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Athlete Endorsement as a Marketing Strategy. Nike and Michael Jordan

Bachelor Thesis 2014 56 Pages

Business economics - Marketing, Corporate Communication, CRM, Market Research, Social Media

Excerpt

Content

I. Introduction

II. MARKETING
1. Marketing Definition
2. Marketing Mix
3. Integrated Marketing Communication
4. The Role of Promotion
4.1. The Promotional Mix
4.2. Advertising
5. The Communication Process

III. ENDORSEMENT
6. Definition of Endorsers
7. Celebrity Endorsement Strategy
7.1. Athlete Endorsement
8. Source Credibility and Source Attractiveness
8.1. Source Credibility
8.2. Source Atravtiveness
9. The Match-Up Hypothesis
9.1. Balance Theory
9.2. The Match-up Effect of Athlete Endorsements
10. The Meaning Transfer Model
11. Celebrity Selection
11.1. On-field and Off-field Attributes
11.2. TEARS Model
12. Risks
13. Advantages and Economic Value
14. Legal side
15. Measuring the Return on Investment (ROI)

IV. A CASE STUDY OF NIKE AND MICHAEL JORDAN
16. Nike, Inc
16.1. Company Information
16.2. Brand Image
16.3. Endorsement Strategies
17. Michael Jordan
17.1. Background Information and Economic Value
17.2. Influence on Nike’s Values
17.3. Air Jordan
17.4. Effect Measuring and Economic Value

V. Conclusions

VI. Bibliography

Abstract

Companies try constantly to extend their markets by attracting different target customers and increasing their brand awareness. The present study investigates how and why endorsing their products by athletes is an always more extensively and popular tool in the companies’ marketing mix. Michael Jordan, a retired American basketball star, who has gained lots of media attention, has endorsed numerous products. Especially his endorsement contract with Nike, Inc. has become an excellent case study for the current trend of athlete endorsement in the international market. The results of this case study provide insights into factors that may influence the success of athlete endorsement as a company’s marketing strategy.

Resumen

Las empresas intentanabrir mercados nuevos constantemente, logrando atraer a nuevos clientes objetivo y aumentar el reconocimiento de la marca. Este trabajoinvestiga el cómo y por qué el patrocinio de atletas, para que éstos representen los productos de una empresa, ya que es una herramienta cada vez más amplia y popular en el marketing mix de las empresas. Michael Jordan, una estrella retirada de baloncesto estadounidense, ha recibido mucha atención de los medios publicitarios y ha representado bajo patrocinio a varios productos. Especialmente su contrato de patrocinio con Nike, Inc. se ha convertido en un excelente caso de estudio para analizar la tendencia actual que supone patrocinar a atletas en el mercado internacional. Los resultados de este caso de estudio ayudan a entender los factores que pueden influir en éxito de las empresas cuando deciden patrocinar a un atleta como parte de su estrategia de marketing.

Resum

Les empreses intenten obrir mercats nous constantment, aconseguint atraurenous clients objectiu i augmentarel reconeixement de la marca. Aquest treball investiga el cóm i per què el patrocini d'atletes, per a que aquests representin els productes d'una empresa,ja que és una eina cada vegada més àmplia i popular en el màrqueting mix de les empreses. Michael Jordan, un estel retirada de bàsquet, ha rebut molta atenció dels mitjans publicitaris i ha representat sota patrocini a diversos productes. Especialment el seu contracte de patrocini amb Nike, Inc. s'ha convertit en un excel·lent cas d'estudi per analitzar la tendència actual que suposa patrocinar atletes en el mercat internacional. Els resultats d'aquest cas d'estudi ajuden a entendre els factors que poden influir en èxit de les empreses quan decideixen patrocinar a un atleta com a part de la seva estratègia de màrqueting.

Keywords

Marketing–Communication – Promotion – Advertisement – Athlete endorsement – Nike – Michael Jordan

I. Introduction

Athlete endorsement is a marketing promotional strategy that is frequently used by companies to reach a wider target audience, to outstand from their competitors, to create brand awareness as well as to make a higher profit. It is an always more popular tool that companies like to apply in order to achieve their goals.

The motivation that drove me to do research on this topic is my high interest in sports and marketing. Also I have a sister who plays international tennis tournaments and it is over there where I witnessed lots of times how companies are looking for young talents to endorse their products. Such endorsement contracts are always of great value for the athletes and they also mean an additional financial support. Nevertheless I always asked myself what the company was getting from it and how they could benefit themselves from it.

In order to get an answer to my wonderings, the aim of this thesis is to gain a deeper understanding of how companies use athlete endorsement as a marketing strategy. To achieve this purpose, the thesis describes and explains the company’s objectives with athlete endorsement, the reason why they decide to endorse an athlete, the consumer perception of celebrities in advertisements, the effectiveness of celebrity/athlete endorsements, the drawbacks and the advantages associated with endorsement contracts and in a final step all the theory is illustrated in a practical case study.

The theory of the thesis was collected with the review of existing literature on endorsements, which included both books and article journals. Additional information was obtained from marketing and sports literature, which provides a deeper insight into the research topic and clarifies many important aspects related to the subject. The first part of the thesis defines the term marketing and explains how communication, and its components promotion and advertisement play a role in it. The second part is about the endorsement strategy as a marketing tool. It shows how it works, the different important factors that have to be considerate and also it comes up with the risks and advantages that come with the endorsement.

