Manchester United seeks to build brand in Asia

Thursday 24th, March 2016


Manchester, England, March 14
Manchester United said on Monday it had cut a three-year partnership deal with Gulf Oil International, part of India’s Hinduja Group. The deal shows the club’s appeal as a global brand bears no sign of waning despite a relatively poor season.

Xerago comment: Football is the number one spectator sport in the world, so it is perhaps no surprise that Gulf has chosen to partner Manchester United. The legendary football club is one of the world’s top clubs and has a legion of committed fans. We wonder though if the decision is more tactical than strategic.

However, it would be interesting to understand from a marketing perspective just what prompted Gulf Oil to sponsor football. The obvious fit for an automotive oils and lubricants company is with motor sport, whether that be on two wheels or four. Gulf Oil has a number of sponsorships with automotive events already.

However, there is still enough headroom for Gulf Oil to potentially expand its motor racing sponsorship opportunities in the Asian region. For example, Formula 1 and MotoGP began to hold races in Asian countries only in the last 10-15 years. Unlike in Europe or the US where motor racing has been a top spectator sport for decades now, much of Asia has been rather slow to take to motor sport. It is seen as a rich man’s sport and one that will not appeal to mass audiences.

By getting in early and staying put, Gulf Oil has an opportunity to lock itself in as the sport and audiences develop in Asia. It is a fact that after the audience’s enthusiasm in the initial years, events such as the Chinese GP or the Malaysian GP now play to half-empty stands.

A combination of reasons such as high ticket prices, the spectacle not being exciting enough and so on account for the decline. However, this is likely to be temporary; after all, the sport’s organisers and sponsors have strong reasons to ensure that their audiences are kept happy.

The club, struggling on the pitch and in danger of missing out on the lucrative Champions League for the second time in three seasons, said the deal would help increase the club’s brand in Asia, where it says it has 325 million followers.

Xerago comment: 325 million is a big number and we wondered on what basis Man Utd made that claim. One possibility we considered was the size of TV audiences for football across the Asian region. A little Google research though dug up the fact that the Club commissioned Kantar Research to do a study sometime in 2011-12 to judge the size of its worldwide base of followers. The numbers need to be taken with more than a pinch of salt; the same study projected that half of Man Utd’s followers are in Asia and nearly 1 in 10 people on the planet is a fan!

Of the three largest countries in the region – China, India and Indonesia – football is popular only in China and Indonesia. Other countries like Korea and Japan bring up the rear. India has always been a cricketing nation and while football is a popular sport, nowhere has it reached the level of craze and following that cricket commands.

What interests us though is the type of audience that Gulf Oil is trying to reach through football sponsorship. Is Gulf trying to reach a mass audience in Asia? One that can currently be reached better through football sponsorship and star endorsements rather than motor sports?

This is very likely. Automotive brands such as Fiat, TVS and a number of others have discovered in the past that it is impossible to use a motor sport celebrity and hope to create an impact in India. Fiat used Michael Schumacher and TVS used Narain Karthikeyan, who was India’s first racer in Formula 1.

Tata Motors which also owns Jaguar Land Rover seems to have taken a risky bet in recent times by signing up the legendary Lionel Messi to endorse one of its forthcoming car brands. Our guess is that the car will be sold outside India as well where Messi’s fan following will translate into a solid brand endorsement.

“(It) already has significant experience in sport and we are looking forward to working with them to expand that into football,” United’s group managing director Richard Arnold said in a statement.

“Through this partnership we will further our commitment to reach our fans around the world, especially in Asia.”

United, who recently announced a 26.6 percent rise in total revenues for the quarter ending in December 2015, largely driven by the club’s commercial activities, are in the first season of a 750 million pound kit deal with sportswear firm Adidas.

United’s lengthy list of partners also includes car firm Chevrolet and financial services company Aon.

The club expects revenue for the year to hit 500 million pounds which would be a first for a British club. — Reuters

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