Nike Case(Strategic Marketing)
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 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-andcomer,
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
30 PART 1 UNDERSTANDING MARKETING MANAGEMENT
In 1998, two Stanford
University PhD students, Larry Page and Sergey
Brin, founded a search engine company and named it
Google. The name plays on the number googol—1 followed
by 100 zeroes—and refers to the massive quantity of data
available online that the company helps users find. Google’s
corporate mission is “To organize the world’s information
and make it universally accessible and useful.” From the
beginning, Google has strived to be one of the “good guys”
in the corporate world, supporting a touchy-feely work
environment, strong ethics, and a famous founding credo:
“Don’t be evil.”
The company has become the market leader for
search engines through its business focus and constant
innovation. As Google grew into a primary destination for
Web users searching for information online, it attracted a
host of online advertisers. These advertisers drove Google’s
revenue by buying “search ads,” little text-based boxes
shown alongside search results that advertisers pay for
only when users click on them. Google’s search ad program,
called AdWords, sells space on its search pages to
ads linked with specific keywords. Google auctions off the
keyword ads, with prime keywords and page locations
going to the highest bidder. Google recently added a
program called AdSense, which allows any Web site to
display targeted Google ads related to the content of its
site. Web site publishers earn money every time visitors
click on these ads.
In addition to offering prime online “real estate” for advertisers,
Google adds value by providing tools to better target
their ads and better understand the effectiveness of their
marketing. Google Analytics, free to Google’s advertisers,
provides a custom report, or dashboard, detailing how
Internet users found the site, what ads they saw and/or
clicked on, how they behaved while there, and how much
traffic was generated. Google client Discount Tire was able
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 long-term 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.
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?