Question

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 could be sourced from overseas at competitive prices. Nike’s commitment to designing innovative footwear for serious athletes, helped it build a cult following among US consumers. Nike believed in a ‘pyramid of influence’ in which the preferences and testimonial of top athletes influenced the product and brand choices of others. From the start its marketing and advertising campaigns featured accomplished athletes: in 1985 basketballer Michael Jordan was signed up, albeit then as a rookie.

In 1988 the ‘Just Do It’ campaign was launched. The campaign subtly challenged a generation of athletic enthusiasts to chase their goals. It was a natural manifestation of Nike’s attitude to self-empowerment through sports.

Nike began expanding overseas. In Europe it found that its US-style ads were seen as too aggressive. To authenticate its brand in Europe it focused on soccer and became active as a sponsor of youth leagues, local clubs and national teams. Further pursuing its strategy of professional endorsements, Nike decided to sponsor the Brazilian soccer team, which turned in to a big break when they won the World Cup in 1994. In 2007, Nike acquired Umbro a British maker of soccer-related footwear, apparel and equipment. This acquisition helped to boost Nike’s presence in soccer.

Continuing overseas expansion, China became a focus during the 2008 Olympics in Beijing. Although Adidas was the official sponsor, Nike received special permission from the International Olympic Committee to run Nike ads featuring Olympic athletes during the games and sponsored most of the Chinese teams. Some believed Nike’s marketing strategy during the Olympics was more effective than Adidas’s Olympic sponsorship.

Through the 1990s Nike moved into baseball, football, cycling, volleyball, hiking, soccer and then golf. During this time it developed a repeatable growth strategy[1]. Athletic shoes continued to be the core starting point but Nike then quickly moved into adjacent segments: into apparel and then equipment.

Internally Nike marketers adopted the three-word brand mantra: authentic athletic performance, to guide their marketing efforts. Its entire marketing program must reflect these brand values. Nike has expanded its brand meaning form ‘running shoes’ to ‘athletic shoes’ to ‘athletic shoes and apparel’ to ‘all things associated with athletics including equipment’. However it is always guided by the brand mantra. For example, as Nike rolled out its successful apparel line, the product had to be innovative enough through material, cut and/or design, to truly benefit top athletes.

Expanding into new categories and then new segments required the company to forge new distribution channels and lock in suppliers. Nike has pursued a selective distribution strategy. It pulled its product from the retail chain Sears when they acquired discount chain Kmart, to make sure Kmart did not carry the brand.

Expanding into new product categories meant new endorsements including Tiger Woods for golf. In tennis, John McEnroe was its first brand star in 1986. More recently Nike has aligned with Maria Sharapova, Roger Federer and Rafael Nadal. Some called the 2008 Wimbledon final between Federer and Nadal – both dressed in swooshes from head to toe – a 5-hour commercial valued at $10.6 million.

Nike has an unfortunate history of associating with some athletes who attract adverse publicity. In the 6 months following Tiger Woods highly publicised personal scandal, Nike lost over 100,000 customers[2] and although several sponsors cut ties with Woods, Nike did not. Nike did however terminate is contract with disgraced cyclist Lance Armstrong once the doping evidence became ‘seemingly insurmountable’. Oscar Pistorius is the latest example of a Nike endorsement that could turn sour.

Nike has also attracted adverse publicity regarding its offshore facilities; centring on working conditions and low wages, with media accusations of exploitation. Whilst Nike has assumed a policy of reformation for its abuses, the issue became, and continues to be, a recurring public relations nightmare for Nike.

NikeiD (rebranded as Nike by You) is a service provided by Nike allowing customers to customise and design their own Nike merchandise. This was launched in 1999 through the Nike website. Delivery is offered too many countries but not currently to Australia and New Zealand; here on-line local companies may act as local distributors for customised Nike products.

Basketball superstars have continued to feature in Nike’s promotions. In addition it formed a partnership with Foot Locker to create a new chain of stores in the US, House of Hoops by Footlocker, which offers only basketball products by Nike sub-brands such as Converse and Jordan.

Recently, Nike’s lead in the running category has grown to 60% market share, thanks in part to its exclusive partnership with Apple. Nike+ technology includes a sensor that runners put into their running shoes and a receiver, which fits into an iPod, iTouch, or iPhone. Then 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 companies and products more eco-friendly. However Nike does not focus on promoting this. As 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 high-tech image, so efforts like recycling old shoes into new shoes are kept quiet.

As of 2020 Nike continues to dominate the athletic footwear market with a 50% world market share. Swooshes abound on everything from wristwatches to skateboards to swimming caps. The company’s long term strategy focuses on basketball, running, soccer/football, women’s fitness, men’s training and sports culture. As a result of its successful expansion across geographical markets and product categories, Nike is the top athletic apparel and footwear manufacturer in the world, with annual corporate revenues exceeding $39 billion.

These questions are compulsory and relate to the Nike case (on pages 3 and 4 of exam). Read the case and answer the following questions.

1. Evaluate all aspects of Nike’s marketing strategy. Within your evaluation, explain fully the reasons for success – or failure. Conclude your evaluation with a summary bullet point list of i) strengths, and ii) weaknesses.
2. You are contemplating accepting a consultancy with Nike’s rival Adidas to help them hone their marketing strategy to compete with Nike
3. 1. You have a meeting scheduled with two of Adidas’s senior accountants who are suspicious of the value of marketing. You have been asked to present to them: Your ‘Top 5’ - that is 5 key marketing points that should contribute to marketing success with a brief explanation of each. (5 marks)
4. 2. In light of your evaluation of Nike’s marketing strategy, outline some marketing strategy recommendations, with rationale, that Adidas may consider.

