Examining the use of professional sport teams as a brand extension strategy in Korean professional baseball.
Walsh, Patrick ; Hwang, Hansol ; Lim, Choong Hoon 等
Introduction
Baseball, while appreciated around the globe, has a long and rich
heritage in South Korea. This is especially true at the professional
level. The Korea Baseball Organization (KBO) consists of 10 professional
teams, and the popularity of the league continues to increase. According
to the KBO (2013), there has been a spike in interest in the league as
spectators have increased from around three million in 2006 to more than
seven million in 2012. This increase in attendance represents not only a
surge in the professional baseball fan base in South Korea, but also
signifies an opportunity for the development and implementation of
business strategies by the league and the teams within the KBO.
One of the aspects of the marketing and management of professional
baseball teams in South Korea involves the strategy whereby some of the
franchises are owned by corporations, and as such these corporations
become part of the organizational and marketing fabric of the teams. The
most noticeable connection between the traditional businesses and the
baseball teams is in the official team designations, in which the name
of a particular team includes the name of the parent company that owns
the team. For example, the "Lotte Giants" are named after the
Lotte conglomerate based in Japan and South Korea, the "Kia
Tigers" are named after the Kia Motors Corporation, the
"Samsung Lions" are named after the business conglomerate
Samsung, and so forth. Thus, the Lotte Giants, Kia Tigers, Samsung
Lions, and some of the other teams in the KBO have adopted a management
system in which they are both named and managed by their parent
companies.
In addition to the KBO, this ownership structure is present in
other areas of the world and sports. For instance, teams in Japan's
Nippon Professional Baseball League (e.g., Yomiuri Giants) and
Taiwan's Chinese Professional Baseball Association (e.g.,
Uni-President 7-Eleven Lions) operate under this type of ownership
model, and while popular in Asia, this type of ownership strategy is
present elsewhere around the globe as well. For instance, clothing
company Benetton owns the Italian professional rugby team Benetton Rugby
Treviso, a U.S.-based furniture store chain called Furniture Row owns
Furniture Row Racing, which has teams in the NASCAR Sprint Cup Series,
and the energy drink company Red Bull owns a number of teams including
the New York Red Bulls of Major League Soccer (MLS), the German
Bundesliga club Red Bull Leipzig, and the motorsports Red Bull Racing
team. According to Aaker (1996), the teams would be considered to be a
brand extension of the corporate parent brand, as the company (e.g.,
Samsung) has created a new product (e.g., Samsung Lions) that exists in
a new product category (i.e., professional baseball).
In the KBO, the parent company subsidizes the majority of the
revenue for the baseball teams. More specifically, according to the KBO
(2013), the majority of revenue for the teams (i.e., 73%) comes from the
parent companies, while ticket sales, media revenue, and sponsorship
revenue account for only 6%, 7%, and 14% of the total revenues,
respectively. Due to the substantial size of the financial support the
companies provide to the teams, the parent company has the exclusive
right to use the brand name of its franchise. Because of this ownership
situation and the magnitude of the investment provided by the parent
brands, it is important to understand how the teams are managed within
the organizational structure of corporate ownership. In addition,
understanding what impact the ownership of the team has on the parent
brand is important in order to determine the viability of using
professional sport teams as brand extensions.
In a similar study in Taiwan it was found that using professional
baseball teams as brand extensions could have an impact on the parent
brand's image (Walsh, Chien, & Ross, 2012). However, what has
yet to be examined is what impact the executives who manage the teams
feel that team ownership has on business-related outcomes for the parent
brand. Therefore, the purpose of this study is to examine, by
interviewing the executives in charge of marketing the teams in the KBO,
the perceived impact that team ownership has on the corporate parent
brand.
Literature Review
Consumer Evaluation of Brand Extensions
While only one study to date has examined the use of professional
sport teams as brand extensions (Walsh et al., 2012), the subject of
brand extensions is an area of research that has received a fair amount
of attention. This is particularly true outside of sport, and, while
limited, research has also begun to focus on the use of brand extensions
for sport-related brands. One of the main areas of research has focused
on determining how consumers respond to brand extensions.
It has been suggested that the success of a brand extension will
rely on a variety of factors. For instance, evaluation of brand
extensions has been regarded as "a function of product-similarity
judgment in which consumers compare some aspects of the existing set of
products with those of the extension product" (Park, Milberg, &
Lawson, 1991, p. 185). Specifically, brand extensions are more likely to
receive favorable evaluations if consumers believe that the brand
extension's product category is similar to the parent brand's
product category (e.g., Bhat & Reddy, 2001; Bottomley & Doyle,
1996; Bottomley & Holden, 2001). In addition to the perceived fit in
the product categories, product feature similarity and brand concept
consistency have been suggested as two additional ways in which
consumers evaluate the fit between the brand extension and the parent
brand (Park et al., 1991). Hem, de Chernatony, and Iversen (2001) also
indicated that similarity between the extensions and parent brands,
reputation of the original product, perceived risk in terms of the
extension category, and innovativeness are antecedents to successful
brand extensions. In sport, Papadimitriou, Apostolopoulou, and Loukas
(2004) also suggested that consumers' perceptions of fit affect
their evaluations of brand extensions. Furthermore, the researchers
found that the strength of the parent brand and promotional support are
other keys to success for brand extensions of professional teams in the
sport industry.
