Researchers at University California Davis studied the impact of the Tiger scandal on shareholder value and concluded that the Tiger-endorsed brands collectively lost between $5 and $12 billion in the two weeks following the wake of the extramarital affairs. More specifically, share values (and market caps) of public companies endorsed by Tiger including Accenture, AT&T, Electronic Arts, P&G (Gillette), Nike, Pepsi (Gatorade) and TLC Laser Eye Centers fell over 2% of value with the news. I am not going to comment on the authors' methodology or if they normalized the stocks values over the two week period, but I will say that I tracked Nike's BrandMojo.org ratings over the same weeks following the scandal. Nike's overall average score decreased along with its overall ranking and the proportion of "1" ratings increased. Using the logic of Till and Shimp, the brand most closely related to the tarnished endorser will suffer the most- and this is precisely the case with Nike. A 4.5% drop in shareholder value and a changing image of it customers. Ouch. We'll see how long these drops last.
Nice post Bob. A nice extension to both your analyses and the one of UC-Davis researchers would to relate your brandmojo score variations with money.
ReplyDeleteNow, on a very non-scientif side: I like Nike for their products and not for their supporters. Can't people just let go of that need of keeping track of celebs lives? Are Nike's products worse because of Tiger's behaviour? I find that pretty sad.
ReplyDeleteOf course, that probably has to do with the fact that Tiger is hardly to be seen on add here in Germany. Still, sad sad.
Thanks for the comment Anonymous. Most marketers (and consumers when they think about it) recognize that the brand is a lot more than the physical product. The brand combines the "tangible" associations with the "intangible" associations and "emotional" appeals of the brand. That's precisely what makes brands strongs and gives the consumer strong reactions to brands. (For a neuroscientific perspective on this check out Lindstom's book "Buy-ology". The strongest brands understand this and are able to "premiumize" the brand because of the non tangible associations. (e.g. Coca Cola "Classic", Wells Fargo "Spirit of the west", Godiva "the luxurious chocolate" etc. Since Tiger was linked to Nike so intimately, when he went down, Nike took a hit- as evidenced by the stock market tumble.
ReplyDeleteAfter brand class we spoke and I said that Tiger would come back stronger than ever and you argued the reverse. You then said, "talk to me in 6 months". So here we are 6 months later and I think you are right.
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