Scandal!

Brand image is everything. More often than not a consumer picks one product over another because of the brand’s image. It’s the reason Gillette owns 80% of the razor industry market share and it’s why McDonald’s has become the top fast food chain in the world. So if a brands image is everything, what affects a brands image?

To strengthen their image, brands often partner with famous figures. Through association with celebrities and athletes the brand hopes to attract new consumers. However, the relationship with celebrities is a two-edged sword. When the celebrity is popular the brand will flourish, but when the celebrity is in hot water the brand may lose consumers.

Tiger Woods

In 2009, one of the biggest celebrity scandals to date hit the golf green. Word got out that Tiger Woods had been having an affair with several women for quite some time. His sponsors, such as Nike, Gatorade and Electric Arts, decided to stick by Tiger through his very public affair scandal.

Research done by two economic professors found that collectively these three brands stock fell 2.3% between November 25th and December 13th in 2009. This stock drop cost shareholders $12 billion. Not to mention consumers may have stopped using these brands due to their association with Tiger Woods.

Recently a new scandal has come to life, this time involving Food Network icon, Paula Deen. Deen is involved in a legal suit by a former manager of Uncle Bubba’s Seafood and Oyster House, a restaurant which Deen and her brother own. The suit alleges that the former manager was sexually harassed and claims the restaurant was a setting where racism was often encountered. While under oath Deen admitted to using the “N-word” and other racism remarks in the past.

This time around brands have responded very differently, unlike the Tiger Woods scandal, brands have decided to separate themselves from Paula Deen. After an eleven year relationship, the Food Network has decided to not renew their contract with Paula Deen, whose show will end when her contract expires this month.

Wal-Mart Stores Inc. has also cut ties with Deen, by releasing a statement that says, “We will not place new orders beyond those already committed…We will work with suppliers to address existing inventories and agreements.” Along with Wal-Mart, Smithfield Foods, the world’s largest pork producer, has said that Deen will no longer represent them as their spokesperson.

It’s obvious that this time around brands aren’t taking any chances. They don’t want to run the risk at damaging their brand image through association with Paula Deen. The news for Deen continues to get worse as her reputation continues to be tarnished. While her cooking empire crumbles, it is estimated that this scandal will cost Deen at least $4.5 million, but how much worse it will get is yet to be determined.

Below is the apology that Deen sent out on Youtube after canceling on Matt Lauer and the Today Show. Deen has since appeared on the Today show, which can be seen here.

The Gillespie Group