In addition to perceived fit, scholars have maintained that if a
consumer holds a positive attitude towards the company that introduces
the brand extension, then that positive attitude will also be held for
the new brand extension that is introduced (Aaker & Keller, 1990;
Broniarczyk & Alba, 1994). Emotional attachment to the parent brand
has also been shown to impact a consumer's evaluation and purchase
intentions of brand extensions (Fedorikhin, Park, & Thomson, 2008).
The positive impact of emotional attachment to the parent brand has also
been supported by brand extension research in sport. For instance,
Apostolopoulou (2002) found that team identification will have a
positive impact on team-related brand extensions. Walsh and Lee (2012)
also discussed the importance of identification in team brand extension
evaluation, and noted that it is important for teams to understand the
level of attachment fans have with their franchise prior to deciding to
introduce any brand extensions. Spiggle, Nguyen, and Caravella (2012)
also introduced the concept of brand extension authenticity (BEA) and
found that consumer attitudes, purchase intentions, and willingness to
recommend a brand extension are enhanced when the extension is seen as
being a legitimate extension of the parent brand (i.e., maintains
similar brand standards and style, preserves the parent brand's
essence and heritage, and does not simply exploit the brand for
commercial gain).
Impact of Extensions on the Parent Brand
In addition to determining how consumers evaluate brand extensions,
another line of research has examined how brand extensions may impact
the parent brand that introduces the extension. This research is
particularly important to understand as it has been suggested that any
potential failure of a brand extension could negatively impact parent
brand equity by altering the pre-existing image consumers hold for the
parent brand (John, Loken, & Joiner, 1998; Loken & John, 1993;
Walsh & Lee, 2012). Two of the frameworks that have attempted to
explain this effect are the bookkeeping and typicality models.
The bookkeeping model states that dilution may occur to parent
brand image if the image of the brand extension is different than the
image of the parent brand that introduces the extension (Loken &
John, 1993; Weber & Crocker, 1983). The typicality model also states
that dilution to parent brand equity could occur. However, according to
this model dilution would only occur to brand extensions that are seen
as being a fit with the parent brand's product category, yet they
still are presented with an image that is inconsistent with the parent
brand's image (Loken & John, 1993; Rothbart & Lewis, 1988).
Research has also determined that brand name structure could influence
potential parent brand dilution (Sood & Keller, 2012). Specifically,
dilution to the parent brand is less likely to occur for a sub-branded
extension (e.g., Courtyard by Marriott) as opposed to an extension with
the parent brand name presented first (e.g., Marriott Marquis).
While elements of the bookkeeping and typicality models have been
supported outside of sport, research within sport has generally not
found the level of dilution to parent brand equity that has been
uncovered with general consumer-based goods. For instance, contrary to
the bookkeeping and typicality models, Walsh and Ross (2010) found that
there was minimal evidence of dilution to the brand associations of a
professional sports team when fans were exposed to a variety of
different types of brand extensions with varying levels of perceived fit
with the parent brand. Rather, they determined that the level of
identification a fan has with the team played a more significant role in
the evaluation of the team's brand than the potential fit of the
brand extensions product category with the product category of a
professional sports team. In other words, highly identified fans are
generally less likely to alter the image they have for a team regardless
of the types of extensions the team may introduce.
Similar to the present study, which explored teams in the KBO as
brand extensions, a recent study also used professional baseball teams
in Taiwan that act as extensions of corporate brands in order to
determine what impact team success or failure may have on the parent
brands that own the teams (Walsh et al., 2012). Through surveying fans
of four teams, the study found that there was generally not a strong fit
between the image of the parent brands and the teams. In addition, it
was more likely for the parent brand image to be enhanced by team
success than it was for the parent brand image to be diluted by team
failure. This effect was also heightened for fans with higher levels of
identification (Walsh et al., 2012). Similar to findings in Walsh and
Ross (2010), the results of the Taiwan professional baseball study did
not support the bookkeeping or typicality models. While the study
provided an initial examination of the strategy of utilizing teams as
brand extensions, what is not yet known is how such brand extensions are
managed under the umbrella of the corporate brand, and what impact team
executives feel the teams have on the parent brand.
