to its customers compared to the major competitors such as Tesco who’ve had their online service operation for several years now †¢Globalization means cheaper and equally quality product can and are being sold by the stores competitors at competitive price Opportunity: †¢Branching out into other business ventures like pharmaceuticals, opticians, electronics, entertainment goods, clothes and many more †¢Focusing more on customer satisfaction and ease of convenience in order to portray the company in a positive manner †¢Special deals and offers on common consumer goods as in food stuff & hygiene, during such economic instability to present solidarity and understanding towards the customers Threats: Adverse weather conditions such as snow storms and heavy rain, etc over major sales season may result in poor profit margins †¢ Due to external geo-political pressure i. e. new rules and regulations brought in by the E. U may result in heavy loss of possible income †¢Recent economic crisis means the loss of hundreds of thousands of job and business loss, directly affecting the spending power of would be customers who may look for cheaper alternatives to a supermarket †¢Competitors from major European supermarket Losing valuable suppliers and fianancial aid from banks due to the economic crisis

Security Chief at a Manufacturing Company

You're the security chief at a manufacturing company that makes small metal hand tools. The plant employs roughly one hundred people. Management has told you that many tools have disappeared. According to company records, the plant produces approximately fifty thousand per day, but far fewer are actually being shipped out. After double-checking the figures to ensure their accuracy, you have concluded that pilferage is the only possible explanation. A meal detector positioned at the employee exit near the time clock would catch anyone trying to smuggle tools out of the factory.Because the purchase cost of a metal detector is prohibited, you have decided to rent one. Anyone caught stealing will immediately be fired, and a note to that effect will become part of the individual's personnel file. You don't want to create an atmosphere of hostility, but you do need to inform the employees about these developments. Write a memo to be posted on the main bulletin board and sent via e-mail. De ar Employees, Due to recent record inconsistencies, the manufacturing company will be reviewing supply and product expenses.Recently brought to our attention is the shortage of production inventory leaving our warehouse plant. Significant security protocols will be implemented as precautions to help reduce cost wherever possible. We ask all employees to keep an open eye for suspicious behavior. Employees caught taking company supplies for personal use, would be grounds for immediate termination and appropriate legal disciplinary actions. Any incident will be reviewed, recorded, and filed for future reference. We thank you for being a part of our company. If you have any questions, comments, or concerns please contact management. Respectfully, -MD

