CASE STUDY Nike

THE

SWOOSH OF
CREATIVITY
EXECUTIVE SUMMARY

Constant innovation has been the byword for Nikes success. This case study analyses
the ever-evolving marketing strategies adopted by Nike to become a global brand.

F
STYLING: PALAK NEB; APPAREL: NIKE

PHOTO: VIVAN MEHRA; MODEL: ANUSHKA/IDOL MODEL MANAGEMENT

By MICHELLE SANUSI, ALEXANDER LAZAREV, JESPER MILLING JORGENSEN,

VASYL LATSANYCH and TAIMURAZ BADTIEV
ounded in January 1964 as
Blue Ribbon Sports (BRS) by
University of Oregon track
athlete Philip Knight and
his coach Bill Bowerman,
the company was initially a
distributor for the Japanese shoemaker Onitsuka Co and their brand
Tiger. In 1966, it opened the first
BRS retail store in Santa Monica,
California.
In those days, Bowerman would
often rip apart the Tiger brand shoes
to see how he could make them
lighter and better. He used to take
help from university runners to test
his creations and collect their feedback.
By 1971, though BRS revenue
had touched $1 million, the business
relationship with Onitsuka was
turning sour. So, they moved on
from being distributors of athletic
footwear to designers and manufac-

LBS Case Study Nike (NEW).indd 2-3

turers of athletic footwear and took

full control over their value chain.
In 1973, they called their brand
Nike after the Greek goddess of victory. A design student Carolyn
Davidson created the famous
swoosh logo for $35. Today, the
estimated market value of Nike is
about $10.7 billion.
In 1973, BRS signed its first endorsement pact with Ilie Nastase, a
professional athlete and ATP tennis
star. Endorsements have ever since
been an essential part of the marketing growth of Nike.

The Innovation Curve

The companys innovation debut
was in 1979 when it introduced air
cushioning technology. The shoes
featured gas-filled plastic membranes that could be inserted into
the sole for comfort during running.
Invented in the mid 1970s by a

NASA engineer, it kept up the reve-

nue of Nike for long. But in mid

1980s the revenue started dipping
mainly because the management did
not take note of the aerobics boom.
Nikes competitors had by then developed their business in this segment.
In a bid to regain its edge, Nike,
in 1987, launched a new product
called Air Max. The shoes had two
interdependent bags with compressed air inside. This helped in
absorbing shocks during running
and jumping. The bags can be seen
by the athletes (users) through a
special window in the heel or toe
shoe. Nike also customised the product to suit individual needs by inserting bags of different size depending
on the height and pressure exerted
by users. This made it easy for a person involved in a particular sport to
choose his/her shoes.

The marketing campaign for this

product was supported by a memorable TV ad in which the Beatles
Revolution was the soundtrack. It
was for the first time that a Beatles
song was being used in a TV ad.
Riding on the success of this campaign, Nike, a year later, launched
an even more empowering series of
ads with the tag line Just do it.
The series had three ads featuring young sportsman Bo Jackson
who campaigned on the benefits of a
new cross-training pair of Nike
shoes. Almost every year after Nike
launched its air cushioning technology, it released new versions of Air
Max. Currently, Nike has nearly 40
models under this brand name.

Shoes + Technology
In due course, even the hi-tech Air
Max technology was found to be
inadequate to entice customers. And
it was time for something that would
differentiate Nike in the long run. It
had to be at once very distant from
the core business and also very appealing. The focus was on digital
gadgets. It had less to do with shoes
and more to do with athletes. Nikes
sales philosophy if you have a
body, you are an athlete had en-

ticed everybody who wanted to

think of himself/herself as an athlete
or wanted to get more athletic.
Fast forward to May 20, 2006.
On this day, Nike introduced its first
mass produced gadget, Nike + iPod
Sports Kit, in the US market. It was a
tool to measure the distance and
speed of a run or a walk and was
built on a virtually flawless partnership strategy.
Nike was cashing in on the most

