Tag Archives: Tiger Woods

Celebrity Endorsement Contracts Gone Bad

Movie stars and famous athletes are everywhere. Not only do we depend on them for entertainment, but we subconsciously depend on them to tell us what kind of gum to chew, what to eat and drink, what kind of razor to use, and even where to rent a car.

Many celebrities are able to fund their lavish lifestyle thanks, in large part, to paid endorsement contracts. All kinds of businesses recruit the help of famous names and faces to sell their product or service. However, many a celebrity has learned the hard way that their fame does not make the invincible. When they break a law, or even just do something a company deems unacceptable, celebrities are vulnerable to losing their spokesperson status and a portion of their income.

Here are several examples of where bad decisions or poor judgement cost celebrities their endorsement contracts.

Tiger Woods and Gatorade, AT&T, and Accenture

There are few people who don’t remember Tiger Woods’ recent problems. The golf super star’s affairs were made public earlier this year by media everywhere, and hard-core fans and even people who didn’t know a thing about golf, were shocked to find out Woods’ wholesome, role-model image wasn’t all it was thought to be. Although Woods apologized, he lost endorsement deals (or was not given the opportunity to resign them) with Gatorade and AT&T, and Accenture had to scrap an entire campaign based around Woods.

Procter & Gamble’s Gillette, Tag Heuer, and LVMH Moet Hennessy Louis Vuitton didn’t completely drop Tiger, but they did shift the focus of their campaigns away from him. Nike and Electronic Arts Inc. continued to include Woods in their campaigns. It is estimated that Woods lost about $12 billion after his affairs hit the news.

Kobe Bryant and Nutella and McDonalds

When Kobe Bryant got in trouble with the law, he damaged not just his image, but two major endorsement deals. In 2003, Nutella, made by Ferrero, let the basketball hero’s contract expire when a hotel maid in Colorado accused Bryant of sexual assault. Then, in 2004, Bryant’s contract with McDonald’s was not renewed. Although Bryant made a public apology and settled the assault case out of court, he lost endorsement agreements with two major businesses.

Madonna and Pepsi

In 1989 Madonna came out with her infamous music video for “Like a Prayer” that offended many with its controversial religious imagery, including burning crosses, and lost her chance to advertise for Pepsi. The popular soda company cancelled its television commercials featuring Madonna after viewers were confusing the spot with the music video and were upset with Pepsi’s apparent approval of its contents. In fact, The American Family Association started a boycott of Pepsi products, but later ended it.

Michael Phelps and Kelloggs

U.S. Olympian and hero to many in the swimming world, Michael Phelps had an excellent reputation. Fans were glued to their television sets as they watched him swim laps up and down pools and win 14 Olympic gold medals, more than any other Olympian. However, America’s love affair with Phelps cooled down when pictures of the athlete smoking a marijuana pipe hit the press. Kellogg’s had an endorsement deal with the star, but decided not to extend it, most likely due to Phelp’s drug issues.

After the incident, Phelps was not given financial support from USA Swimming, or allowed to compete, for three months due, not to a violation of rules, but because the organization didn’t believe Phelps was fit to be a role model. However, Speedo, Omega, and Visa all continued their relationship with Phelps.

O.J. Simpson and Hertz

Most people remember the O.J. Simpson trial, full of car chases and gloves. The well-known football player and broadcaster was almost equally as well known for the Hertz commercials he stared in, beginning in the 70’s. When Simpson was accused of domestic abuse, Hertz ended their contract with him in 1992.

Two years later, Simpson was tried for murdering his wife Nicole Brown Simpson and Ronald Goldman. The trial was drawn out and the country was fascinated by the details of the case and the often controversial developments. Hertz was probably grateful it no longer had a contract with Simpson when he was tried for double murder.

Kate Moss and Chanel, Burberry, and H&M

Kate Moss, the extremely well-known English beauty, is a successful model who has been featured on more than 300 magazine covers. Making millions every year, Moss has been in lots of advertising campaigns and is known for her relationships with other famous people. However, even money and connections can’t save a celebrity caught snorting cocaine.

