Nike (NYSE:NKE) facing Endorser Dilemma

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By Thomas Copeland on September 22, 2014 Company

For decades, companies have spent bundles on celebrity endorsers for their brands. Nike (NYSE:NKE) is one such company that has gone over the top for endorsers like Ray Rice, Lance Armstrong, Tiger Woods and Adrian Peterson. The company has also started product lines that are named after its endorsers like Nike (NYSE:NKE) Air Jordan Retro XI sneakers, named after Michel Jordan as he played from the Chicago Bulls.

Recently however, some of these endorsers have caused the company major trouble. With revolts of misconduct, the company is thinking about changing its buzz model; it is also being pressurized to do so by a few stockholders. It is not easy to get publicity through word of mouth (WOM) and buzz in a large mass. It takes a differentiated product with exciting capabilities that would trigger consumers to spread its word.

In order to have good WOM as well as Buzz, a company must make sure that it starts with products that meet consumer needs as well as desires. After this, these products must be innovated to meet these consumer demands and also targeted at the right pool with the message of what it aspires to do, only then will they be purchased.

What most companies do not understand is that a situation must be created in which the product can be sold. By creating a different scenario for customers, it helps them better understand their needs for it. Consumer hype must be triggered by emotion in order to get them up and about in a market, especially luxury products.

With all this in mind, athletic sponsorships seem just the thing for Nike (NYSE:NKE), being a sports brand with celebrity endorsers, the public is lured into buying their ideal athletes in the form of its products.

The problem that companies are facing with this approach is that the media is constantly targeting celebrities and trying to get a hold of dark information that they may use as a means of destruction. By acting out, a celebrity may lose appeal in front of the audience that will end up tarnishing not only their image but also the brand’s that they were endorsing.

It does not take much time for positive buzz to switch to negative buzz with such circumstances. Sponsors are considered threats to the company in such instances where major changes need to be made to deal with the problem at hand before consumers are given time to wander away. There are two reasons that have increased this possibility, the first being proliferation of security devices whereas the other being increase in social media awareness.

Surveillance cameras help people get into the personal lives of celebrities which can be used to manipulate them on the social media. However, even with all these dangers, consumers appreciate celebrity endorsers. Nike (NYSE:NKE) should consider this fact before trying to do away with the endorsers. It must understand that these endorsers have become the image of the product itself as they are used to identify Nike (NYSE:NKE) by its consumers.