Purpose
As suggested by Walsh et al. (2012), the parent companies that own
teams in the KBO potentially have more at stake than a corporate
organization that may simply sponsor a team. While both may receive
benefits such as having their corporation's names placed on the
uniforms of the teams, those companies that actually own and operate the
team have made an investment that goes above and beyond a typical
sponsorship contract. For example, in an arrangement such as this, the
parent companies have the power to control aspects of the team including
functions related to marketing, facility and player management, public
and media relations, front office staffing, sales, sponsorship, and
other business activities and areas. On the other hand, a sponsor of a
team or naming rights partner of a facility would generally not have
this level of control.
Teams in the KBO have been operating under this corporate ownership
model since 1982 when the league began play, and as previously mentioned
this ownership structure is present in other areas of the world as well
and can be seen in a variety of professional sports and leagues. Despite
the significant investment by the companies that own and operate these
teams, and the fact that this ownership strategy has been in place for
many years, little research has examined the potential benefits received
by the parent brands engaged in such business arrangements. As such, it
is important for research to address this topic from the viewpoint of
the impact such arrangements may have on the parent brands.
The KBO provides a good forum to address this because franchises
have been owned by parent companies since the league's inception.
While the KBO franchises have been corporate owned and named since the
formation of the league it is worth noting that the concept of brand
extensions was still early in its developmental phase at the time the
KBO was founded. It has been suggested that the development of brand
extensions as a recognized and common business practice became popular
in the 1980s (Tauber, 1988), and it could be argued that modern research
on brand extensions has its roots based in some of the seminal works
from the early 1990s (e.g., Aaker & Keller, 1990; Park et al.,
1991). With that said, teams in the KBO may not have been originally
founded to function as a brand extension as scholars view the concept
today, but over time the KBO franchises have evolved into what would be
considered brand extensions in today's business lexicon and
practices. This historical perspective provides an interesting lens to
examine the use of professional sport teams as brand extensions. In
addition, in the KBO many of the teams' employees are transferred
from different departments within the respective parent companies to the
marketing departments of the teams, or they at least have direct
reporting relationships with the parent companies. As such, the team
executives in the KBO can provide an insider perspective of how
corporate ownership of teams may impact the parent brand.
It should be also noted that a potential benefit of the KBO teams
for the corporate parent brand is that the teams represent an
opportunity for non-sport companies to utilize the teams as tools for
the marketing, promotion, and public relations functions of their parent
brands (Ko & Choi, 2000). An interesting aspect of this arrangement
is that teams in the KBO have experienced a deficit in their operating
budgets over the last three decades. However, despite financial
challenges, the baseball teams' parent companies--in an effort to
promote their brands--continuously invest millions of dollars to make up
for the team deficits, and the teams are financially reliant on their
parent companies, as the parent corporations provide more 70% of the
teams' financial funding (KBO, 2013).
As these potential benefits have not been studied in previous
research, the KBO provides an opportunity to examine the rationale,
value, and impact of utilizing professional sport teams as brand
extensions of a corporate parent brand. In addition, because these
corporations continuously invest money in the teams it is important to
understand how the teams are managing and marketing their franchises in
order to provide the most value for the parent brands. It is also an
important time in the history of the KBO, as it is estimated that the
league will draw more than eight million fans during the 2015 season,
which would break the league's all-time attendance record (Wang,
2015). This growth represents a great opportunity for the affiliated
parent brands to reach more potential consumers, but first there must be
an understanding of how team ownership may impact the parent brands.
Therefore, the purpose of this study is to provide an analysis of the
relationship between the parent brands and their team brand extensions.
It is anticipated that the results may uncover answers to questions,
such as the role parent companies play in the decision-making and
marketing for the KBO teams, and how the teams' successes or
failures may impact the image of the parent brands and the sales of the
parent brands' products or services.
Method
In order to address the purpose of this study a qualitative
approach was utilized. Specifically, semi-structured interviews were
conducted with executives from teams in the KBO. Individuals who manage
the marketing functions from each of the 10 teams in the baseball league
were contacted and asked for their participation in the study.
Ultimately, interview responses from a total of seven teams were
utilized in the analysis: the Samsung Lions, Doosan Bears, LG Twins,
Lotte Giants, NC Dinos, Hanwha Eagles, and KT Wiz. The Nexen Heroes were
not included in the analysis for the purpose of this study as the Nexen
Tire Corporation does not own the Heroes baseball team, but rather
provides money in the form of sponsorship. Specifically, the Nexen
Heroes are owned by a group that was allowed by the KBO to find a naming
rights partner in order to maintain financial stability. As this would
not represent a brand extension, the Heroes baseball franchise was not
included. In addition, the Kia Tigers and SK Wyverns did not wish to
participate in the study. To provide some level of anonymity to the
seven teams that participated, the KBO franchises representing the
executives who were involved in this study are referred to below as Team
A, Team B, Team C, and so forth. As noted in Table 1, these executives
held leadership positions with the teams, had multiple years of
experience, and on average have worked for the same team for an extended
period of time. Also, as Table 1 indicates, one of the teams (Team B)
had two executives who participated in the interview.
