Friends in low places
A new study suggests that Nike was right to stick with its troubled endorser
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Staying loyal to a major endorser even as he or she makes headlines for marital infidelity may pay off, according to a recent paper published by Carnegie Mellon University’s Tepper School of Business. Nike’s decision to stick with Tiger Woods, despite his sex scandal, led to a profit of $1.6 million in golf ball sales, the research found. By contrast, the sports-gear giant would have lost as much as $22 million by ditching the golfer like other big companies, such as Gatorde, AT&T and Accenture did.
The tarnishing of Woods’s image is thought to have cost the golf ball industry $7.5 million, and it did take a bite out of Nike’s bottom line, turning away some 105,000 golf ball buyers worth $1.3 million in sales. But considering that Woods is credited with converting an estimated 4.5 million customers to Nike over a 10-year endorsement campaign, the shedding of a few angry consumers wasn’t worth an ugly breakup.