Marketing Plan of the Beijing 2008 Olympic Games：<br>Sponsorship and Licensing Opportunities for Hong Kong Companies (hktdc.com)

The Beijing Organising Committee for the Olympic Games (BOCOG) launched on 1 September the marketing plan of the Beijing 2008 Olympic Games. The marketing plan of Beijing Olympics forms the basis for both domestic and overseas companies to take part in the broadcasting, ticketing, sponsorship and licensing programmes of the Beijing 2008 Olympic Games.

For Hong Kong companies that are interested to tap on the Beijing Olympics to expand and strengthen their sales, exposure and community outreach in the mainland, it is considered that the sponsorship and licensing programmes will be more directly relevant. This paper hopes to provide Hong Kong companies with a clearer understanding of the implementation of the Beijing Olympic marketing plan, and the potential opportunities arising from sponsorship and licensing.

The marketing plan of the Olympics is actually a partnership between the Olympic Movement ¹ and the business community. While the International Olympic Committee (IOC) manages a series of Olympic marketing programmes to solicit support for the Olympic Movement and the Olympic Games in terms of technology and capital, the global business community also finds the marketing programmes an effective marketing platform for their companies. For example, Samsung enjoyed breakthrough in its sales and corporate image after becoming a sponsor of the Olympic Games.

The Olympic marketing programmes are composed of four main programme areas, which are television broadcasting, Olympic Games ticketing, corporate sponsorship and Olympic licensing. Among these four programme areas, sponsorship and licensing are the two which most likely would derive more business opportunities for Hong Kong companies, including small- and medium-sized ones.

Television broadcast partnership － Olympic Games is the most-watched sporting event in the world. Since the Seoul Olympics in 1988, the number of countries televising the Games increased from 160 to 220 in the 2000 Sydney Olympics. The long term broadcasting rights strategy developed by the IOC is now the most important source of the Olympic marketing revenue.

Olympic Games ticketing － The ticketing programme is for the public to purchase tickets for the different events of the Olympic Games. In 2000, more than 6.7 million tickets were sold in the Sydney Olympics and generated US$551 million in revenue.

Corporate sponsorship － Sponsorship is a relationship between the Olympic Movement and corporations. There are different levels of sponsorship entitling companies to different marketing rights² in various regions, category exclusivity and the use of designated Olympic images and marks. Companies can also become suppliers to the Olympic Movement providing the Olympics with the necessary support and products. In return, suppliers at different levels are granted the corresponding marketing rights. In the Sydney Olympics 2000, there were 11 TOP sponsors which had worldwide Olympic marketing rights and 13 domestic Olympic Games sponsors which had Olympic marketing rights within Australia only. Besides, there were altogether 80 Sydney 2000 supporters, suppliers and sporting goods suppliers which had relatively less marketing rights.

Olympic licensing － Licensing programmes are agreements that grant rights of use of Olympic marks, imagery, themes, including emblems and mascots, to companies to produce products to commemorate the Olympic Games or specific Olympic teams. The company, or licensee, pays for the right with royalty fee which is usually between 10% and 15% of the product sales revenue. In the Sydney Olympics 2000, there were 100 licensees who produced a full range of apparel, collectibles and other merchandise (3,000 product lines in total). The Sydney Olympic merchandise was available in 2,000 retail outlets throughout Australia since 1997.

	US$ million	% share
Broadcasting rights	1,331	45
Tickets	551	19
TOP sponsorship	550	18
Local sponsorship	492	16
Licensing	52	2
TOTAL	2,976	100

Three-tier Administrative Structure of Olympic Marketing － IOC, OCOGs and NOCs

Administration of Olympic marketing is a three-tier structure, each having its own corresponding marketing programmes within specific boundaries.

The highest level is the International Olympic Committee (IOC). The IOC, as the holder of the rights to the Olympic Games and the Olympic marks, is responsible for the overall direction and management of Olympic marketing programmes. Marketing programmes directly under the IOC are those worldwide programmes such as worldwide sponsorship and broadcasting.

