Every day consumers come across a wide range of product names, images, stimuli and information which appear in many different formats - in the high street, on the products they use, at events and places they attend and through a range of entertainment media both inside and outside the home. It is important for business organisations to understand how consumers assimilate this information and how it affects their behaviour. For example, when they make buying decisions, how do they choose between the many products and services on offer and what helps them make that choice?
It is possible to say that successful companies are generally those which understand customer requirements better than their competitors. However, identifying customer needs is only part of the story. It is also necessary to find out why customers make certain decisions. Marketers often refer to the consumer’s mind as the ‘black box’ - because it is very difficult to understand exactly what goes on in this black box! Consumers make choices based upon their perception of the value represented by the various products and services on offer.
For routine decisions, such as buying groceries in a supermarket, value may not be a such a complicated or subtle factor in the decision making process. For longer-lasting, more durable products, such as financial services, their perception of value is much more significant.
This case study examines how one organisation, Nationwide Building Society, has used sponsorship as a means of communicating more about the value of its customer proposition to consumers. Nationwide operates in a fiercely competitive market where it is difficult for consumers to distinguish between the financial service organisations in the market and the array of services on offer. The study provides an insight into how the process of sponsorship can help an organisation which wishes to set itself apart from its competitors.
Over recent years, there has been continuous change in the market-place for financial services. A number of the larger building societies and life assurance societies have converted to public limited companies (plc). At the same time, the range of financial service providers has fluctuated - reduced initially by mergers, then widened by the entry of new players, some of which include leading retailers. For most consumers, the pace of change and the implications of such change have been difficult to understand.
Nationwide is now the world’s largest building society with seven million customers, 13,000 employees, 690 branches and assets of more than £40 billion. Nationwide is large enough and strong enough to offer a real competitive alternative to the banks. The main aim of the Society and its subsidiaries is to provide a full range of top value, quality financial services that are widely available and delivered with speed, courtesy and reliability. This aim is backed by the key values of fairness, honesty, staff importance and corporate responsibility.
Commitment to customer ownership
In order to continue offering the strongest possible competition to banks and other public limited companies, in terms of price and service, Nationwide is committed to remaining a mutual building society. This means the Society is owned by the customers as opposed to shareholders.
There are many reasons why Nationwide is committed to this approach. The absence of shareholders demanding dividends means that Nationwide can work to lower profit requirements and instead offer consistently higher rates for investors. Nationwide’s championing of member ownership has aroused widespread public interest. Its policy is designed to pass the benefits of mutuality on to members - with more emphasis on customer satisfaction and business efficiency and less emphasis on profit. Nationwide wants to remain the first choice for customers who want ‘membership’ of a building society and as a place where people want to work. It is only by achieving this that Nationwide can consistently achieve top industry ratings.
Nationwide has improved its competitive advantage by offering improved rates, improved services and a better product range. Its business has grown from using a strategy of differentiation which has successfully communicated a range of unique benefits providing value for buyers. These strategies have been shaped by customers’ views of what ‘value’ means to them. In practice, five factors have dominated:
As a customer owned building society, Nationwide has had the flexibility to adopt an aggressive pricing strategy, improving its savings rates across a range of products. In order to project this message, Nationwide has focused on brand development. An important part of this process is sponsorship - developing and emphasising the value represented by the Nationwide customer proposition and strengthening relationships with the wider community.
Branding is a major part of any product strategy. In the financial services industry, developing a brand is about developing a name, offering products and features of high value, which customers can trust. Different brands vary in the amount of power they have. For example, customers are unlikely to choose a little known brand in a competitive market-place. Brand preference occurs when customers select certain brands over others and show a high degree of brand loyalty. Sponsorship is a good way of increasing brand awareness which, in turn, helps to generate preference and foster brand loyalty. Sponsorship is the material support of an event, activity or organisation by an unrelated donor. It reinforces awareness through the appropriate event whose target market and appeal is similar to that of the customer.
In the football industry, there are few instances where gate receipts and pitch advertising fees are sufficient to cover club costs. Financial support from many different sources is therefore necessary to guarantee the survival of many clubs.
In March 1996, Nationwide started its pursuit of the sponsorship of The Football League Championships. This decision was not taken lightly as, although Nationwide had sponsored other events, such as the Fairford Air Tattoo and AAA Athletics, it had never sponsored such a high profile event as the Football League. However, it was believed the time was right to integrate this new element into Nationwide’s marketing strategy. The existing sponsor, Endsleigh and another financial services company were also pitching for this coveted prize but after a series of negotiations, the deal was secured by Nationwide in May 1996. When the 1996/7 season kicked-off, Nationwide’s three year £5.25 million sponsorship of the game had begun.