06/13/2014 5:45:05 PM

CASE STUDY Nike

NIKES MOVE TOWARDS SOCIAL MEDIA

MAY BE POTENTIALLY DANGEROUS

ikes success lies in its ability to keep the brand modern and
relevant in an ever-changing marketplace. It also remains
consistent with its original brand identity. The Just Do It tagline epitomises the lonely, rebel runner who aggressively
strives to overcome his/her physical and psychological limits.
The brand identity, therefore, is in sync with the ideas of individualism, aggressiveness, performance and empowerment. This
helps Nike differentiate itself from its competitors. While
Adidass identity is built on team activities and community
achievement, Reebok focuses on fashion and street credibility.
Nikes latest hi-tech innovations such as Nike + FuelBand focuses on individuality as it helps users track and improve their
athletic performances. But the move towards social media is potentially dangerous as the idea of sharing information and belonging to a virtual community may be at odds with the individualism and rebelliousness of the Nike brand.
Of course Nike cannot ignore the social media but it needs to
embrace it in a way that does not impact its brand positioning.
The stress on using social media as a platform in which individual achievements are celebrated seems to be the right way to go.
The Nike consumer remains a self-focused warrior but one that
is less isolated in his/her struggles thanks to Nike technology.
Nikes brand management, therefore, is based on continuous
revitalisation through gradual delivery changes in the brands
positioning. This approach is less risky than the intermittent repositioning efforts of other brands (for example Burberry Group).
Continuous revitalisation needs constant investment in consumer research with focus on development of brand image and
the extent to which brand p
perception
aligns with brand identity.
p
The USP of Nike is not its ability
abilit to effectively innovate but in
its understanding of how innova
innovation can be used to reinforce its
original associations.

Nikes success
llies in its ability to
understand how
u
iinnovation can be
used to reinforce
u
brand identity
b
SSIMONA BOTTI
A
Associate
Professor of Marketing,
LLondon Business School

technologically advanced portable

device that could do all the tech
work brilliantly. What was it that
Nike did for the partnership? It
brought the idea and developed it
into a business. The company was
actually selling just a small electronic chip that had to be inserted in
the shoe (preferably a special one,
but even a regular shoe would do)
and a wireless connection device
that had to be plugged to an iPod.
All the rest (calculation, storage,
integration) was done by the iPod.
But it was Nikes product. It paved
the way to a truly innovative future
of the company.

An upgraded product, Nike +

Sportband Kit, was released in April
2008. It no longer needed an iPod
and could be connected to the computer directly to download the results. All the next products were an
enhancement of this concept. The
chip in the shoes was integrated
with the iPhone, enhancing the possibility to view, manage and share
the tracking results through iTunes.
A Nike + Sportwatch was also introduced in combination with the chip.
In September 2010, Nike introduced a running app to be used in
the latest iPhones. The app used the
phones accelerometer and so there
was no need of a chip in the shoe.
Going miles ahead of its competitors with a user community of
more than six million people, Nike

88 BUSINESS TODAY July 6 2014

LBS Case Study Nike (NEW).indd 4

06/13/2014 4:29:17 PM

CASE STUDY Nike

BUILDING MODELS BASED ON CUSTOMER EXPERIENCES

nnovation is the art of making hard things easy and

creating viable business offerings. Innovation has become
vital for survival, making it
imperative for businesses to
rethink strategies, become
more nimble and adaptive, not
just in product development,
but also in building effective
business models, processes
and customer experiences.
Nike puts innovation at
the heart of all its efforts. To
run ahead of the competition,
Nike took a unique approach

for its shoe manufacturing

process and occupied the
mind space as a maker of athletic shoes. It not only developed new products that created and defined categories
but also developed new business models aimed at
enhanced performance.
Nike has smoothly overcome local and global challenges varying from sustainable evolution of existing products and markets to create
new products, thereby expanding its outreach.