The third part is a case study about Nike, Inc. and the endorsement contract they signed with Michael Jordan, a former professional American basketball player in 1984. The study relies on the theoretical part of the thesis and it is compared with additional data research to complete it.

Build on the theory and on Nike’s endorsement contract with Michael Jordan the findings show how valuable a well done and a well-chosen endorsement contract can be for a company as well as for the endorser.The conclusions are based on the comparison with the theoretical part and the results of Nike’s case study. It shows why companies chose athletes to endorse their products and that convey their brand image effectively, as a promotional and marketing strategy.

It has been a great pleasure for me to work on this project. My sincere thanks goes to Josep Lluís del Olmo, my teacher for giving me an opportunity to work on this project whereby I was given a chance to study the impact of athlete endorsement as a marketing strategy, which helped me to expand my knowledge and practical thinking in that field. I thank him for his guidance and support throughout the time when I was working on this project. I also want to express my sincere thanks to my family and to my friends who encouraged me all the time throughout this project. Not at least I also want to thank everyone who made it possible to me to study abroad in the United States. It gave me the opportunity to make a great literature research on all the American literature I had access to.

II. MARKETING

The roles of advertising and promotion are changing in modern marketing. In the past, companies often relied on advertising through the mass media to promote their products. Nowadays many companies are taking a new approach to marketing and promotion by integrating their advertising efforts with a variety of other communication techniques. These can be by using sales promotion, direct marketing, publicity, public relations, event sponsorship and/or celebrity endorsements. Advertising and other form of promotion are most effective when they are combined with another element of the marketing program. Using various elements together to promote a product or a service is what is known as an integrated marketing communication approach. The integrated marketing communication is applied to get competitive advantage over the company’s competitors.

1. Marketing Definition

The overall marketing process consists of a mix of various terms of individual activities. The most popularconception people have about marketing is that it ofteninvolves sales. Nevertheless besides sales, there are other marketing activities such as market research, pricing or product planning.All these terms and activities are just a part of marketing. It involves more than just one of these individual elements, it needs the interaction of all of them.

The American Marketing Association (henceforthAMA), which represents marketing professions in the United Stated and Canada define marketing as “the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.”[1]According to P. Kotler the termmarketingis defined as “a social and managerial process by which individuals and groups obtain what they need and want through creating, offering and exchanging products of value with others”.[2]

Effective marketing requires that the company recognize the independence of such activities as sales and promotion and the way they can be combined to develop a marketing plan. Both definitions, the one from Kotler’s as well as the one from the AMA, recognize that exchange is an essential concept in marketing. Exchange takes place when two or more parties have something of value for the other. There is a desire and an ability to give up that something they have to the other party, and there is also a way to communicate with each other. Advertising and promotion play an important role in the exchange process. Through these tools the target audience of a certain product or service is getting informed and convinced of its ability to satisfy their needs or wants. Customers will only be willing to do the exchange, if they feel that their needs and desires are being satisfied. Also the amount of money cannot be more than the amount the customers are prepared to pay to satisfy their need.

Nowadays most companies are seeking for more than just a one-time exchange transaction with their customers. The focus is changing and companies are trying to develop and sustain relationships with their customers.Relationship marketingis the word that describes this new emphasis. The term involves “creating, maintaining, and enhancing long-term relationships with individual customers as well as other stakeholders for mutual benefit”.[3]The movement towards relationship marketing started due to several factors. One reason is that companies have recognized that customers have become much more demanding than in the past. They look for personalized products and services adapted to their specific needs and desires. They are also looking for a superior value. A superior value is given when the product is from a high quality, when it is competitively priced and also supported by an excellent customer service. Another reason why relationship marketing is becoming more popular is because it is more cost effective for the company to retain old customers rather than acquire new ones.

2. Marketing Mix

Marketing facilitates the exchange process and the development of the relationship between the company and the customers. The process goes from examining the needs and the wants of the customers, to developing a product or service that satisfies these needs and desires, offering a certain price, making it available through a particular place or channel of distribution, and developing a program of promotion or communication to create awareness and attract the interest. That process describes the four P’s, also known as the elements of the marketing mix, which are product, price, place, and promotion. The basic task of marketing is to combine these four elements info a marketing strategy to facilitate the potential exchange with the company and its customers. The marketing mix requires a company’s knowledge about the issues and options involved in each element of the marketing mix. The more the four elements are combined with each other, the more effective the marketing strategy becomes. Therefore a deep previous research is necessary. The customers are being analyzed through market researches and the obtained information serves to develop an overall marketing strategy.

[...]


[1] AMERICAN MARKETING ASSOCIATION. “AMA Board Approves New Marketing Definition”.Marketing News. [New York](March 1st 1985), p. 1

[2] KOTLER, P.Marketing Management: Analysis, Planning and Control. 1st ed. Englewood Cliffs, New Jersey J: Prentice-Hall. 1967. P. 36

ISBN 9780132613637

[3] BERRY, L. L.“Relationship Marketing of Services – Growing Interest, Emerging Perspectives”.Journal of the Academy of Marketing Science.Vol. 23 (1995), no. 4, p. 236

Details

Pages
56
Year
2014
ISBN (eBook)
9783668326262
ISBN (Book)
9783668326279
File size
950 KB
Language
English
Catalog Number
v285682
Grade
95%
Tags
athlete endorsement marketing strategy nike michael jordan

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Title: Athlete Endorsement as a Marketing Strategy. Nike and Michael Jordan