In 2005, the Daily Mirror printed pictures of Moss using the drug with her former boyfriend. When the story came out, Chanel decided not to renew its endorsement contract with the model after it was scheduled to end a month later and Burberry cancelled a planned ad campaign that featured Moss. H&M originally stood by Moss when she apologized to its marketing chief, but later ended the relationship over fears the fall out would harm their image as a company that supports drug prevention and who works with the Mentor Foundation.

Martina Hingis and Tacchini

When tennis player Martina Hingis sued Tacchini in 2001 (an Italian shoe and tennis gear business) she came out on the bottom both when the case was dismissed and she lost her endorsement deal with the company. The extremely accomplished Swiss athlete wore Tacchini shoes for four years as the company’s main celebrity endorser, then filed a lawsuit against the same company, claiming the shoes caused chronic foot problems.

What’s a company to do when it is sued by one of it’s endorsers? Drop the celebrity of course. Tacchini filed for bankruptcy in 2007 and then a year later, the remaining parts of the business where bought by a businessman in Hong Kong.

Michael Vick and Nike, AirTran Airways, Coca-Cola, and Kraft Foods

Animal rights activists and football enthusiasts alike were disappointed in Michael Vick when he was accused of conspiring to run an interstate dog-fighting operation in 2007. The day after the iconic player pleaded not guilty to the charges, Nike stopped selling Vick-centric merchandise (as did Reebok) and suspended his contract without pay. When Vick eventually pleaded guilty Nike ended the endorsement deal. Interestingly enough, after Vick served a 20-month sentence, Nike picked him up as a celebrity endorser again in 2009.

But wasn’t all the football star had to deal with. Also in 2007, Airtran Airways didn’t renew Vick’s endorsement contract when it expired. It’s unclear whether the relationship came to an end over the dog-fighting incident or one of Vick’s other questionable situations like when he made obscene gestures to fans or when airport security found suspicious material in a water bottle.

After Vick’s scrape with the law, Coca-Cola also chose not to renew their contract with the athlete but stated the decision to end the PowerAde campaign featuring Vick was made a few years before the incident occurred. Kraft Foods also didn’t renew their endorsement contract with Vick, for unknown reasons.

Chris Brown and Doublemint

If you were to ask Brown “Got Endorsements?” The answer would be no. In 2009, the singing sensation Chris Brown was arrested for assaulting his girlfriend and fellow singer Rihanna. This prompted the Milk Processor Education Program to discontinue their Chris Brown “Got Milk?” ads and a radio station in Cleveland stopped playing his tunes. While Wrigley did say Brown deserved due process in the proceedings, they stopped running their Doubleming ads featuring the R&B artist.

The worlds of business and advertising are full of exciting situations including celebrity endorsements. My Colleges and Careersis an excellent source of information on careers in the industry, what they entail, and how to get started.

Nike’s Marketing Strategy

Nikes marketing strategy rested entirely upon a brand image which is favourable and has evolved into a great multinational enterprise over time. The favourable brand image has been kept afloat due to the strong association with the Nikes logo which is quite distinctive and the slogan Just Do It which has been used in advertisement for quite some time. The company has been known to invest heavily in advertisements and brand promotion (Fill C, 2005 p.54).

Market Segmentation
Most of the consumers of Nikes products are mainly sportsmen. This is so because of the utility that comes with the products. An athlete is more likely to go a sports shoe designed and marketed by Nike more than a person who detests sporting and exercises. Nike targets these consumers by agreements between Nike and athletic teams, colleges athletic teams1 etc for product sponsorship and eventual promotion to the members of these teams. In this way, Nike is able to reach a wide number of consumers and consumers who are more likely to buy. Even though others are likely to buy the products, Nike pays specific emphatic targeting to the athlete more than any group of individuals even though it also targets the youth who have embraced the hip hop culture (Mercer David, 1996, pp 171).