As the purpose of the study is to understand the relationship that
exists between the parent brands and the affiliated baseball teams, and
ultimately how the ownership of the teams may impact the parent brands,
all of the interview questions were designed to allow for an analysis of
this corporate ownership brand extension model. The interviews began by
asking the interviewees to describe the organizational structure that
exists between the team and the parent brand, and how much the parent
brand is involved in the decision-making for the team. These questions
allowed for the understanding of how the team operates under parent
brand ownership. Questions were then asked to determine the ways in
which the team is marketed and how much consideration is given to
promoting the parent brand when developing these activities. These
questions allowed for an analysis of the importance of the parent brand
when developing team-related marketing activities. Then a series of
questions were asked in order to determine what positive or negative
marketing outcomes ownership of the team may have on the parent brand.
For instance, the interviewees were asked if they felt the parent brand
was impacted in a positive way when the team was winning and in a
negative way when the team was losing.
The interviewees were also asked if ownership of the team has any
impact on the image of the parent brand and sales of the parent
brand's products/services. Finally, the interviews concluded by
asking the participants to discuss anything they felt was important to
know about marketing a team that is owned and managed by a parent
company in the KBO. In addition, where appropriate and needed,
additional questions were asked in order to clarify an
interviewee's response or ask for additional information.
The interviews were conducted in Korean and lasted approximately 30
to 45 minutes depending on the length of the marketing executives'
responses. Each interview was recorded and then transcribed to allow for
the coding of the data to take place. The interviews were first
transcribed word-for-word in Korean, and then translated to English by
an individual who is fluent in both spoken and written Korean and
English and who was part of the research team for this study. Two
individuals who are familiar with both brand extension research and
interview coding were then utilized to code the interview transcripts.
As suggested by Saldana (2013), both first-cycle and second-cycle
coding methods were utilized. Specifically, as prescribed by Saldana,
the first-cycle method of initial coding was used to separate the large
chunks of interview data into smaller parts in order to provide
potential codes for further analysis. Initial coding was utilized, as
this form of line-by-line analysis is generally seen as appropriate for
the examination of interview transcripts (Charmaz, 2006). In accordance
with Saldana, second-cycle coding was then used as a means of analyzing
the data coded from the initial coding in order to develop common
responses, or categories, that emerged from the interviews.
Specifically, focused coding was utilized in which similar data (i.e.,
interviewee responses) that were found in the initial coding were
clustered together to create common categories of responses.
Results
In the process of analyzing the interview data three major themes
emerged related to professional sport teams as brand extensions of
corporate parent brands: moderate empowerment, varied parent brand
focus, and significant perceived impact on the parent brand. What
follows is a discussion of each of these emergent major themes.
Moderate Empowerment
An examination of the organizational structure and relationship
that exists between the parent brand that owns the team and the KBO team
itself was one of the areas of inquiry for this study. In general, the
results suggest that while the teams are supported financially by the
parent organization they are generally empowered to operate the team
independently. For instance, one team executive mentioned "We have
full authority for the team" (Team E) while another stated that
"They (the parent company) empower us to operate the team. The team
leader is positioned under the CEO of the parent company and will
usually make recommendations to the CEO" (Team G).
This theme of empowerment was prevalent throughout the interviews
that were conducted. Such empowerment may stem from the fact that there
was a sense among the team executives that corporations felt it was part
of their corporate social responsibility (CSR) initiatives to own the
teams regardless of whether the team made the parent corporation money.
In other words, ownership of the teams--along with the accompanying
financial investment of the corporations--was one of the ways in which
the corporations would try to gain favor with the public and develop a
strong image, while financial rewards were not necessarily a main focus.
"As you know, there are few teams that make a profit and the parent
company usually invests more than $40 million to the annual team budget
to include player salaries, marketing, and management fees," noted
one team executive. "So the parent company just regards their
professional sports clubs as a CSR campaign aimed at the public"
(Team D).
While the type of hands-off approach explained above was prevalent
for the team executives, they did mention that that parent company would
intervene if there was something happening that could negatively impact
the parent company's desired positive image with the public. One
executive indicated that the parent company would make demands if there
was some sort of emergency (Team E) while another mentioned that there
would be some specific instances in which decisions may come down
unilaterally (Team G). This generally occurred when a player would act
in a way that could have a negative impact on the parent company's
image or there was a decision to be made about signing or selling a
player's rights. As will be discussed later, this type of reactive
approach to managing a brand extension, as opposed to the parent brand
becoming more involved with the day-to-day management of the team, may
not be the best strategic decision.
