Celebrity Endorsement Strategy: An Investigation Using Nike's Essay

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Celebrity Endorsement Strategy: An Investigation

Using Nike's relationship with Federer as an example, the paper analyzes the use of celebrity endorsement strategy of the brands beginning from choosing the right celebrity figures until the final results of the strategy. Many industries promote their products by hiring the services of influential celebrities who advertise the products in question. The celebrity has to have various characteristics in order to be seriously considered as endorser. The company also has to take various steps to protect itself. The whole process of considering, finding, and finally hiring a celebrity is one that is done incrementally and thoughtfully with the whole, actually, occurring in four stages. Celebrity and brand are closely intertwined. Just as celebrity may profit the brand, the brand also effects the reputation of the celebrity. The company-endorser relationship, in other words, can provide potential benefits to both with both brand and endorser receiving increased attention and both benefitting from deal in various other ways. On the other hand, potential hazards include the fact that the endorser may overshadow the brand, may become involved in public controversy hence tarnishing the brand, and may be too expensive. Ultimately, research shows that the product has to be good to begin with and that

The trend seems to be that celebrities are losing the appeal in marketing. A worthwhile product and ad will always attract notice regardless of endorsement. A poor one will fail for the same reason. Nonetheless, given the appeal of celebrities, it is likely that celebrity endorsement will always be around with their accompanying benefits and risks.

Part 1: Introduction: An example of celebrity marketing

Legendary art director, George Lois, mused that "enlisting a celebrity to sell cat food, an airline, off-track betting, an analgesic, or a lube job would seem to be a delusionary strategy fraught with irrationality. But let's face it, it's a star-struck world." (The Finch Post. A Blog http://www.thefinchpost.com/2012/01/celebrity-endorsements1.html)

"Marketing" is generally thought of as a generic term, but, in reality, as Gilligan (2004) points out, "Marketing strategies are different for different cultures." Marketing depends on many factors such as cultural aspects, religious aspects, living conditions of the individuals or the overall trends in society that exist during a particular time. In fact, marketing, by definition, means to 'market' a certain product -- make it as attractive as possible, in order to persuade a certain target audience to buy it. Many industries, therefore, promote their products by hiring the services of influential celebrities who advertise the products in question.

A case in point is Nike's employment of services of the famous tennis player Roger Federer in order to market their products in Switzerland. Federer is an internationally renowned personality name due not only because of his tennis achievements but also due to his overall involvement in many different charitable efforts and community efforts. Nike, too, is a famous organization and it hoped to leverage its branding by associating its image with that of Federer.

My aim in this essay in a general sense is to assess whether companies, like Nike, profit from hiring celebrities to brand their products. Nike's hiring of Federer will be used as one of the recurring instances throughout in order to serve as touchstone for analyzing the use of celebrity endorsement strategy of the brands beginning from choosing the right celebrity figures until the final results of the strategy.

Nike is a U.S. based multinational firm which deals in sportswear equipments. It is one of the world's largest supplier of athletic footwear as well as a major manufacturer of different other sports equipment and apparel. Its total revenue is estimated to be around $19 billion, total operating income is more than $2.5 billion, its total net income is estimated at $1.9 billion, total assets are around $14.4 billion and total equity is more than $9.5 billion. Nike also has a total employee workforce of more than 34000 worldwide.

Nike is an example of one company out of many that hit for celebrities in order to market its products. It is arguable whether or not the trend is dying today, but either way, companies go to exorbitant expense and research to match just the right celebrity to their product or service and to ensure math the outcome is profitable.

The three questions that the company essentially asks are the following:

Do the celebrity endorsements programs increase the sales?

How to use the value generated by the celebrity endorsements

Are customers connecting the brand with the celebrity?

The following essay explores those points and intends to analyze the use of celebrity endorsement strategy of the brands beginning from choosing the right celebrity figures until the final results of the strategy.

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Part II: Definition of the endorsement strategy

Marketing and Industry

The American marketing Association (AMA) has defined marketing as the "the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large." (/Community/ARC/Pages/Additional/Definition/default.aspx. )

It can also be defined as "the process by which companies create value for customers and build strong customer relationships, in order to capture value from customers in return" (ibid.). In this way, marketing is seen as a concept where the organization seeks to maximize value for customers and shareholders so that it generates profit.

Industries generally spend millions of dollars in order to research customers' desires and the predicted state of the market (Brown, 2010). In a related sense, they also spend millions of dollars in attracting clients to buy their products -- in other words, in 'marketing' their products to companies. One of the ways that they do this is through celebrities since it is considered that celebrities will have more credibility.

Nike for instance wanted its Swiss clientele to buy their footwear. Organizations usually advertise their products / services through 'branding' which is repeated association of the name of their company with a certain desirable image. The image that Nike decided to associate its footwear with was celebrity. Switzerland is a very sports loving nation which is proud of its soccer team, and athletics team. Federer is a well-known tennis player, but to the Swiss he is particularly renowned not only for his sport but also for his philanthropic interests. The Swiss are generally keen to buy those products which are endorsed by him.

Nike took advantage of that fact.

The lure of celebrity marketing

Of all the markets that are attracted to celebrities none are more so than teens. To teens, celebrities are far more than 'mere' pop singers, fashion models, musicians, athletes, actresses, and so forth. They are icons, heroes, and role models. Celebrities can determine trends or destroy them and they can become the voice of the teen in a big way, becoming an important tool for teen-oriented marketing. As much as America is attracted to celebrities, teens are lured to them even more. Adolescent-based marketing therefore leverages celebrities in a big way (Zollo, 1999). In fact, the ones most caught up in celebrities, particularly in athletes are boys aged 12 to 15. Zollo (1999) discovered this when he tested a Nintendo TV spot for the company's "Ken Griffey Jr. presents major League Baseball." The company's intent was to see whether the execution interested the boys. What they discovered instead was that the boys were hooked by the celebrity's association. It was this, more than anything else that attracted the boys to the game even though Griffey Jr. did not even appear in the commercial; his father did.

Michael Jordan is an all-time favorite that has become indelibly linked with Nikes. Other products associated with Jordan include Gatorade, McDonald's, Coca-Cola, Wilson, Wheaties, and Hanes. Regarding Basketball ball, you have Grant Hill, Penny Hardaway, and Kobe Bryant.

Music and sports as well as perhaps fashion gourmet, are the fields that attract the greatest amount of celebrity marketing. Of all celebrities, athletes and musicians are the preferred ones by teens followed by supermodel (preferred by girls). This is succeeded by TV and movie stars (Zollo, 1999). Nonetheless, sports stars, music stars, and models remain adolescents' top choice and since celebrity marketing, generally, succeeds best in the adolescent sphere, these, generally, remain endorser's best choice too.

III. Overview of the four stages in finding and hiring an endorser and evaluating the outcome

The whole process of considering, finding, and finally hiring a celebrity is one that is done incrementally and thoughtfully with the whole, actually, occurring in four stages as Figure * indicates.

Fig. 4. Four stages in finding and hiring an endorser and evaluating the outcome

DIMENSION

STAGE 1

STAGE 2

STAGE 3

Align celebrity endorsement with business objective

The first step is to cautiously test celebrity match

Create buzz

Objectives are cautiously formed

Some parameters / measurements are constructed for these objectives

Celebrity characteristics and business objectives are carefully aligned

Objectives and measurements are put into place

Measure and qualify performance

No measurement methodology

No benchmarks are set when selecting celebrity

Limited use of….....

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