Photo: Allyson Felix from Marie Claire
SUMMARY
“Is
Nike spending too much on superstars?”[1]
was written by Kyle Stock for the online sports section of BusinessWeek.com and
was published March 20th, 2014. The author of this article is trying
to explore why Nike spends vast amounts of money endorsing athletes to
represent their brand. The author feels that it is important as a global
company to spend money to keep its superstars in their corner. It is said that Nike
uses “1 in 10 of its revenue dollars on such costs…and has spiked again in
recent months”. Nike’s advertising sponsorship tends to fluctuate based on
different seasons and events. Recently in March of 2014, Nike had released a
new line of “burly –looking sneaker boots and a line of patriotic sportswear”[2],
which ultimately was not cheap exposure based on the event it was released at. “Nike
has said its fans can expect an increase of more than 20 percent in
“demand-creation” expenses for the recent quarter, which comes to an added $124
million”.[3]
The author feels that as a business you must first spend your money if you’d
like to make a profit but at some point feels this may be harmful.
OPINION
In my
opinion, I agree with the author that you ultimately need to spend the extra
dollar in order to make a profit and keep your brand alive. I believe Nike
spends a lot of money endorsing athletes for different product lines and
various other activities, however I do feel it is justified. In order to have
your business grow, you need to build your brand. Celebrities are given a high
regard and are often imitated. In my opinion, many consumers look to
celebrities when selecting certain sports attire as it’s a common notion that people
believe if you see someone use a specific product and it works for them, it
will then in turn work for you as well. To me it is also a monkey-see monkey-do concept. I feel all their advertising does
them justice or they would not still be in business. Their brand is easily
noticed, easily known, and is in every sports match and workout video, etc. By
endorsing various athletes , Nike ultimately gets their brand out into the
public sphere where it is recognized and the functionality of their design is
exhibited.
QUESTIONS/FEEDBACK
1.
Do you feel that Nike spends too much endorsing
their athletes? If so, do you believe they would get the same result with less
endorsements?
2.
How much do you think Nike spends a year
endorsing athletes?
REFERENCES
Stock, Kyle. "Is Nike
Spending Too Much on Superstars?" BloomburgBusinessWeek.
Bloomburg LP, 20 Mar. 2014. Web.
<http://www.businessweek.com/articles/2014-03-20/is-nike-spending-too-much-on-superstars>.
I feel like Nike does way too much on endorsements. Whether its $100 million or $50,000 that they offer the athlete I still feel like Nike is a big enough brand that their product will sell.
ReplyDeleteI agree that Nike spends a lot on endorsements. Since their brand has been around so long they are an established company which can still continue to profit without the help of endorsed athletes. However, I do feel the endorsements help to push their dollar just that much more. My suggestion may be that they should reduce their budget for endorsements. Does that sound like a better idea? Or do you feel they should just drop it all together?
DeleteNike recently offered Kevin Durant in excess of $250 million dollars on a 10 year deal, so I would estimate that athlete endorsements worldwide might approach the sum of billions of dollars.
ReplyDeleteWow. That's pretty crazy.
DeleteAnd that's not even what he makes to play the actual sport -- it's actual a bigger contract than he could receive from actually playing. It's probably minimal compared to how much money it will generate for Nike in the long run.
ReplyDeleteI think Nike spends well over a million dollars endorsing athletes every year. However, they do level this out through contributing to many charitable organizations including several of their own. Nike could easily decrease their number of athlete endorsements by capping endorsements to two athletes one male and one female for each professional sport. However, this is unlikely as the world of professional sports is constantly changing and very uncertain. I quite enjoy the Nike ads featuring some of the world's best athletes, and I think they are always creative, but it wouldn't hurt to get some regular, average people into their ads.
ReplyDeleteHi Emily. I think you're right. They could very well limit it but it does increase their revenue quite substantially the more endorsements they have. I'm typically a fan of their ads too.
Deletei believe that nike does not spend too much on endorsements because athletes promote their brand, so in the end they are advertising their products which will bring more consumers
ReplyDeleteI believe Nike does spend lots of money on their brands which they don't really need to but on the other side if say they should not spend lots of money then how people will buy the Nike products. If Nike spending money on the celebrities they are also getting back as well. So we can say if they are spending they are earning also. This is the strategy of the business.
ReplyDelete