Case
Excellence >>Nike
Nike hit the ground running in 1962. Originally known as Blue
Ribbon Sports, the company focused on providing high-quality
running shoes designed for athletes by athletes. Founder Philip
Knight
believed
high-tech
shoes
for
runners
could
be
manufactured at competitive prices if imported from abroad.
Nike’s commitment to designing innovative footwear for serious
athletes helped it build a cult (trend) following among U.S.
consumers.
Nike believed in a “pyramid of influence” in which the preferences
of a small percentage of top athletes influenced the product and
brand choices of others. From the start its marketing campaigns
featured accomplished athletes. Runner Steve Prefontaine, the
first spokesperson, had an irreverent attitude that matched the
company’s spirit.
In 1985, Nike signed up then-rookie guard Michael Jordan as a
spokesperson.
Jordan
was
still
an
up-and
comer,
but
he
personified superior performance. Nike’s bet paid off—the Air
Jordan line of basketball shoes flew off the shelves and revenues
hit over $100 million in the first year alone. As one reporter
stated, “Few marketers have so reliably been able to identify and
sign athletes who transcend their sports to such great effect.”
In 1988, Nike aired the first ads in its $20 million “Just Do It” ad
campaign. The campaign, which ultimately featured 12 TV spots
in all, subtly challenged a generation of athletic enthusiasts to
chase their goals. It was a natural manifestation of Nike’s attitude
of self-empowerment through sports.
As Nike began expanding overseas to Europe, it found that its
U.S.-style ads were seen as too aggressive. Nike realized it had to
“authenticate” its brand in Europe, so it focused on soccer (known
as football outside the United States) and became active as a
sponsor of youth leagues, local clubs, and national teams.
However, for Nike to build authenticity among the soccer
audience, consumers had to see professional athletes using its
product, especially athletes who won. Nike’s big break came in
1994 when the Brazilian team (the only national team for which
Nike had any real sponsorship) won the World Cup. That victory
transformed Nike’s image in Europe from a sneaker company into
a brand that represented emotion, allegiance, and identification.
It also helped launch Nike into other international markets over
the next decade, and by 2003, overseas revenues surpassed U.S.
revenues for the first time.
In 2007, Nike acquired Umbro, a British maker of soccer-related
footwear, apparel, and equipment. The acquisition helped boost
Nike’s presence in soccer as the company became the sole
supplier of uniforms to over 100 professional soccer teams around
the world.
Nike focused its efforts on international markets, especially China,
during the 2008 Summer Olympics in Beijing. Although Nike’s
rival, Adidas, was the official sponsor of the Olympic Games, Nike
received special permission from the International Olympic
Committee to run Nike ads featuring Olympic athletes during the
games. In addition, Nike sponsored several teams and athletes,
including most of the Chinese teams and 11 of the 12 high-profile
members on the United States men’s basketball teams. That year,
sales in the Asian region grew 15 percent to $3.3 billion and
Nike’s international divisions grew to 53 percent of the company’s
revenue. Some believed Nike’s marketing strategy during the
Olympics was more effective than Adidas’s Olympic sponsorship.
In addition to expanding the brand overseas, Nike successfully
entered new athletic footwear, apparel, and equipment product
categories by using endorsements from high-profile athletes and
consumer outreach programs. The Nike Golf brand, endorsed by
Tiger Woods, has changed the way professional golfers dress.
Tiger’s powerful influence on the game and his Nike emblazoned
style have turned the greens at the majors into “golf’s fashion
runway.”
In addition, Nike has used the superstar to help build its
relationship with consumers. In 2009, it launched a Tiger Web
Talkback session at nikegolf.com, where fans could ask questions
and hear Tiger talk about golf. The session was part of a
nationwide Nike Golf consumer experience day, which included
equipment demos, long-drive contests, and in-store specials.
In tennis, Nike has aligned with Maria Sharapova, Roger Federer,
and Rafael Nadal to push its line of tennis clothing and gear. Some
called the famous 2008 Wimbledon match between Roger Federer
and Rafael Nadal—both dressed in swooshes from head to toe—a
five-hour Nike commercial valued at $10.6 million.
Nike teamed up with seven-time Tour de France champion Lance
Armstrong not only to sell Nike products but also to help
Armstrong’s
LIVESTRONG
campaign.
Nike
designed,
manufactured, and sold over 70 million yellow LIVESTRONG
bracelets,
netting
$80
million
for
the
Lance
Armstrong
Foundation. It also featured Armstrong’s message of survival,
willpower, and giving in a series of Nike commercials.
To promote its line of basketball shoes and apparel, Nike
continues to feature basketball superstars such as Kobe Bryant
and LeBron James. In addition, it formed a partnership with Foot
Locker to create a new chain of stores, House of Hoops by Foot
Locker, which offers only basketball products by Nike brands such
as Converse and Jordan.
Recently, Nike’s lead in the running category has grown to 60
percent market share thanks to its exclusive partnership with
Apple. Nike_ (Plus) technology includes a sensor that runners put
into their running shoes and a receiver, which fits into an iPod,
iTouch, or iPhone. When the athlete goes for a run or hits the
gym, the receiver captures his or her mileage, calories burned,
and pace and stores it until the information is downloaded. Nike_
is now considered the world’s largest running club.
In 2008 and 2009, Nike_ hosted the Human Race 10K, the largest
and only global virtual race in the world. The event, designed to
celebrate running, drew 780,000 participants in 2008 and
surpassed that number in 2009. To participate, runners register
online, gear up with Nike_ technology, and hit the road on race
day, running any 10K route they choose at any time during the
day. Once the data is downloaded from the Nike_ receiver, each
runner’s official time is posted and can be compared to the times
of runners from around the world.
Like many companies, Nike is trying to make its company and
products more eco-friendly. However, unlike many companies,
Nike does not promote
its efforts.
One
brand
consultant
explained, “Nike has always been about winning. How is
sustainability relevant to its brand?” Nike executives agree that
promoting an eco-friendly message would distract from its slick
high-tech image, so efforts like recycling old shoes into new shoes
are kept quiet.
Today, Nike dominates the athletic footwear market with a 31
percent market share globally and a 50 percent market share in
the
United
States.
Swooshes
abound
on
everything
from
wristwatches to skateboards to swimming caps. The firm’s longterm strategy focuses on basketball, running, football, women’s
fitness, men’s training, and sports culture. As a result of its
successful expansion across geographic markets and product
categories, Nike is the top athletic apparel and footwear
manufacturer in the world, with corporate fiscal 2009 revenues
exceeding $19 billion.
Questions
1. What are the pros, cons, and risks associated with Nike’s core
marketing strategy?
2. If you were Adidas, how would you compete with Nike?
