Adidas Response to Nike S Marketing Case Study

Pages: 2 (785 words)  ·  Bibliography Sources: 3  ·  File: .docx  ·  Level: Master's  ·  Topic: Urban Studies

Nike Case Study

Nike's core strategy is based on the idea of the pyramid of influence. The way that this strategy typically manifests is that Nike partners with top athletes in their fields, and uses the latent influence that those athletes have to market Nike's products. The strength of this strategy, in essence, is that Nike is right. Over time, the evidence is fairly conclusive that Nike's top athletes are worth a tremendous amount in the marketplace. Elberse and Verleun (2012) found that there is a positive payoff to having a celebrity endorser, and it stands to reason that the value of the endorser will increase with their prestige and fame. The authors found that when an athlete has a major achievement, sales increase. If the company is sufficiently skilled at leveraging its relationship with the athlete, the company can enjoy tremendous success, and Nike has provided ample evidence of that over the past thirty years. For example, Tiger Wood's effect on golf ball sales alone was determined to be worth $103 million from 2010-2012 for Nike (Chung, Derdenger & Srinasavan, 2012)

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There are two risks for the company. The first is that there are diminishing returns over time (Elberse & Verleun, 2012). This is because the value of the endorser is typically linked to performance, and performance naturally declines at a certain point. Only an elite handful of athletes are (i.e. Michael Jordan, David Beckham) are able to maintain their marketing power after they retire. The other risk is that the athlete's credibility as an endorser may decline significantly if there are any off-field issues that cloud public perception of the athlete. One of Nike's major clients, Tiger Woods, is a pretty good example of this. When Tiger Woods' scandal broke, the companies that endorsed him collectively lost 2% of their stock market value. This scandal in particular "sent a negative marketwide signal about the reputation risk associated with celebrity endorsements" (Knittel & Stango, 2013).

Case Study on Adidas Response to Nike S Marketing Assignment

If there are cons that are not included under the category of "risk," it would be that there is a need to spent quite liberally to acquire the endorsement of high-end celebrity athletes. This means that any company wishing to utilize this strategy needs to have premium pricing, and be able to support that pricing with a high quality product. The different elements of the firm's… [END OF PREVIEW] . . . READ MORE

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