Nike took a unique approach for its shoe manufacturing process

and occupied the mind space as a maker of athletic shoe
SUNIL CHANDIRAMANI, Partner & Leader, Advisory Services, EY

products were not just dressing up

the athletes but also coaching the
masses who wanted to be like athletes. Products like Nike + iPod for
gym goers and Polar WearLink+
targeted specific needs of users.
The users of Nike+ can not only
store and review their results in
their computers or devices but also
analyse and share them within the
community. The whole evolution
process has managed to change the
concept of what a regular apparel
seller is. Through apps, Nike has
come closer to its customers and can
study them and communicate with
them conveniently. In contrast, a
regular apparel seller even after
spending huge amounts on advertising can only expect to meet a customer in the store when the customer has already made a decision
to go and shop there.

90 BUSINESS TODAY July 6 2014

LBS Case Study Nike (NEW).indd 5-6

Thanks to its technology leap,

Nike, it is said, was able to cut down
on advertising expenses by 40 per
cent without compromising on efficiency and results. The latest Nike
products released in end-2012 include Nike + Baseball and Nike +
Training Shoes. Yes, it is back to
shoes but with lots of electronics,
including Nike Chip Skis.
Nikes tech growth was also accompanied by social media initiatives. In 2008, Nike created a
Facebook account. Today, each
Nike sub-brand has its own
Facebook page, which runs product
specific promotions and features
events in a particular sporting activity. It also provides information on
the latest game of endorsed athletes.
For example, a Facebook user who
wants to know more about the
latest basketball shoes or

game can turn to Nike Basketball

Facebook page.
Nike pairing up with Apple Inc,
another company known for its innovative products, was a way to
bring into its fold the Facebook fans
of the company. This helped the
company to increase brand awareness and also reach out to customers who were still in two minds
about choosing their brands.
The tie-up with Apple was
Nikes realisation that most runners
will use iPods or iPhones to listen to
music while jogging. So now
iPhones and iPods come pre-installed with Nike+ app. With this,
iPhone/iPod users can map out
their running route
and later share it
with
their
Facebook friends.
One of the

companys latest products is Nike

FuelBand, a wristband that calculates the amount of energy spent
during a day. The band tracks the
wrist movement, predicts the activity performed and the approximate
amount of calories burned.
However, the number of calories
spent is not a robust index of energy
used because 100 calories burned by
a person who weighs 100 kg is not
the same as the same amount of
energy burned by a person who
weighs 50 kg. So, to create a platform where a group of people can
compare their energy spent, Nike
created a new index called Nike Fuel.
This index was actually introduced in the era of Nike+ app but it
was not actively promoted until
Nike FuelBand was launched.
Compared to other specialised players like Jawbones UP and Fitbit Flex,
FuelBand is rather primitive. But its
biggest selling point is the Nike +
Fuelband Community on Facebook.
The page on Facebook does not say
much about the FuelBand. Instead
it uses the social media site to motivate its users to get fit.
On this page, every week Nike

sets a new challenge for its followers. And it is here that Nike Fuel
comes into play. Users can compare
the Nike Fuel accumulated and
comment on the challenge, motivate each other, share their difficulties and get suggestions on how to
improve the general level of fitness.

Conclusion
Nike has been creative since the
start. It has been pushing the technological boundaries of innovation
to offer its customers new products
and also differentiate itself from its
competitors. Somewhere in its evolution, Nike also realised the importance of hi-tech gadgets in day-today lives. So it started to combine

BEST OF THE LOT

new products with hi-tech solutions

to give unconventional capabilities
to a customer of sportswear.
Nike was also quick to seize the
opportunity offered by social media
to engage with a wider customer
base so much so that it is now able to
link its new hi-tech gadgets to social
media platforms. The power of such
customer contact is phenomenal as
it gives greater visibility in a single
click, generates interactions among
customers and gives the company
an opportunity to collect info about
customers choices and preferences.
It also gives endless chances for customer segmentation and product
differentiation, the pillars
of any marketing strategy.
(This case study is from the
Aditya Birla India Centre of
London Business School)
What can we learn from Nikes
branding strategy? Post your
comments at www.businesstoday.
in/casestudy-nike. The best response
will win a copy of Marketing As
Strategy by Nirmalya Kumar.
Previous case studies are at
www.businesstoday.in/casestudy

