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Economic Value of Celebrity Endorsements: Tiger Woods' Impact on Sales of Nike Golf Balls

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  • Kevin YC Chung

    (Tepper School of Business, Carnegie Mellon University, Pittsburgh, Pennsylvania 15213)

  • Timothy P. Derdenger

    (Tepper School of Business, Carnegie Mellon University, Pittsburgh, Pennsylvania 15213)

  • Kannan Srinivasan

    (Tepper School of Business, Carnegie Mellon University, Pittsburgh, Pennsylvania 15213)

Abstract

In this paper we quantify the economic worth of celebrity endorsements by studying the sales of endorsed products. We do so with the use of two unique data sets consisting of monthly golf ball sales and professional golfer (celebrity) rankings. In particular, we examine the impact Tiger Woods had on sales of Nike golf balls. Our identification of the causal effect of a celebrity is grounded in the celebrity's random performance over time. Using two different approaches, reduced form and structural, we find that there are substantial celebrity endorsement effects. From our structural model, we determine that endorsements not only induce consumers to switch brands, a business stealing effect, but also have a primary demand effect. We determine that from 2000 to 2010, the Nike golf ball division reaped an additional profit of $103 million through the acquisition of 9.9 million in sales from Tiger Woods' endorsement effect. Moreover, having Tiger Woods' endorsement led to a price premium of roughly 2.5%. As a result, approximately 57% of Nike's investment in Woods' $181 million endorsement deal was recovered just in U.S. golf ball sales alone.

Suggested Citation

  • Kevin YC Chung & Timothy P. Derdenger & Kannan Srinivasan, 2013. "Economic Value of Celebrity Endorsements: Tiger Woods' Impact on Sales of Nike Golf Balls," Marketing Science, INFORMS, vol. 32(2), pages 271-293, March.
    • Handle: RePEc:inm:ormksc:v:32:y:2013:i:2:p:271-293
    DOI: 10.1287/mksc.1120.0760
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    Cited by:

    1. Scott M. Kaplan, 2022. "Putting a price on popularity: Evidence from superstars in the National Basketball Association," Economic Inquiry, Western Economic Association International, vol. 60(3), pages 1357-1381, July.
    2. Stefan J. Hock & Sascha Raithel, 2020. "Managing Negative Celebrity Endorser Publicity: How Announcements of Firm (Non)Responses Affect Stock Returns," Management Science, INFORMS, vol. 66(3), pages 1473-1495, March.
    3. Bazi, Saleh & Filieri, Raffaele & Gorton, Matthew, 2023. "Social media content aesthetic quality and customer engagement: The mediating role of entertainment and impacts on brand love and loyalty," Journal of Business Research, Elsevier, vol. 160(C).
    4. Guhl, Daniel, 2019. "Addressing endogeneity in aggregate logit models with time-varying parameters for optimal retail-pricing," European Journal of Operational Research, Elsevier, vol. 277(2), pages 684-698.
    5. Abhishek & Sahay, Arvind, 2013. "Role of culture in celebrity endorsement: Brand endorsement by celebrities in Indian context," IIMA Working Papers WP2013-07-01, Indian Institute of Management Ahmedabad, Research and Publication Department.
    6. . Abhishek & Arvind Sahay, 2013. "Role of Culture in Celebrity Endorsement: Brand Endorsement by Celebrities in Indian Context-A Review, Synthesis and Research Propositions," Working Papers id:5432, eSocialSciences.
    7. Raja Kali & David Pastoriza & Jean‐François Plante, 2018. "The burden of glory: Competing for nonmonetary incentives in rank‐order tournaments," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 27(1), pages 102-118, March.
    8. Zamudio, César, 2016. "Matching with the stars: How brand personality determines celebrity endorsement contract formation," International Journal of Research in Marketing, Elsevier, vol. 33(2), pages 409-427.
    9. Marco Caiffa & Vincenzo Farina & Lucrezia Fattobene, 2020. "All that glitters is not gold: CEOs' celebrity beyond media content," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 25(3), pages 444-460, July.
    10. Christopher R. Knittel & Victor Stango, 2014. "Celebrity Endorsements, Firm Value, and Reputation Risk: Evidence from the Tiger Woods Scandal," Management Science, INFORMS, vol. 60(1), pages 21-37, January.
    11. Niu, Baozhuang & Yu, Xinhu & Li, Qiyang & Wang, Yulan, 2023. "Gains and Losses of Key Opinion Leaders’ Product Promotion in Livestream E-commerce," Omega, Elsevier, vol. 117(C).
    12. Natalie Bragança Düsenberg & Victor Manoel Cunha de Almeida & João Guilherme Barbosa de Amorim, 2016. "The Influence of Sports Celebrity Credibility on Purchase Intention: The Moderating Effect of Gender and Consumer Sports-Involvement," Brazilian Business Review, Fucape Business School, vol. 13(Special I), pages 1-21, November.
    13. Patrick Rooney & Jonathan Smith, 2019. "The Impact Of Highly Publicized Campus Scandals On College Outcomes," Contemporary Economic Policy, Western Economic Association International, vol. 37(3), pages 492-508, July.
    14. Lin, Hsin-Chen & Bruning, Patrick F. & Swarna, Hepsi, 2018. "Using online opinion leaders to promote the hedonic and utilitarian value of products and services," Business Horizons, Elsevier, vol. 61(3), pages 431-442.
    15. Borghesi, Richard & Naranjo, Andy & Ryngaert, Michael, 2022. "What are the odds? Underdog brands are consumer favorites," Economics Letters, Elsevier, vol. 221(C).
    16. El Hedhli, Kamel & Zourrig, Haithem & Becheur, Imene, 2021. "Celebrity endorsements: Investigating the interactive effects of internalization, identification and product type on consumers’ attitudes and intentions," Journal of Retailing and Consumer Services, Elsevier, vol. 58(C).
    17. Timothy P. Derdenger, 2018. "Examining the impact of celebrity endorsements across consumer segments: an empirical study of Tiger Woods’ endorsement effect on golf equipment," Marketing Letters, Springer, vol. 29(2), pages 123-136, June.

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