The second tier is the Organising Committee for the Olympic Games (OCOGs) and the third tier is the National Olympic Committees (NOCs). Under the direction of the IOC, the OCOG manages Olympic Games marketing programmes that are targeted to the Olympic host country. The NOCs manage national Olympic marketing programmes that are targeted within their home countries.

The three tiers of Olympic marketing structure governs three different levels of sponsorship programmes:

Worldwide sponsorship, also known as the Olympic Partner Programme (TOP), was created and is directly managed by the IOC. TOP partners are multinational organisations which will provide direct support, services or expertise for the staging of the Games. Agreements with these multinational organisations are on a four-year term, including one Olympic Winter Games and one Summer Games. The TOP partners, in return, are granted exclusive marketing rights, including the use of all Olympic imagery, and opportunities within their designated product category. They may exercise these rights on a worldwide basis.

Olympic Games sponsorship, also known as OCOG sponsorship, is managed by the OCOG under the direction of the IOC. These programmes are supposed not to be worldwide, but are targeted within the host country of the Olympic Games. Olympic Games sponsors, or OCOG sponsors, are granted marketing rights within the host country or territory only.

National sponsorship, or NOC sponsorship, is managed by local Olympic Committees that support their sports development and their Olympic teams. These programmes grant marketing rights within the NOC country or territory only.

Similar to the sponsorship programme, the licensing programme also has a three-tier structure.

The first tier is the IOC licensing programme. The IOC operates a limited worldwide licensing programme in certain categories such as film, video games and other multimedia opportunities.

The second tier is for the OCOG to grant licensees the rights to use OCOG or Olympic Games marks to create souvenirs or merchandise relating to the Olympic Games for sale to the public. The merchandise is usually of a festive or commemorative nature, such as pins, T-shirts and caps.

The third tier is for an NOC to grant licensees the rights to use NOC or national Olympic team marks to create souvenirs relating to the national Olympic team.

The general framework of the recently released marketing plan of the 2008 Beijing Olympics resembles that of other Olympic Games. However, certain implementing details and principles are worth noting for Hong Kong companies interested in exploring business opportunities arising therefrom.

At the launch ceremony of the marketing plan of the Beijing Olympics 2008, Ms Yuan Bin, deputy director of BOCOG Marketing Department, made a special presentation on the sponsorship programme and the licensing programme, reflecting that these two programme areas attract more attention from the business community.

So far, nine international corporations have signed contracts to become IOC's TOP partners. They are Coca-Cola, General Electric, John Hancock, Kodak, Panasonic, Samsung Electronics, Schlumberger, Swatch and Visa International. Reportedly, IOC hopes to invite more companies (including Chinese enterprises) to participate in the partner programme in addition to the existing nine TOP partners.

As for sponsors, the Beijing Olympics marketing plan has not placed any special restrictions on their industry category. Sponsors can come from any industry provided that the category does not contradict the Olympic spirit and is in line with the actual needs of the Games and the marketing rules. However, according to common practice, there is usually only one sponsor in each category, creating exclusive marketing opportunities for the sponsoring company. Sponsors to BOCOG can enjoy various rights and benefits, including:

Corporate strength and accountability － Companies must be prestigious enterprises, enjoying market leadership, boasting good growth prospects, financial strength, and the ability to generate adequate cash flow in order to meet the sponsorship investment requirements.

Quality and reliability of product/service － Companies should be able to supply sufficient top-notch and reliable products/technology/service as required to ensure the sound operation of the Games.

Financial pledge/investment － Companies should make competitive financial offers, which is one of the key criteria for selecting sponsors.

Brand alignment － Companies must possess a good reputation and social image, identify with and boost the ideals of the Olympic Movement and the concepts of the Beijing Olympic Games. In addition, their products should be environment-friendly.

