Crisis Management in Celebrity Endorsements

Crisis Management in Celebrity Endorsement Group 3 Shweta Zacharia Kern Rachita Swarooparani Nike * World’s leading supplier of athletic gear * A major sponsor of various global sports events and high-profile athletes and athletic teams * Entered into China in 1980 Considered to be the ‘coolest’ brand in China- success due to clever marketing Liu Xiang * One of Nike’s most important brand ambassadors in China * First endorsement signed in 2002- he won his first World Championship * New television commercial (TVC) launched in 2004- he won a gold medal at Athens Olympics- “Stereotypes are meant to be broken” What went wrong in this arrangement? Nike spent heavily on high-profile advertising campaigns centred on Beijing Olympics themes *

It also invested a lot of money to design new sportswear and footwear for Liu and other athletes specifically for the Beijing Olympics * Liu was considered to be more valuable than Yao Ming (Chinese Basketball Team) as he was believed to have a higher chance of defending his title from Athens Olympics- so more money was spent on him * A couple of days before the event, Liu quit the race due to an Achilles injury after a false start by another athlete * This was believed to be a big blow to Nike as Liu was the cornerstone for their program What was the reaction to this? * Mixed emotions spread throughout China. Some of them were sympathetic while others were angry as the news that Liu was injured was kept in the dark till the last moment. * Online posts on a major Chinese portal even criticized Nike by saying that Nike forced Liu not to participate, as the odds in favour of Liu winning the race was unfavourable. Liu made a public apology and expressed his interest in the sport. His desire for victory is still burning in him and he will soon return back to the sport. What did Nike do? * The day after Liu’s withdrawal, Nike placed a full-page tweaked advertisement depicting Liu’s love of sport despite setbacks * Subsequently, a revised TVC was launched under the same theme- “Love sport despite setbacks” What is expected to happen now? Although Liu’s existing contracts might not be terminated immediately, in order to avoid public backlash, his withdrawal might affect advertisers’ decisions on renewals. Questions that need to be answered: * Would Nike’s “Love Sport despite Setbacks” tweaking strategy work?

Yes, we think it will work. * Would Nike be able to turn Liu’s withdrawal from the Beijing Olympics into an opportunity to further boost its brand image? Yes, Nike might be able to turn this crisis into an opportunity to further boost its brand image if it continues with Liu. This will give it an edge over other sports gear-brands, which have contracts only with successful players and forget them once a better player comes into the picture. Nike can project itself as a partner to the player through thick and thin. This will help to make it a trusted brand. * What alternatives did Nike and other global brands have to minimise the losses from Liu’s withdrawal? 1.

Nike and other global brands can still endorse Liu but reduce the amount spent on him. 2. Though Liu was injured, they can still keep Liu in their campaigns, making him support the upcoming champions in the sport. 3. By keeping Liu (though he was injured), Nike can prove to the customers that ‘Nike is with them through thick and thin’. * Would Nike and the other sponsors drop Liu from their future campaigns? No, we think that they should not drop Liu from their campaign so soon but stick to the theme that they have adopted in this crisis. This is in keeping up with the spirit of sportsmanship – never give up. Tough times do not last, but tough people do!