How Nike's marketing strategies helped

it become a global brand

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

Executive Summary: Constant innovation has been the byword for

Nike's success. This case study analyses the ever-evolving marketing
strategies adopted by Nike to become a global brand.
Founded 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
manufacturers 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 company's 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
revenue of Nike for long. But in mid 1980s the revenue started dipping
mainly because the management did not take note of the aerobics
boom. Nike's 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. Nike's sales philosophy - if you have a body, you are an
athlete - had enticed 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 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 Nike's 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 phone's 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 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.
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.
Nike's 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 Nike's 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 company's 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 Jawbone's 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 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.
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 Adidas's identity is built
on team activities and community achievement, Reebok focuses on
fashion and street credibility. Nike's 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.