BT receives many responses to its case studies. Below is the

best one on Gillette (April 13, 2014)

K.R.R. Rajendran, Student, Indian Institute of Management, Kozhikode

illette was adept in creating a new business segment in one of

the fastest-growing economies. The product Gillette Guard
carved out a new segment by giving better shaving quality to
customers who had certain economic constraints.
Starsports.com too did something similar when it launched a new
service to telecast live the IPL matches to smartphone users who
could not watch the match on TV. Starsports.com understood the
importance of live matches for the cricket-loving country. The proA
motional advertisements seem to be effective and
promote its use by smartphone users. Improved
connectivity, low price of data plans and higher
public aspiration to use such technology implies
that Starsports.com has clearly set a platform for
new IPL match viewers. With growing competition and customer expectations, exploring ways to create
a new market would always be a good alternative. This gives the flexibility to design the market as required and of course gives the first-mover advantage.
CASE STUDY Gillette

EXECUTIVE
SUMMARY

sharp focus
lthough Gillette entered the Indian market in 1984 and
launched its newest triple-blade system, Mach3 in
2004, sales were flat for a long time. The product did not
go through any changes and kept its key features such
as long lasting diamond-like coating blades,
PowerGlide smoothness, ergonomic handles, pivoting precision heads and premium price, which was 10 times more
than its two-blade competitors.
Even though the target customers were professional
men with higher disposable incomes than the average
Indian, the traditional, double-edged razor, could not
be dislodged. Indian men do not consider shaving
a significant enough activity to justify such a
premium. Gillettes Mach3 value proposition
was based on extensive consumer research,
which highlighted key concerns men had
about shaving: it was time-consuming,
caused skin irritation and was generally unpleasant. Mach3 promised

96 BUSINESS TODAY April 13 2014

the closest shave ever in fewer strokes with less irritation. Research and development served as the key value
network component supporting this value proposition, as
it was crucial to deliver the promised performance.
Manufacturing, distribution, marketing and advertising
were geared for the global introduction through increased
production capacity and aligned promotional material.
With such indifference towards shaving, Gillette had
to focus on changing the consumers attitude, leading to
some creative marketing campaigns. For example, the
launch of the newest Gillette Mach3 in 2009 was supported by the Shave India Movement 2009 campaign
which included several initiatives. Gillette created the
platform India Votes... to shave or not to support this
campaign, which asked three controversial questions: Are
clean-shaven men more successful? Did the nation prefer
clean-shaven celebrities? And the big one: do women prefer clean-shaven men? For two months, various media
channels picked up on the campaign and ran interviews,

Traditionally, Gillette
relied on extensive
research and development
to create a single product
for global distribution.
The product was
supported by a marketing
premise that it would be
equally valuable to
customers globally. But
Gillette set aside its global
strategy in India and grew
its market share
dramatically. This case
study looks at how Gillette
innovated by tailoring
advertising and inventing
a new product
development process
to reflect local
shaving habits.
By GABRIELA BERNER, JADE
CHANG, MARINA DUNAEVA,
and LEONARDO SCAMAZZO

discussions, editorials and news stories, which triggered

popular interest. The main purpose was to create a debate
around shaving.
The company created the Women Against Lazy
Stubble (WALS) association, where women were encouraged to ask their men to shave, capitalising on their role as
influencers of men in this aspect. Gillette recruited
Bollywood celebrities such as Arjun Rampal and Neha
Dhupia to support the campaign. This innovative way of
marketing proved to be effective and as awareness grew,
sales and market share increased by 38 per cent and 35
per cent respectively.
Until 2010, Gillette India had been following a strategy
of marketing cheaper-end US-developed razors. However,
low-income Indian customers who could not afford
Gillettes premium price relied on the outdated, but traditional, double-edged razor shaving systems. An estimated
400 million customers not happy with existing market
offerings provided a promising growth opportunity for

April 13 2014 BUSINESS TODAY 97

Rajendran wins a copy of the book Marketing As Strategy by Nirmalya Kumar

July 6 2014 BUSINESS TODAY 91

06/13/2014 4:30:27 PM

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