01 May 2008  Research & Ideas

The Marketing Challenges of the China Olympics

The Olympic Games are normally a marketer's dream. Not so much this year, given widespread protests against the Chinese government. Professor John Quelch outlines the branding challenges posed by this year's Games in Beijing. Key concepts include:

  • Political pressure directed at the Chinese government will also pose challenges for Olympic Games sponsors, who don't want to be associated with the controversy.
  • Given the prominence of China as a supplier and customer, it is unlikely that we will witness grandstanding boycotts of the Games by any company.
  • Some marketers are employing a dual marketing approach, with China-specific campaigns inside the country but less Beijing-centric messaging outside.
  • Marketers are not over-committing funds to Olympics-related brand advertising and promotions. The normal Olympics year advertising boost may be less than expected.

 

Editor's Note: Harvard Business School professor John Quelch writes a blog on marketing issues, called Marketing Know: How, for Harvard Business Online. It is reprinted on HBS Working Knowledge.

Normally, the Olympic Games are a positive force in marketing. Worldwide marketing expenditures increase as official sponsors and unofficial free-riders attach themselves to the Olympic logo, to particular sports, national teams, or individual athletes. Global brands, in particular, see the Olympics and World Cup soccer as the two most important international sporting events; brand linkage to these events can boost brand awareness, preference, and sales over competitors who cannot afford the global sponsorship prices set by the International Olympic Committee.

Lenovo hardly wishes to be known as the Chinese PC company that consumers find convenient to boycott.

This year, however, concerns over the Chinese government's role in Tibet, Sudan, and other alleged human rights abuses threaten to derail its plans to stage the Olympics as China's coming out party. Tight security in Beijing may take some of the fun out of the Games, not just for the sports fans and athletes but also for the sponsors.

Take Lenovo, for example. The fourth largest personal computer manufacturer in the world is the first and only Chinese company to be a global sponsor of an Olympics. Lenovo's investment in the Games is around $100 million. The company paid millions, along with Samsung and Coca-Cola, to sponsor the torch relay. Lenovo's sponsorship will doubtless reinforce its brand preference rankings in China. However, around the world, Lenovo hardly wishes to be known as the Chinese PC company that consumers find convenient to boycott.

Here are some trends I'm seeing among sponsoring companies:

First-time sponsors have a lot more to lose than long-term investors.

Lenovo, as a first-time global sponsor whose future depends heavily on success this year, has much more at stake than veteran Olympics sponsors such as Coca-Cola, Visa, and McDonald's. These companies are long-term investors in the Olympics; if Beijing fails to realize earlier commercial expectations, London in 2012 can make up for it. Around the world, the veteran sponsors may be careful not to over-identify with Beijing. They will emphasize sponsorships of national athletes and national teams rather than focus on the Olympic rings. But, in China, the Western multinationals will pursue a much more aggressive strategy. They will build goodwill for their brands by creating China-specific advertising and promotion programs that tap Chinese pride in hosting the Games.

"Two-faced" approaches.

Those companies that are not global sponsors of the Games will also take a two-faced approach, supporting the Games in China while being disinclined to associate with them in North American and European markets. Given the prominence of China as a supplier and customer, it is unlikely that we will witness grandstanding boycotts of the Games by any company. Most consumers around the world do not let their political views affect their purchase decisions. However, we are likely to see Web sites promoting boycotts of Chinese brands such as Haier, TCL, and Lenovo.

Late campaign purchasing as a safety hedge.

The International Olympic Committee continues to argue that the Games and the aspirations and achievements of individual athletes should be independent of politics. The reality is that the Chinese government has always intended to use the Games to its political advantage and that further escalations of violence in Tibet could diminish public support and lead to national team and individual athlete boycotts, as occurred in Moscow following the Soviet Union's invasion of Afghanistan. As a result, marketers are not over-committing funds to Olympics-related brand advertising and promotions, and the normal Olympics year advertising boost may be less than expected. Instead of long-term preset media advertising buys, many companies are planning short-term promotional bursts that they can activate as late as July and August if all appears to be in place for a successful, trouble-free Games.

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About the author

John Quelch is Senior Associate Dean and Lincoln Filene Professor of Business Administration at Harvard Business School.