Marketing activation － Companies should invest an adequate amount of financial and other resources in their promotions, advertising and general activation efforts in order to fully leverage on the Olympic marketing platform and thereby assist in promoting and propagating the Olympic ideals and Beijing Games.

BOCOG will recruit sponsors in different ways, including open recruitment, selective recruitment (i.e. sending out invitations to companies satisfying the necessary technical requirements) and individual recruitment (i.e. direct negotiations with individual companies).

The Beijing Olympics has set out the following objectives of the licensing programme:

The licensing programme of the Beijing Olympics will serve to promote the Olympic image with an appealing blend of Chinese culture and Beijing element. According to Ms Yuan Bin, deputy director of BOCOG Marketing Department, major licensed product categories include sporting goods, cultural products, leisure goods, arts and crafts, and souvenirs. The programme will adopt a segmented market strategy, ensuring that Beijing Olympics licensed products will be available in a broad range of styles and prices targeting different consumer groups. Where fees are concerned, licensees have to pay a minimum guarantee and a royalty advance to BOCOG.

Licensees should maintain good performance as the contract term may vary and contract renewal is subject to prior performance. This will help achieve the "Made-in-China = High Quality" objective.

Recruitment of partners is scheduled to start in the fourth quarter of 2003, while that of sponsors is expected to begin in the second quarter of 2004. The licensing programme will unfold in two stages: the national programme in the second half of 2003 and the international programme after the Athens Olympics 2004.

As a sponsor

Although there are not many big names and multinational companies in Hong Kong that could become TOP partners of the Olympics, large Hong Kong companies having their own brands and aiming to build up their corporate image, especially in the mainland market, may consider participating in the Beijing Organising Committee for the Olympic Games (BOCOG) sponsorship or Chinese Olympic Committee (COC) sponsorship.

Sponsorship can be expected to have positive effect on consumers' purchase intent. According to survey researches commissioned by the IOC, 53% of respondents stated that they feel more favourable towards a company if it is associated with the Olympic Movement. Among the surveyed Olympic Games spectators in 1996, 83% of them agreed that "official Olympic sponsors are leaders in their industries" and 33% of them stated that they would be more likely to patronise an Olympic sponsor than another company.

For the majority of Hong Kong companies that would not become official sponsors, there are still ample opportunities for them to become suppliers to Olympic sponsors. As official sponsors of different tiers have corresponding marketing rights, they are expected to leverage on these marketing rights to the largest extent in building their corporate image. As a result, there would be massive demand for corporate gifts and premium relating to the Olympic Games. Hong Kong manufacturers, with their production in the mainland, excel in supplying competitively priced quality gift items and should be able to benefit from such demand.

Sourcing Practice of Olympic Sponsors

In getting business from the sponsors, it is vital for suppliers to have an idea of the sponsors' sourcing practices for their gift items. Take the case of TOP sponsors, these multinational companies would normally have a "two-tier" structure in their promotion plans. From their headquarters, these MNCs would formulate a worldwide promotion plan related to the Olympics with a specific theme and specially designed promotion items carrying the Olympic marks. However, local or regional offices of these MNCs in different parts of the world may also have various degrees of free hand in mapping out their own local promotion programmes in order to suit particular market situations or consumer tastes and demand. Therefore, suppliers of promotion items can have two tiers of opportunities, one at the worldwide corporate level and one at the local level.

It should be noted that some MNCs, whether at worldwide corporate level or local office level, tend to use advertising agents to manage their promotion programmes. After formulating the marketing plan, the advertising agents will source the necessary promotion items from manufacturers. This may represent opportunities for both advertising agents as well as gifts companies and manufacturers of Hong Kong, though the gifts companies and manufacturers may need to identify the advertising agents to approach for business. For certain MNCs, they may have their own subsidiaries to serve as their marketing arm, such as Cheil Communications of the Samsung Group. However, some TOP partners may deal directly with manufacturers and involve advertising agencies mainly in creative design unless they find one-stop service more economic and efficient in a particular promotion programme.

