Another important cause is the change in the profile of the car itself. Cars are becoming more and more a commodity in the current market. This means that car companies have to compete on price which in turn reduces, or in some instances takes it away completely, profits. Car racing at the top level is a very expensive exercise and this thesis will therefore focus on the questions if spending millions of euros is still a worthwhile investment for car manufacturers or if this money could be put to better use within the company.
The last motive is the high entry barrier that manufacturers have when entering into motor sports. Due to the high cost involved in motor sports, many car companies only have one chance to be successful because they are only present with a factory sponsored team in one form of motor racing. This is completely different from other types of companies, for example Nike, who are present in many different sports, but also present with many different participants in each sport. In this way, the participation that companies like Nike do resembles sponsoring very closely. Keeping in mind the above factors, it is important for companies to know how effective their presence in motor sport is. .
Chapter 2 - Literature Review.
Brand Loyalty "The term "marketing" usually conjures images of consumer packaged goods and advertising campaigns " (Olivia, 2007) but in reality this is only a very small part of marketing. To ensure full understanding of the topic discussed, a short overview of marketing possibilities will be given.
It is generally understood that the more brand loyal customers are, the better the results will be for a firm. High brand loyalty leads to lower marketing costs because the companies do not need to spend money on convincing these customers to purchase their product, they can focus on retention which is a lot cheaper. Chauduri et al (2001) highlight the importance of brand loyalty in the last decades.