In return for its investment, Nationwide receives extensive exposure. Over 60 Nationwide League games were televised live on Sky and ITV in the first season, with an audience of up to two million per game. Highlights of these and other games were also shown on ITV, in a programme called Nationwide Football League Extra, and there was national and regional press and radio coverage. Sponsorship included a shared identity logo for the Nationwide Football League and shared identity logos for each of the three divisions. Nationwide has four advertising boards at every League club ground and opportunities to promote the Nationwide name and services in every match programme. Nationwide also receives an entitlement to free tickets which it uses for hospitality and entertainment to support business generation.
In communication terms, Nationwide had negotiated a classic sponsorship strategy, but why did it choose football? Football has dramatically changed since the mid 1980s. The tragedy at Hillsborough and the subsequent Taylor report, requiring all-seat stadia has been a catalyst in restoring the popularity of the nation’s favourite spectator sport. For the last eight seasons, match attendance has been consistently rising.
The profile of supporters is also changing. Football is not, as some may believe, the exclusive domain of young males. A trip to any League ground on matchday will confirm the attendance of children, whole families and even groups of female supporters, sharing their common love of a football team and reinforcing the club’s role as a focal point within local community life.
According to the Target Group Index (TGI), football sponsorship delivers a broad-based group of over 18 million active ‘enthusiasts’ who may be playing, spectating or watching on TV. Many more have a passing interest in the game, watching or listening to sports news reports and reading the sports pages in the press. For Nationwide, football sponsorship offered a tangible link with existing and potential customers through a leisure time activity.
Nationwide is a large brand with a high profile. There are Nationwide branches in the area of every team in the League and many football supporters are also Nationwide customers. Nowadays, it is becoming more and more difficult to target key consumer groups by television advertising alone. This is due to the increasing number of television channels and the consequent fragmentation of the target group. ‘Channel hopping’ during the advertising break can also mean that messages are not successfully transmitted to the consumer.
A key element in any form of promotional activity is to ‘maintain’ your target’s interest in a product or brand at all times. Both the coverage and frequency of a message are key elements in its transmission. Sports sponsorship helps to achieve this as the advertiser’s message becomes part of the event - in advertising around the ground, the use of the name in TV messages and in the publication of the results in the newspapers. The Football League play-offs at Wembley also help to provide Nationwide with the opportunity to ‘switch into the event’ over a focused and relatively lengthy period.
Consumers often select brands because they are familiar. As a key element in the promotional mix, sponsorship is particularly effective in developing brand awareness and familiarity. Nationwide’s sponsorship of The Football League is a particularly effective way of increasing awareness by branding Nationwide to many more groups of targeted customer groupings. One method of assessing the success of a sponsorship strategy is to use a range of spontaneous interview techniques - finding out if individuals are becoming increasingly aware of a brand. Nationwide has built a three year strategy for its sponsorship:
Initially the plan was simply to make consumers aware that Nationwide was sponsoring The Football League.
The current strategy is to:
- continue to develop awareness of Nationwide
- begin to actively sell products through the same medium.
To continue as in Year Two, but less product activity will take place as ‘awareness’ needs to be embedded, and to have a more active participation with co-sponsors and the League.
The sponsorship of The Football League was launched under the banner “Wherever you find a Football League team, you’ll find a Nationwide Team”, reflecting the fact that where there is a League club, there is also a Nationwide branch. In fact, there are 630 branches within the catchment area of The League.
Initially, in May 1996, consumers were confused as to who the sponsors were. Many people believed that Carling, sponsor of the Premiership, also sponsored The Football League. In August 1996, 32% of consumers believed that Carling sponsored The Football League and only 5% had identified the role of Nationwide. By March 1997, however, the strategy had fundamentally changed consumer perceptions. Only 9% thought that Carling sponsored The Football League whereas 13% now identified Nationwide. In less than a year, the sponsorship strategy had drastically helped to improve Nationwide’s brand familiarity - i.e. the strategy had played an important part in promoting Nationwide as a Building Society and not just Nationwide as sponsor of The Football League. The combination of sponsorship, television, press and radio activity has led to spontaneous awareness levels of Nationwide increasing from 27% to 38% in one year.
This case study has illustrated how the process of sponsorship has helped Nationwide to target a key market effectively and within a relatively short period of time - building brand awareness and using it as a base from which new business can be generated in the highly competitive market of financial services. For Nationwide, football has helped to build its response to community issues and generate the ‘friendly’ face of the company. In doing so, it has provided a tangible link with existing and potential customers through a leisure time activity they enjoy and feel positive about. .