Varied Parent Brand Focus
The interviews also provided information regarding how much
consideration is given to how the parent brand will be impacted when
developing marketing activities for the team. Given the ownership
structure and the financial reliance the teams have on the parent brand,
it was surprising to find that there were mixed responses in the
influence the parent brand has when team executives are developing
marketing activities for the team. This could be the case as some of the
parent companies are content with the teams simply acting as a CSR
initiative. For instance one executive noted:
Even though all teams in the league are operating at a loss, many
parent companies continue to operate baseball teams in order to improve
the image of the parent company and for the purpose of social
restoration through baseball as most people like baseball. Many parent
companies think that owning their own baseball team is the best way to
promote and improve their image (Team F).
Some of the teams also noted that the lack of fit between the image
of a professional baseball team and the image of the parent company
makes it difficult to design promotions for the parent brand. Previous
brand extension research would suggest that fit is important in
influencing positive consumer evaluation of brand extensions (e.g., Park
et al., 1991; Walsh & Lee, 2012) and a lack of perceived fit between
the parent brand and the brand extension could lead to dilution of the
parent brand's image (e.g., John et al., 1998; Loken & John,
1993). However, as suggested by Walsh et al. (2012), and by the team
executives in this study, it may be difficult to establish a fit between
a corporate parent brand and a professional sports team brand extension,
as there may not be a natural connection between the corporation and the
team. For example, it may be difficult to establish a fit, and for fans
to see a fit, between a manufacturing, construction, and machinery group
like Doosan and its professional baseball team the Doosan Bears. Because
of this disconnect it is important for the teams to develop marketing
activities that attempt to mitigate the potential differences between
the parent brand and the team. However, trying to establish this fit
between the parent brand and the team does not seem to be a focus for
all the teams, as an executive from Team A indicated that his
team's focus is on building brand awareness for the team while the
executive below indicated his team's focus is on the fan
experience:
We do not consider any promotions related to our company's
products or brands. Rather we focus on baseball and providing a good
value for the fans. In this sense, we are currently focusing on
increasing the youth fan base. So our marketing focuses on connecting
with fans through social network services, youth baseball camps, and we
offer a camping program on our field for fans, which is something other
teams have not tried before (Team C).
However, some of the other teams--in particular, the teams that
have a longer history in the league--do take a parent brand-focused
approach and consider how the marketing activities of the team might
impact the parent company. This is an important consideration for the
parent brand in order to limit potential for parent brand dilution. In
particular, it is important for the marketing activities of a brand
extension to be presented with some consistency with the parent
brand's image (Park et al., 1991; Spiggle et al., 2012). Some of
the teams in the KBO have taken this approach by trying to reach a
similar target market and/or by ensuring their marketing activities are
positioned in a similar fashion to the parent company's brand image
or philosophy. A good example of this connection is a response by one
interviewee when he noted that, "When considering a new promotion
we have to determine both the probability of success and if the
promotion is consistent with the parent company's philosophy."
He added that, "We are currently targeting women and children fans,
which is consistent with the parent company's philosophy"
(Team E).
Significant Perceived Impact on the Parent Brand
Despite the differences in the amount of focus the teams give to
the parent brand when developing marketing activities, there is no
denying that the parent brand name is highly connected with the team
itself. One of the unique aspects of professional sport, and marketing
professional sport, is that marketers have no control over the success
of the product on the field (Mullin, Hardy, & Sutton, 2014). Because
the parent brand name is tied to a professional baseball team that could
have varying levels of success, it is important for teams and their
parent companies to understand the level of impact that a team's
success, or lack thereof, will have on the parent brand.
While previous research on this type of team ownership structure in
Taiwan suggests there is more potential for team success to have a
positive impact on a parent brand's image than team failure have a
negative impact among fans (Walsh et al., 2012), it is important to also
understand the team executives' opinions on how team performance
impacts the parent brand. Overwhelmingly, in the interviews there was a
sense among the team executives that team performance does have a
significant effect on the parent brand. In particular, while the
executives did not have quantitative measures of this effect, there was
a sense among the interviewees that the team's performance on the
field was correlated to how the fans felt about the parent company. In
other words, if the team was doing well those positive feelings were
passed on to the parent brand, whereas if the team was performing poorly
the executives believe that the fans think the parent company is not
managing the team properly and the fans' frustrations are passed
along to the parent brand. For instance, one executive noted:
Our team's image is tied to the parent company's image.
If we have a bad record people may think that the parent brand may not
have invested enough in the team. They may then express their discontent
with the parent company because they are dissatisfied with the operation
of the baseball team. However, when we have a good record people believe
that the parent brand is doing a good job managing the team (Team E).
In addition to the performance of the team having an impact on the
parent brand, many of the teams noted that the star power of the players
would also have an effect on the parent brand. In particular, the teams
noted it was important for the players themselves to maintain a proper
image in order to not have a negative effect on the parent company, and
that having star players can dramatically improve the image of the
parent brand. This impact could be seen in a positive way if the players
are successful on and off the field, but could also have a negative
impact on the parent brand if the players are involved in some sort of
scandal. For instance, one of the executives stated, "After winning
the championship we had three very popular players, which quickly
improved the parent company's image and preference for their
products" (Team G). Another executive commented:
The personality of the players has a big impact on the parent
company. As such, the parent company does pay close attention to the
signing of players and coaches because they (and the parent
company's brand) receive a lot of exposure in the media. Yesterday,
there was some issue where a player got in trouble with the parent
company and was expelled from the team. Situations like this will not
only affect the image of the baseball team, but also the image of the
parent company (Team F).
