Subject:

International Business Case Study Nike The Ugly American?

Nike - The Ugly American? Nike has always cultivated its rebel image James Dean in sneakers. Nike was founded in 1972 by Phil Knight, a former university track star, and Bill Bowerman, who had been his coach. Since then the Beaverton, Oregon, company has grown from a niche (np trong gc) supplier of running shoes for hard-core athletes into a global colossus in the athletic footwear and apparel business with sales of $10 billion, 40% of which are generated outside of the U.S. These factors seem to underpin the companys success the quality and innovation of its products, its sponsorship of key athletes with star appeal such as Michael Jordan and Tiger Woods, and its global advertising that has established a strong brand image for the company. The image of Nike as the cool iconoclastic (deviating from commonly accepted beliefs or practices) rebel shines through strongly in its advertising. Tough and gritty (cng quyt, cng ci), Nike ads urge consumers to damn the consequences and Just Do It! while wearing Nike gear, of course. In America, the rebel has done extraordinary well. Nike dominates the market, selling $20 in footwear and apparel per year for every man, woman and child in the country. The company has been so successful that it is difficult to see how it can continue to grow in the now mature US market. This is not a pleasant thought for an aggressive, ambitious risk taker like CEO Phil Knight. Knight has set a goal of increasing revenue by 15% annually and has focused the companys attention on international markets where the opportunities for growth seem much greater. In contrast to the saturated (bo ha) US market, annual per capita Nike sales in Japan are $4, in Germany they are $3, and in China just over 2 cents. Knight wants to see foreign sales exceed 50% of total sales. There is only one problem with this vision. Basketball is still a fringe (ra) spot outside the U.S; jogging is a distinctly American passion; and as for baseball and football, dont ask! If Nike is going to grow its international business, it is going to have to focus on the dominant global sport, soccer. But in many countries soccer is imbued (nhum) with nationalistic passions and pride, and Nike is American, and Americans arent very good at soccer (at least American men arent; the womens team are world champions). Also, soccer already has its dominant footwear and apparel suppliers, Adidas and Umbro, which have tied up most of the worlds top teams and stars in sponsorship deals. However, Knight and his team dont shy from a competitive challenge. Underdog once more, Nike embarked on an aggressive advertising campaign to build awareness for its brand in the world of soccer. In the spring of 1996, Nike announced its intentions to the world with a series of ads in soccer magazines around the world. Europe, Asia and Latin America, the ad screamed,
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Barricade (chn ngang) your stadiums. Hide your trophies. Invest in some deodorant. As Asia and Latin American had been crushed, so shall Europe .the world has been warned. The world, as it turned out, was not amused. The reaction was more along the lines of who do these Americans think they are, and whats in the gibe (nhao bang) about deodorant? Nike, however, had only just begun. Next came the TV commercial portraying Satan and his demons playing soccer against a team of Nike endorsers. The ad, which set a company records for costs, ran worldwide. Knight declared the ad his favorite Nike commercial ever, and it certainly went down well in America. In contrast, several European broadcasters deemed it too scary and offensive to show in prime time when kids were watching. The ad also drew a spate of angry letters from viewers. But this is all grist for the mill (everything can be made useful, or be a source of profit) of the American rebel, so Nike plunged ahead with an ad for British TV that featured a French Soccer star and perennial (lu nm )bad boy proudly detailing how this spitting at a fan and calling his coach a bag of s.. had won him a Nike contract. This ad provoked a scathing editorial against Nike in the newsletter of soccers governing federation, FIFA, Sepp Blatter, now president of FIFA, condemned an advertising trend that glorifies violence or bad taste technically clever and futuristic as it may be, such style does nothing to promote values, especially among impressionable youngsters. What really set Anti-American tongues wagging among soccers ruling establishment, however, was Nikes coup (a successful result brought about by hard work ) in Brazil. The Brazilian soccer team is legendary, having won a record at World Cups. It is also a vibrant symbol of Brazils samba culture and a huge source of national pride. Imagine the shock when the loud American waltzed into town with bundles of money and purchased the rights to sponsor Brazils national team for the next 10 years, pushing aside the existing sponsor, Umbro. The deal, which cost $200 million, commits Brazil to appearances in Nikes produced exhibition matches and community events, in addition to the requirement that team members wear Nike shoes and uniforms sporting the Nike swoosh logo. To the soccer establishment, it looked as if the Visigoths had just stormed the high temple of soccer. While Nike may have alienated soccers establishment, it is not clear that the same is true of Nikes target market the youth of the world. The establishment may have hated Nikes Satan soccer ad, but Nike managers tell about a focus audience of teens being mesmerized when French soccer star Contana, flips up his collar, says au revoir, (li tm bit) and kicks the winning goals through the devil. As they left the room, the youngsters all flipped their collars and said au revoir. The kids, apparently, got it!. **********

Case Discussion Questions

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1. Is Nike wrong to try to leverage (tn dng) its American rebel image to build brand

awareness in the global market for soccer footwear and apparel? What are the potential drawbacks of such an approach? Give a justification!
2. Is Nikes promotional strategy for soccer an example of the ugly American abroad, or is it

clever marketing by one of the worlds shrewdest (thng minh) promoters? Justify your explanation!
3. How might Nike alter its marketing approach in order to woo (thu ht hn) soccer players

over to the Nike brand, without generating the kind of negative reaction that it has apparently generated among the soccer establishment?