Corporations and the Economy

Corporations and the Economy

Economics is a very broad yet complex subject. Sometimes, in order to get a better view of the picture as a whole, it is useful to make an up-close and in-depth analysis of the elements which make up an economy. Examining the details of this topic can offer a revealing look into what composes a complex society such as that of America. Two very basic elements to be reviewed are 'producers' and 'consumers' and the relation that exists between the two. More specifically, as in the article I have chosen to review, how it is that a producer reaches its consumer, how their market is defined and what effects marketing has on both the targeted audience and third party members. Advertising takes on many forms in the world of business but a company's ability to tune its methods and localize the market to which it wishes to peddle its goods may very well determine whether or not that company will prosper. Corporations are a very good example of effective mass advertising simply because of their size and high profile positions. Still, despite the enormity of these organizations, if they wish to continue their success among competitors they must adhere to the same rules as their smaller counterparts or suffer a nose dive in revenues. Things like cost and return must be considered in any marketing campaign that wishes to be successful. Anheuser-Busch is a super power in the world market. Primarily a manufacturer of beer, this corporation like many others has expanded into a variety of other markets to include, but not limited to: retail, tourism, foods, and theme parks; to name a few. For this investigation I shall take an in-depth look at this company's stake in one of the world's biggest sporting matches, the Super Bowl- a significant event and relative smorgasbord of advertising that reaches millions of consumers simultaneously.

The news article "Bud-maker a major player in the sports world" appeared in an online news column written by reporter Scott Wapner on MSNBC.COM February 4, 2005. This is the article I have chosen to review in this presentation. The main subject of this article is a representative of Anheuser-Bush, Tony Ponturo, whose job is to travel around the country to various sporting events and examine the market to which his employer tailors. It is largely his decision that dictates how this corporate brewer will approach the sale of its product. While, from an entertainment aspect, this article may be seen as focusing on the exploits of a man who, by many men's standards, has a job to be greatly envied, it offers a wonderful insight into the consumer market we live in and a snap-shot view of the way businesses analyze production and sales.

You don't have to be a football fan to look forward to the biggest NFL game of the year. In recent years, the commercials aired during the game have become as much of a crowd winner as the game itself. This boom in popularity has set the stage for one of the largest advertising fiascos of the year. With the eyes of millions of potential buyers glued to the T.V. set for the four hour time slot, manufacturers and retailers have poured countless resources into producing and airing ads that will satisfy the ever-higher expectations of the viewing public and entice them to spend their money on the goods they offer. Companies bid millions of dollars for a thirty second time slot during the highly publicized game and none of the mega-spenders have more stock in the event than the 'King of Beers,' Budweiser. This year the brewery giant is running ten ads during the Super Bowl valued at more than $25 million dollars. Overall the company has spent more than $100 million dollars in advertising through the NFL alone. Anheuser-Busch expenditures on sports advertising total over $300 million dollars annually and it is Mr. Ponturo who they pay to decide how this money should be spent. The article explains how these sports franchises are more than happy to have an organization like Anheuser-Busch on board. These leagues view the beer company not just as an advertiser, but an asset to their own business. The many considerations a producer must make in determining the best approach to its market are illustrated in this commentary of Budweiser's marketing plan for the big football game.

Let's take a look at how all of this influences the economy and its relationship to our studies in microeconomics. What could possibly justify spending $2.5 million dollars for thirty seconds of air time? When we look at the term "opportunity cost," it tells us that decisions are made based on the value of the best opportunity forgone. In this case, that means spending hundreds of millions of dollars annually in sports marketing has enough return to make it worth such a large expenditure. In terms of marketing, there is something called 'residual effects.' The huge sum paid for a single commercial slot now becomes worth it because of all the free air time it will get in the days after. Major web sites dedicate sections to the Super Bowl commercials and millions of consumers log on to view the ads again and vote for their favorite. TV stations replay them on their news programs, people download and e-mail their favorites