NOTES - ENDORSEMENTS

1. NOTES - ENDORSEMENTS

2. Athlete Endorsements Fact – 2009 American businesses paid out over $1.5 billion dollars to athletes for endorsements. Most top athletes earn more money on their endorsement contracts than their playing contracts.

4. What is an Endorsement? • Any advertising message consumers are likely to believe reflects the opinions, beliefs or experience of a party (person in the ad) other than the sponsor. • public expression of approval or support for a product or service…..utilized as a promotional tool. Examples: 1.) Pete Rose appears in a TV commercial for Muzuno batting gloves. 2.) Jimmie Johnson appears in a commercial selling motor oil.

5. Must always reflect the honest opinions, findings and beliefs or experience of the endorser. Endorser must have real experience with the product. May not contain any deceptive or misleading statements. May not be presented out of context or reworded so as to distort in any way the endorser’s opinion. Endorser must use and continue to use and believe in the product for as long as the endorser is used in advertisements. If product changes (at all), company must notify endorser. Legal Restrictions on Endorsements

6. Derek Jeter Peyton Manning Michael Jordan Jeff Gordon Danica Patrick Charles Barkley David Beckham Phil Mickelson Maria Sharapova Lebron James Michael Phelps John Madden Dale Ernhardt Jr. A) T-Mobile B) Canon Wrangler Jeans Gilette Subway DirecTV GoDaddy Hanes Adidas Electronic Arts TAG Huer Calloway McDonalds Can you match the “Product” to its correct Endorser

7. Derek Jeter - Gilette Peyton Manning - DirectTV Michael Jordan - Hanes Jeff Gordon – TAG Hueer Danica Patrick – GoDaddy Charles Barkley – T-Mobile David Beckham - Adidas Phil Mickelson - Calloway Maria Sharapova - Canon Lebron James - McDonalds Michael Phelps - Subway John Madden – Electronic Arts Dale Ernhardt Jr. – WranglerJeans

8. Proven studies that consumers will buy products endorsed by celebrities (athletes, entertainers) Viewers are less likely to turn the channel when a commercial features a celebrity. Consumers tend to believe the celebrities that are featured in the ad. Very expensive – have to pay high price to get top celebrities. Endorser may want to promote more than one product. Always chance for endorser to create negative publicity. Endorsement Advantages Disadvantages

9. Endorser with controversy Challenge for companies is making sure endorser they choose is a positive representative for their product or service. Some companies are willing to risk it because their target market is not the mainstream or typical consumer. Examples of questionable endorsers: Aaron Hernandez Mike Tyson Dennis Rodman Richie Incognito Tiger Woods

10. Endorsers speaking out… Should celebrities speak out on controversial or human rights topics? Companies are split… Some say it is okay…but why? • They have a responsibility to know what is going on utilize their fame and wealth to make difference. Others say no way…but why? • Celebrities are only experts in their fields…they could lose all credibility if they speak on become to personal.

11. When searching for a celebrity endorser, businesses typically look for a celebrity: • with a positive, charismatic, trustworthy image • that is respected by consumers • that is widely known • has a current career (rather than someone retired) • that presents few risks • who has a believable relationship with the product

12. NOTES: LICENSING

13. License Licensing Royalty Key Terms

14. Licensing License or Licensing is a the legal right to reproduce or copy the logo (image) of a league, team, athlete, or entertainer for payment. Examples: Bumper Stickers, Hats, Gloves, Vanity Plates, Grill Covers, Jerseys, Shoes, Cleats, Bats, CD’s, etc.

15. Examples…. John Wall - Air Jordans - LeBron - Derrick Rose -

16. How does it work? 1st – a company will license the use of the name and/or logo on a particular item. 2nd – the license may be exclusive (means that no one else can sell the same type of item with the team’s or player’s name, # or logo) or non-exclusive. 3rd – typically the Licensee pays the team/player a fixedfee and a % or amount per unit soldof its sales on the item (know as the royalty) for as long as the contract is valid. It is typically win/win situation for both the parties involved….if the numbers are right.

17. Fixed Fee + (Royalty x Est. Sales)= Licensing Agreement

18. A team/athlete will consider the amount of the fixed fee, and the royalty (% of the sales) based on the estimated sale projections of the item. Which deal is better? Fixed Fee Royalty or Price Units Sold Estimated Sales $100,000 $2.00 10,000 $25,000 $3.00 75,000 $200,000 $1.25 30,000 $120,000 $250,000 (best deal) $237,500

19. NOTES – PROMOTIONS

20. Target Audience - a particular market segment selected as being the most appropriate for a certain advertising campaign or schedule. What do you focus on? Demographics Why is it so important to get this right? If you focus on the wrong Target Audience you are wasting your time and money. WHY?

21. What is the PROMOTIONS? ways to encourage customers to purchase products; Advertising – Paid for communication Publicity – Free communication Personal Selling– Face-to-Face communication Public Relations– Creating a positive public image/opinion

22. Promotions do what? Keeps the products/services in the minds of customers and potential customers by 1.) INFORMING 2.) UPDATING current or potential fans/customers.