PEST analysis of manufacturing in Pakistan - Free Essay Example

Sample details Pages: 3 Words: 990 Downloads: 4 Date added: 2017/06/26 Category Marketing Essay Type Analytical essay Did you like this example? PEST ANALYSIS POLITICAL The government of Pakistan plays a pivotal role in regulating cement manufacturing industry. Controls and policies are being formulated to smoothen up business operations and facilitate entrepreneurs to operate effectively and efficiently. However, still there are many tax and other charges imposed on cement producers which makes them non-competitive in international market. Cement manufacturers are liable to pay Corporate Income Tax @34%, Federal Excise Duty (FED) of US$3.8/t, and Sales Tax of 17% of the MRP. In addition to this, the initial allowances on Plant and Machinery are also restricted to 25% together with import taxes on raw materials and capital goods being kept at 5% for cement manufacturers of Pakistan. Duties are also being imposed on basic packaging material i.e. Kraft paper under @15% https://www.globalcement.com/news/itemlist/tag/Pakistan Government has to play an important role in improving trade relations across the globe. The export sales of manufacturers are damaged by worsening bi-lateral relations in international markets and as a result cement manufacturers suffer due to government inefficiency and ill-diplomacy. Recently the government badly failed to persuade India for removal of trade barriers and consequently manufacturers lost a lucrative Indian market. https://www.dailytimes.com.pk/business/02-Mar-2014/budget-proposals-for-2014-15-cement-industry-demands-tax-rationalisation Government assisted policies also help the cement industry flourish. Successful development of Metro Bus system in Lahore has greatly helped cement industry in previous years. Further extension will be an injection to cement industry from the governmentà ¢Ã¢â€š ¬Ã¢â€ž ¢s side. https://www.thenews.com.pk/Todays-News-6-240002-PML-N-government-fulfils-longstanding-dema nd-of-residents Presently largest coastal nuclear power projects are in pipeline to be started shortly this year. https://www.thenewstribe.com/2013/11/26/pakistan-initiates-largest-coastal-nuclear-power-projects-of-62000-mw-electricity/ In addition to this, construction of steel mills in Chiniot will be another gift for the industry by the government. https://tribune.com.pk/story/690593/man-of-steel-shahbaz-signs-chiniot-iron-ore-estimation-agreement/ By now, the government has also motivated the Chinese investors to invest in various construction projects including Gadani Power Project, Dasu Power Generation Project and cement industry development. https://www.thenews.com.pk/Todays-News-13-29098-Pakistan-attracting-foreign-investment-says-Nawaz Don’t waste time! Our writers will create an original "PEST analysis of manufacturing in Pakistan" essay for you Create order SOCIAL Due to non-availability and expensive nature of oil and gas coal is used as basic fuel. However, some companies have even progressed to using tire fuel because of its efficient power generation and has lesser TDF metal content as compared to coal. Though this is more environmental friendly but companies will take time to shift to this power source and make themselves more environmentally responsible. https://www.epa.gov/osw/conserve/materials/tires/tdf.htm Cement manufacturing as like other production processes cause environmental pollution.Residents if living in nearby areas get affected by such production processes. Such was the case of dust pollution caused by Kohat Cement Factory that threatened the prosperity of the surrounding villages. https://www.dawn.com/news/1028419/cement-factory-causing-dust-pollution-in-kohat Cement industry provide enormous employment opportunities for Pakistani population. It approximately accounts for 5% of total employed labor force of the country. It employs skilled, unskilled, technical, managerial and engineering professionals for various job roles. Further, it creates business and opportunities for ancillary industries including retailing, distribution, transport etc. https://www.dgtrdt.gov.pk/Research/38th_syndicate_reports/4.pdf ECONOMIC The market structure of cement industry seems to be cartel based and the membersà ¢Ã¢â€š ¬Ã¢â€ž ¢ interests are taken care of by All Pakistan Cement Manufacturers Association (APCMA). However, members of APCMA deny presence of cartel on the grounds of inconsistency in cement prices, capacity utilization and market capitalization. https://tribune.com.pk/story/528875/cement-industry-denies-existence-of-cartel/ Competition Commission of Pakistan (CCP) fined 20 cement manufactures acting and coordinating as a cartel. However, these market producers kept on denying any sort of collusive price arrangements agreed between them. https://www.globalcement.com/news/item/1937-lucky-strike?-changes-in-pakistan%E2%80%99s-cement-industry The international cement market is becoming fiercely competitive as all countries start to protect their balance of payments by imposing trade restrictive measures on cement imports. Depressing economic circumstances and balance of payment concerns worldwide has forced countries to adopt protectionist policies at large. https://www.globalcement.com/news/itemlist/tag/Tax The profitability of cement industry has been badly affected by rising power generation costs. The energy crisis reduces the electricity supply to the industry and therefore many producers are shifting towards self generated power systems. In addition to this, gas tariffs have been increased by 17% resulting in higher power generation costs. https://www.dawn.com/news/1080191/tepid-growth-in-cement-sector Government uses a discriminatory tariff policy by which gas tariffs have been increased by only 17% for captive power plants as compared to compared to 50% increase for industrial consumers. This principal policy distorts completion and provides an undue edge to captive power generation owners. https://www.brecorder.com/brief-recordings/0/1246753/ Survival of small cement manufacturers is very difficult in the market which is dominated by giants. Their market power, pricing controls and collusion pose a dominant t hreat to survival of small scale manufacturers. Especially smaller cement producers are finding it very troublesome to compete against large manufacturers after discriminatory power policy because they are primarily dependent on grid power sources of WAPDA. https://www.globalcement.com/news/itemlist/tag/All%20Pakistan%20Cement%20Manufacturers%20Association Technological All Pakistan Cement Manufacturers Association (APCMA) has entered into an agreement with Lafarge Pakistan Limited to improve and upgrade cement manufacturing units in Pakistan to international health and safety standards. https://www.dawn.com/news/800576/mou-for-safety-in-cement-industry The main concern for the industry is to rationalize their power sources. Investment in Refuse Derived Fuel (RDF) is being done by few companies to secure and streamline their power generation activities. This is a modernized way of power generation through municipal waste. Moreover, waste heat recovery projects are being carried out by many producers in order to reduce their costs. https://www.nation.com.pk/business/11-Mar-2013/debt-servicing-a-major-part-of-cement-industry-cost In addition, the technological advancements are taking place to reduce fuel costs by switching to power generation through alternate sources of energy including pet coke and shredded rubber. https://www.d awn.com/news/1090385/cement-sector-seeks-relief