Answer 1

1. Marketing startegies used by Nike
   1. Influencer marketing strategy (Signing athletes for promoting its products)
   2. Geography expansion and consumer-focused Go-To-Market strategy (Nike expanded in the European market and sponsered youth leagues, local clubs, and national teams of soccer)
   3. Ambush Marketing strategy (Sponsered Brazilian Soccer Team in World Cup of 1994, sponsoring chinese teams during Olympic 2008 held in Beijing, and running ad campaigns during the Olympic featuring olympic athelets)
   4. Acquisition strategy (The company also acquired Umbro, a British footwear maker for soccer. It helped a company win the already existing consumer base of Umbro)
   5. Diversification strategy (Launched apparel and other sport equipment segment; Won an additional consumer base and market share; succeded in minimizing business risk)
   6. Selective distribution strategy (Acquired Kmart)
   7. Brand endorsement strategy (Collaborated with the Tennis plays and golf players as and when the new sports specific products are launched by the company)
   8. Product innovation and customization (Company has enabled its consumers to build a customized product using its NikeID feature. In addition, it has partnered with Apple to develop a running shoe with sensors that captured mileage, calories burns and other interesting data)
   9. Promotional marketing strategy ( hosted the Human Race 10 k event for winning additional customer base)
2. The success of the Nike's marketing strategies could be attributed to its consumer specific marketing, product innovation, effective promotional marketing startegies, and acquisitions of the key market players in the local market (for winning the existing consumer base in the foreign market).
3. Strengths
   • Strong brand endorsement with the best athletic players has its promoters and ambassadors for multiple product lines (e.g. Tiger Woods, Roger Federer, Michael Jordon, etc.)
   • Product Innovation specific to consumer's immediate needs (Partnered with Apple to develope Nike+ Technology that could track the calories burns and other fitness metrices)
   • Global presence (The company has already became a global giant showing off millions of consumers across the globe)
   • Diversification of the product offerings (The company offers apparels and other sporting equipment. It attracts two important benefits to company. It minimizes business risk for the company. Secondly, it serves as an opportunity for the company to attract the consumer's attention to other product offerings of the company. For example, the consumer willing to buy the running shoe for himself could also find Sports band needful for him.)
   • Brand Image ( It has already established itself as "Pro-athelete" company supporting all the logistics need of the athelets)
   • Customization (The company's feature NikeID enables its consumers to design the products as per their needs and get it delivered)
4. Weaknesses
   • ​​​​​​​Company has devastating image in some of its foreign locations on grounds of working conditions and low wages
   • Customization (The company has presence globally; though it has not expanded its customization features in Oceania countries (such as Australia and New Zealand. The company delivers a products here through the local vendors)
   • Eco-friendly products (The consumer could have earned additional brownie points by promoting and showcasing its products as eco-friendly winning the support from the nature-wary consumers)
5. Marketing strategies that Adidas could use
   • ​​​​​​​Ambush marketing strategy: Adidas was the official sponsor of the 2008 Olympics. Yet, Nike ripped maximum benefits than Adidas does. Adidas has to consider the culture of the country, the population of the country and the choices of its prospective consumers of the country before driving the marketing campaign. Nike tend to rip the maximum benefits as the it has sponsered most of the Chinese teams participating in Olympics. As Nike had sponsored the Chinese teams it succeded in earning the attention of Chinese population. Secondly, the China is the world's largest country in terms of its population; thus the largest market that both Adidas and Nike could rip a benefits from.
   • Product Innovation: Adidas should try to bring in innovation in its sporting products by bringing in customizations that Nike hasn't already did. The innovation should be such that it should be look fascinating to its consumers and should serve the purpose for them. For this, the company should partner with the tech companies
   • Tapping the untapped market: Nike is a global company still it seems to have lesser presence in Oceania countries. Entering the market (through acquistion) could help Adidas in gaining the majority of the market share in that country's market. In addition, the Adias could offer the customization option with additional incentives to consumers in order to gain an attention of more cosumers
   • Eco-friendly products: Nike doesn't presents its products as eco-friendly. Though Adidas, could use this opportunity to expand its consumer base. The company could showcase its product eco-friendly. It could promote it on a line that company recycle the old shoes into new shoes leaving lesser carbon footprints. Secondly, the company could also donate a shoes to needy-people who are unable to pay for it. This could help company get more consumers on sympathy ground
   • Offshore facilities: Nike has earned a bad reputation of offering a bad working conditions and low wages to its employees. It stands as an opportunity for Adidas to market its as employee-centric company which offers good working conditions and high wages. This will help company attract quality and learned workforce which could add values to the company's products in future
   • Targeting atheletes from school and colleges: The company could collaborated with the Education chains and institutions such as (DPS, IITs and others in India) to promote the health education classes. Meanwhile, the company could also distribute its product at the discounted prices to win the future consumer base and earn higher returns in future. It serves dual purpose.
6. Nike's strategies that Adidas could use
   • ​​​​​​​Focusing its marketing efforts with a due consideration to country's culture, consumer's choices, and other economic and demographic parameters
   • Developing technologically advanced products that could fascinate its consumers and serve the purpose
   • Promotional marketing campaigns should be organized that could attract participants and lead to promition of company's products.