The executives also felt the team's success and/or failure has
an impact on the sales of the parent brand's products or services.
In general, the team executives perceived that the team acts as a
revenue catalyst for the parent brand, but those interviewed could not
put a specific financial value on this effect. Furthermore,
surprisingly, they do not measure the effect. For example, one executive
noted that there was a correlation between team performance and sales
but the team did not specifically measure this correlation (Team D),
while another indicated that some teams may--in order to impact
sales--discount their products when the team wins (Team A), and that
sales of the parent company products increased when the team was playing
well (Team F). One executive even went on to indicate that if the team
consistently loses its games the fans could boycott the products of the
parent company (Team B), yet this claim was based on the
executive's past experiences and knowledge of this affect and not
necessarily based on quantitative data. It was also noted by some of the
marketing executives that this impact may be dependent on the type of
products/services that that parent company offers. For instance, one
executive stated, "The more expensive the product is the less
impact the team's record will have on sales of the product.
However, something that is less costly may be tied in more heavily to
the record of the team" (Team B). In other words, if an individual
was interested in purchasing an item that has a significant investment
such as a car, the success and/or failure of the Kia Tigers would likely
not impact the purchase decision, whereas if the product required less
investment, such as purchasing candy manufactured by Lotte, the
team's play may impact purchase decisions.
Discussion
This study provides initial insight into the relationship that
exists between the parent brands that own and operate teams in the KBO,
and the potential benefits of utilizing a professional sport team as a
brand extension. The responses from the interviews with the team
executives provide a behind-the-scenes look at this brand extension
strategy, and in doing so there are a number of practical and
theoretical implications that can be applied to teams in the KBO, their
parent companies, and for other teams and parent companies around the
world where this type of brand extension strategy may be prevalent or a
consideration.
The first aspect examined in this study was the role that the
parent brand plays in the decision-making of the team. The results
suggest that most of the teams are allowed to operate autonomously.
However, the parent brand may become more involved in the team's
decision-making as the importance of the decision increases. This
represents a unique aspect of a team as a brand extension. In a typical
brand extension situation the parent brand will be heavily involved
throughout the entire product life cycle of the extension. For instance,
if consumer brands such as Coca-Cola or Apple were to develop a new
brand extension they would be intimately involved in the research and
development, logistical planning, marketing, etc. of the brand
extension. That does not appear to be the case with the teams in the
KBO. This thinking could be based in the historical roots and management
philosophies from when the teams were founded. Specifically, the teams
were seen as simply an engine to improve the parent brand's image
and standing in the community, without giving much credence to the
concept of brand extensions or other potential positive and negative
outcomes associated with brand extensions. However, as will be
highlighted throughout this discussion, it is recommended that parent
brands that own professional sport teams take a much more involved and
strategic approach to managing their team brand extensions and that they
market their team in such a way that is consistent with how the parent
brand is positioned.
Given the amount of financial investment the parent brands have
with their affiliated teams, and the fact that a failed brand extension
has the ability to negatively impact the brand equity of the parent
brand (Aaker, 1991; John, Loken, & Joiner, 1998; Loken & John,
1993; Walsh & Ross, 2010), companies that own teams could benefit
from--and should be involved with the overall management of--the teams
they own. While some teams did mention that as accountability becomes
more important in these arrangements the parent company becomes more
involved in important decisions, it is recommended that parent companies
should also be more involved in the day-to-day operations of the teams
in order to protect their investments and brands, and to ensure there is
a strong focus on the parent brands when developing team marketing
activities.
This is particularly important as recent research has suggested
that it is important for brand extensions to have an authentic fit with
their parent brands (Spiggle et al., 2012). In other words, the brand
extension should be positioned with similar brand standards and colors,
should honor the brand's heritage, and be marketed in a similar
fashion to the parent brand. For instance, from a brand identity
perspective, a parent company that owns a professional sport team should
ensure that the team's colors, logo, uniforms, font, website,
social media accounts, messaging, etc. are all consistent with the
parent brand's approved brand standards and guidelines. For
example, if Coca-Cola were to own a professional sport team, the
Coca-Cola red should be the primary color, the famous Coca-Cola script
logo and lettering should be utilized on the team uniforms and marketing
materials, the team's website should have a similar look and feel
to the Coca-Cola website, etc. In addition, if the parent brand
typically positions itself by promoting certain brand personality
characteristics or brand associations then the company's team brand
extension should be promoted in a similar fashion. For example, if the
parent company and its products are marketed as a low-cost,
family-friendly brand then the team should develop promotions,
advertisements, etc. that also portray low-cost and family-friendly
associations (e.g., cheap tickets, family sections, kid friendly
entertainment and activities). Engaging in such activities will allow
for a consistent presentation of the brand and create a stronger fit
between the parent brand and the team brand extension.
