Wednesday, 20 February 2013

If Nike is a Small Business…

When Nike withdrew their sponsorship deal with Oscar Pistorious, I asked myself, how many deals will go wrong with Nike? We have that of Tiger Woods, Michael Vick, Marion Jones, Justin Gatlin, Lance Armstrong and recently, Oscar Pistorius. When I consider all this high profile endorsements, I asked myself if Nike is a small business, will it survive with all the negative publicity from its major endorsements?
Maybe there is something about the endorsement that is working for Nike in spite of the negative publicity that the small business owners may need to learn. But then, if Nike is a small business, will it still continue promoting is business this way? I don’t see a retail store that is involved in so many ‘bad endorsements’, still maintaining such business model and continue to wax stronger except the benefits are higher. 
Although it cost a lot to engage a celebrity, it could also be that more customers are gained when the going is good such that the numbers of losses as a result of ‘Bad endorsement’ deals are insignificant.
No doubt Nike grows its customer based from all these endorsements, but the number of ‘bad endorsements’ are also enough to ground any business. Thankfully, the company has successfully managed its way through the scandals to remain on top of their game. The company seems to have a model that keeps it afloat even when their endorsement goes bad. It seems their decision to pull out, suspend, or continue with a celebrity is dependent on the gravity of the offense.

In marketing, celebrity endorsement is often used to enhance product’s brand image. Though some experts believe that celebrity endorsements only enhances product recall but not sales, studies have show that Tiger Woods’ endorsement of Nike products, which began in 2000, resulted in the acquisition of about 4.5 million customers and $60 million dollars in profit. And maintaining their relationship with Tiger Woods, even after the scandal earned Nike an overall profit in golf ball sales of $1.6 million greater than it would have been without him.

Maybe if Nike is a small business, with all these negative publicity from it ambassadors it would have stopped using celebrity endorsement to promote its brand because of the cost involved.What do you think?

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