Targeting strategies
Nike lays a number of strategies to target their immediate consumers; athletes and other sportsmen. The targeting strategies include among others the sponsorship of products by professional athletic teams, celebrity athletes and college athletic teams. This strategy is specifically successful because of its ability to reach a large number of athletes. If the athletic team manager prescribes a specific type of track shoes made by Nike, the trainees have no option other than to buy them. The teams can as well buy the track shoes in bulky and supply them to the team members.
The second strategy that Nike applies is the designing of product destination. It does this by associating success with the product. For example, when a celebrity athlete sponsors a specific brand of athletic shoes, the brand will be associated with success. This psychological effect is reinforced with advertisements that affirm this position.
Finally, Nike targets the consumers who are likely to develop product intimacy; those who care more about the utility and quality of the product than the price. In this way, the pricing is not affected too much in a bid to accommodate a large number of consumers. However, price has also been factored in Nikes marketing strategies as shall be seen later in this paper (Frank, 2004, p.173)

Pricing Strategies
As stated in the foregoing section, Nike targets the consumers who embrace product intimacy and thus care less about the product. This has enables Nike to set relatively higher prices than its competitors. This is a strategy that calls for higher pricing points so as to push the perceived product value. It has been established that consumers who consider a product to be of high quality are likely to pay the high price more often and consistently. Once consumers develop product intimacy, they come to associate their person with the product and will pay whatever price quoted on the product provided it has the Nike logo on it.
Another very important thing to note is the fact that Nike uses the vertical integration pricing strategy in which they take ownership of the participants at channel levels that differ and they also engage in multifarious channel level operations both in a bid to control costs and thus influence pricing function (Goldman S, 2000, pp154)

Distribution Strategies
Distribution strategies embraced by an organization can either give them an edge in market or make them lag behind the winners in the market. The more efficient the product distribution is the more sales and thus more profits. The delivery of the right product and at the right time to the consumer not only effects utility but also leads to high degree of consumer satisfaction and loyalty. Nike distributes its products on level basis. The high priced premium products are given to certain distributors while leaving the low priced to be sold at highly discounted prices at mega retail stores such as Wal-Mart. Whereas Reebok embraced a limited distribution strategy Nike ventured more into a global3 market capitalization (Jeannet J, 2000, pp 44).

Promotional and Communication Strategies
Apart from Nike selling quality products which have lead to a high degree of customer loyalty, the promotional strategies that the company employs are simply superb. Nike has contracted a number of professional and celebrity athletes which have managed to draw a considerable attention to their products. Some of the sportsmen signed by Nike include soccer stars such as Ronaldinho, Ronaldo and Roberto Carlos, Basketballers such as Jermaine O’Neal and Lebron James2, triathlete Lance Armstrong and golf superstar Tiger Woods. This has created a relatively high degree of Nike products awareness. Besides the signing of celebrity sportsmen to promote their products, Nike has also employed a great deal of advertisements through the mass media. Nike employs a selective- demand advertisement focused on the high priced shoes used for traditional sports (Goldman S, 2000, pp154).

Conclusion
Nike has remained and continues to remain at the top of production and distribution of sports gear and equipment. However, it should be noted that competitive pressure cannot allow Nike to sleep at the top. The recent Reebok- Adidas merger poses a great challenge to devise new marketing strategies to continue leading or recede to oblivion. The following recommendations are suggested in a situation where marketing management is competent. These include:
Increased market share through a new product development, competent pricing strategies, advertisement and other sound promotional activities.
Restructure market dominance by driving away competitors mainly through fierce promotional strategy coupled by pricing function that will make the market quite unattractive for the competitors.
Increased social responsibility to strengthen the image of the company
Diversification of market through factoring the Asians and Black Americans in their product promotion besides doing a research to establish the tastes of these groups.
Venture into new distribution channels especially in international markets
Different pricing strategy so as to open up a new market segments.

All the above show a competent marketing management can hoist organizations top become market leaders and making the market leaders maintain their competitive edge in the market through adherence to marketing ethics, marketing plans and well thought out and formulated marketing strategies.