In order to truly do this there needs to be some level of
consistent collaboration between the team and the parent company. As
such, team executives and executives from the parent company should work
together to develop the vision/mission for the team, the strategic
marketing plan, and both should be involved with how the team is
positioned. In this type of arrangement it would also be recommended to
hire individuals who have expertise in running a professional sports
franchise, but also to assign high-ranking officials from the parent
company to work with the team executives on a consistent basis. Open
lines of communication should exist between the team executives and
executives from the parent brand, and frequent status meetings could be
conducted to ensure that the goals and objectives of both the team and
parent brand are being met.
In addition to considering the parent brand when developing
marketing activities, all of the team marketing executives mentioned
that they felt that success and/or failure of the team does have an
impact on the image of the parent brand. What was particularly
interesting, and yet to be uncovered in previous research that has
examined teams as brand extensions, is that the parent brand may have a
positive image if the team is performing well because fans then believe
the parent brand is managing the team well and doing everything in its
power to field a successful team for the fans. However, if the team is
not performing well the fans may believe that the parent brand is
neglecting its duties in managing the team properly. Therefore, in order
to avoid some potential for dilution of parent brand image, it is
important for the parent brands that own teams to provide the financial,
player and staff, and marketing resources necessary to field a
successful team.
From a theoretical perspective, this finding suggests the
bookkeeping model may be the most appropriate framework to consider when
examining the impact team brand extensions have on the parent brand. In
this particular setting, the bookkeeping model (Loken & John, 1993;
Weber & Crocker, 1983) would suggest if a team is unsuccessful that
negative image may be transferred to the parent brand regardless of the
parent brand's pre-existing image. For example, if the LG Twins
continuously have a losing record the bookkeeping model would suggest
that the negative attitudes fans may have for the team will be passed to
the parent brand of LG because fans may believe LG is not managing the
team well. It was this potential for dilution that most concerned the
team executives in the KBO, and points to the bookkeeping model as a
consideration for how team failure could impact a parent brand.
Practically, it is recommended that the team executives and parent
company management keep in mind this potential for dilution as they
determine how to market and manage the team, and understand that if the
team is unsuccessful there is the risk that their overall brand image
could be diluted. If that is the case the parent brand must determine if
they should devote more resources to the team in order to limit this
potential for dilution. For example, if the team is unsuccessful and the
parent brand's image is being negatively affected because of this,
it may be in the best interest of the parent company to try and acquire
new players who may help improve the product on the field and the
team's on-field performance. While this potential for dilution
would need to be empirically tested as well, this finding potentially
contradicts previous brand extension research that did not find evidence
suggesting that the bookkeeping or typicality models would be
appropriate to consider when examining brand extensions in sport (Walsh
& Ross, 2010; Walsh et al., 2012).
On a similar note, one of the major theoretical contributions of
previous research on brand extensions in sport is that team
identification has been found to significantly moderate the effect of
sport-related extensions on parent brands (Walsh & Ross, 2010; Walsh
et al., 2012). However, the team executives who participated in this
study did not acknowledge the potential impact identification may have
for teams and the corporations that own the teams. In fact, none of the
executives mentioned anything about fandom and the impact it might have
on the team and the parent brand. Therefore, from a practical
perspective, teams in the KBO as well as other teams that are brand
extensions of corporate organizations should conduct research to
understand how identified their fan base is, and to determine what
potential impact the identification levels of the fans may be having on
the parent brand. Surveys should be conducted to first provide a
baseline measure for how identified the team's fan base is, and
then at regular intervals throughout the year further research should be
conducted to monitor any changes in fan identification levels and
differences in consumption habits and attitudes towards the parent brand
of fans with varying levels of identification.
Finally, another key finding was that the team executives did
believe a team's success and/or failure would have some impact on
the sales of the parent brand's products or services. However,
while the marketing executives anecdotally felt this was the case, the
KBO leaders involved in this study did not have strong evidence to back
up this claim due to the challenges often involved with quantifying such
intangible assets. From a practical perspective, it is recommended that
both the teams and the parent companies conduct research in an attempt
to understand if ownership of the teams is successful at driving revenue
for the parent brands. Specifically, the teams and the parent brands
should conduct research to compare sales figures for the parent brand at
various points throughout the season, at various times when the team is
successful or unsuccessful, and when a team-themed promotion is
developed in an effort to impact sales for the parent brand. For
example, if a team reaches a certain milestone, whether good or bad
(e.g., wins the championship, makes the playoffs, is on a losing
streak), a sales analysis could be conducted for a specified time period
surrounding this milestone and compared to the same time period in
previous years. This comparative analysis may help in providing some
evidence to the impact the team's success and/or failure is having
on the parent brand.