Innovative and original ideas may be the trump

For most large corporations, a tendering process will be the rule rather than an exception in identifying the suitable suppliers for their promotion plans. However, these corporations may also be looking for innovative and original ideas on promotion. There are indications that if the advertising agent, the gifts company or the manufacturer can come up with an original theme that these corporations find attractive, the company with the original idea will likely be chosen as the exclusive supplier. Therefore, it is not necessarily that only large agencies or manufacturers can be suppliers to these large corporations. Smaller companies with a cutting edge in innovative and original ideas can still have the chance.

Designs need to comply with IOC guidelines

For promotion items, very often the sponsoring corporations expect manufacturers to supply detailed designs. It should be noted that for the promotion of commemorative items related to the Olympics, all designs must strictly follow the guidelines set out by the IOC and have to be approved by the IOC. As most Hong Kong manufacturers may be well aware, these large overseas corporate buyers also tend to have high requirements for quality control, environmental protection and other social responsibilities in the production process.

Able to delivery in the mainland

Hong Kong companies interested in supplying gift and premium items to those large corporate sponsors for use in the mainland may need to consider logistics arrangements. Some of these corporations with a large marketing network covering a huge area of the mainland, such as Coca-Cola which has 24 bottling companies in China, may require the manufacturers to deliver the products to many different locations in the mainland. Furthermore, as suppliers selling directly in the mainland, Hong Kong manufacturers would also be required to be able to issue VAT invoice.

Note the timing of sourcing

Corporate sponsors may start to plan their promotion programme one year ahead of the Olympic Games. Take the case of Coca-Cola, it is indicated that the company may start launching its promotion programme in the third quarter of 2007. Other TOP partners, such as Kodak, may begin their marketing plan at the headquarter level about one year before the Games, and about half a year before the event at the regional or local office level.

Hong Kong companies can also become licensees of the Olympics at different tiers. There is a wide range of products that companies can bid for the license. The most popular categories include pins, T-shirts and baseball caps, etc. Moreover, companies can bid for the license for producing their own specialty products. Although this involves paying a minimum guarantee and a royalty advance, the amount may depend on the popularity of the product category and whether there are other restrictions, such as exclusive geographic distribution rights. Under Beijing Olympics' objective of promoting the "Made-in-China = High Quality" message, Hong Kong manufacturers, renowned for product design, quality control and intellectual property rights protection, should have an advantage in the production and sale of licensed products.

In supplying commemorative or gift items to Olympic sponsors, designs of the licensed products must comply with the technical requirements regarding the Olympic symbol, emblem and mascot. However, industry sources indicate that these technical requirements are not difficult to comply as they are clearly defined, such as the colour code. Comparing product design development between licensed products of the Olympic Games and other sports event, like the World Football Cup, some experienced companies opine that since the Olympic Games consists of a wide range of sports, there is more room for design development.

In the Sydney Olympics 2000, approximately 100 licensees produced over 3,000 different product lines that were sold in more than 2,000 retail outlets across Australia, generating nearly US$500 million in retail sales of Olympic merchandise and was considered as a retail phenomenon and one of the most powerful brands in the Australian marketplace by the time of the Games. Given the large population of China, the host country of Beijng Olympics 2008, and the increasing purchasing power of Chinese consumers, the potential domestic market of Olympic merchandise is likely to be much bigger in volume.

Hong Kong companies, with their expertise in turning out innovative designs and quality products at competitive prices, should have good chances in supplying to large corporations' marketing campaigns, becoming licensees, or acting as manufacturers for the licensees, and benefit from the massive demand for Olympic memorabilia.

The BOCOG Marketing Department has deployed special staff for different areas of the marketing plan. For further enquiries, Hong Kong companies can contact the following:

BOCOG Marketing Department
E-mail: marketing@beijing-olympic.org.cn
Address: 24 Dongsi Shitiao Street, Beijing, China
Postal code: 100007