Taking all of the above into consideration, there are several
practical implications that have been discussed that corporations should
consider when either managing their current team, or they could
implement if deciding to introduce a professional sport team as a brand
extension of their corporate parent brand. In summary, it is important
to realize that the team does act as a brand extension of the corporate
parent brand. As such, the success and/or failure of the team and how
the team is marketed could potentially have an impact on the parent
brand. Therefore, in order to obtain optimal benefits from the extension
and to mitigate any potential negative consequences (e.g., parent brand
dilution), it is recommended that the parent brand be directly involved
with the management of the team, that the team be positioned in a
consistent fashion with the parent brand's standards, and that
market research is conducted to understand the impact team ownership and
the team's success and/or failure is having on the parent brand.
While the recommendations outlined may not necessarily guarantee success
in all situations, they do provide a solid foundation for the management
and marketing of a professional sport team as a brand extension.
Limitations and Future Research
While this study provides unique insight into the relationship
between a corporate parent brand and their brand extension of a
professional baseball team, there are some limitations that should also
be addressed. The interviews were conducted from the perspective of the
team executives. While they are employees of the corporate parent
company, and as such report to the executives of the company, their
primary duties are to manage the team and the team's marketing
activities. While this study has provided great insight regarding the
impact the teams have on the parent brand, future research should
attempt to interview executives from the parent company in order to
confirm or contradict the results of this study, and to understand what
benefits the parent company themselves believe they receive from
ownership of the teams. Future studies such as this could also examine
professional sport teams as brand extensions through the lens of
management theory. While the majority of research on brand extensions is
consumer based, and as such this particular study used this literature
as the basis for examination, future research could focus more on the
managerial aspects and dynamics between the team executives and the
parent brand.
In addition, this study was conducted with teams in one particular
sport industry segment of South Korea. The popularity and growth of the
league and baseball in this market validate the use of the teams in the
KBO as units of study, and does confirm some of the findings of Walsh et
al. (2012), who examined Taiwanese professional baseball teams as brand
extensions. However, additional markets where this type of brand
extension strategy is utilized could also be examined. Another
interesting connection to this line of research would be to conduct
similar studies with the intercollegiate athletics model in the United
States, where the college athletic teams represent an extension of the
overall university brand (e.g., the University of Michigan football team
could be seen as a brand extension of the University of Michigan).
Qualitative and quantitative research examining the impact that the
athletic teams have on the overall university brand is an appropriate
next step and augmentation of brand extension research. Experimental
research could also be conducted in markets where teams are not used as
brand extensions of corporate parent brands in order to determine how
fans might respond to this type of structure of team ownership and to
make comparisons across cultures. In addition, while the case has been
made that teams like those from the KBO used in this study are not
sponsored entities but rather are brand extensions of the companies that
own the teams, experimental research could examine if there are
differences in brand-related outcomes if a company owns a team versus if
a company simply sponsors a team.
Finally the interviews took place in Korea and as such were
conducted in Korean. They were then transcribed in Korean and further
translated back to English to allow for coding and the development of
this manuscript. While the individual employed to transcribe and
translate the interviews is fluent in both Korean and English, there is
the possibility that some fractions of the interviews may have been
mistranslated due to language and cultural differences. However, in
examination of the transcripts, the major categories that emerged from
the data were successfully translated and transcribed.
Patrick Walsh, Hansol Hwang, Choong Hoon Lim, and Paul M. Pedersen
Patrick Walsh, PhD, is an assistant professor in the Department of
Sport Management at Syracuse University. His research interests include
sport brand management and the use of sport video games and new media
outlets as marketing tools.
Hansol Hwang is a doctoral student in the School of Public
Health--Bloomington at Indiana University. His research interests
include sport marketing and sport communication, specifically focusing
on the use of smartphone apps.
Choong Hoon Lim, PhD, is an associate professor of global sport
management and institute of sport science in the Department of Global
Sport Management at Seoul National University. His research interests
include sport consumer behavior and sport marketing.
Paul M. Pedersen, PhD, is a professor and the director of the sport
management program in the School of Public Health Bloomington at Indiana
University. His primary area of research and teaching is sport
communication within the field of sport management.
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Table 1
Background Information of Interviewees
Team Job Title Total years Total years
worked in worked with
the KBO current KBO
team
A Team Leader--Marketing 15 2
B Public Relations Manager 15 15
Business Manager 13 13
C Team Leader--Marketing 5 5
and Promotions
D Chief of the Marketing 5 5
Department
E Team Leader--Marketing 18 18
F Team Leader--Promotions 15 15
G Team Leader--Public 3 3
Relations
Average Years 11.13 9.50
