Marketing Business Case Analysis: Nike
Abstract
Marketing is one of the most important elements of business. Companies that seek to grow must invest in marketing and advertising, in addition to producing quality products. The need for proper marketing stems from the competitiveness of the current business market. Corporations work hard to gain competitive advantage over their rivals to survive. As part of marketing, advertising holds an important part in assisting enterprises to not only be known, but also remembered by customers. As a communication tool, advertising encourages customers to make purchases of goods and services as it (advertising) is both persuasive and informative. Nike is one of the companies that has perfected the art of marketing and advertising. “Just Do It” is hailed as one of the best advertising campaigns in the 20th century. The slogan continues to receive accolades for its wit, relevance, and resonation with customers’ needs.
Organizations are in constant struggle for market share, customer loyalty, and improvement of their bottom lines because of the influx of businesses selling similar goods and services (Zawawi & Razak, 2017). Essentially, advertising assists enterprises to not only be known, but also remembered by customers. Used for as a communication tool, advertising engages and invites customers to buy goods and services given their informative and persuasive nature (Remziye, 2014). To inform and persuade consumers, companies use advertising/marketing campaigns, which are essentially series of messages sharing an idea or themecomprise an integrated marketing program. Companies often express . One of the companies that has mastered the art of advertising is Nike, Inc., whose “Just Do It” campaign launched in the 80s enabled the company to not only ascend to the top in its business environment, but also raked the company a lot in profit. The “Just Do It” campaign became (and remains) one of the most successful advertising campaigns in both Nike and advertising history, with a confluence of factors making it so.
Bill Bowerman and Phil Knight founded Nike in 1964 initially naming it Blue Ribbon Sports. The company was later consolidated in 1969, with its headquarters in Beaverton, Oregon. By 2015, Nike’s workforce had grown to 62,000 employees (Zawawi & Razak, 2017). The two had a vision of creating a company that would do impressive running shoes designs, while innovating the sale of shoes to athletes (Spence, 2008). The combination of Bowerman’s business acumen and Knights sports knowledge were great ingredients in the creation of a company that would make comfortable, versatile and exceptional track shoes.
In its early years of operation, Nike, through Bowerman and Knight, sold its inventory from the back of Bowerman’s car. With growing sales, however, there was need to establish a store, which the company opened on 3107 Pico Boulevard in Santa Monica (Spence, 2008). All this time, the company operated as Blue Ribbon Sports; it however changed its name to Nike and began using the Swoosh logo designed by Carolyn Davidson in 1971 (Spence, 2008). The new name, Nike, was in reference to the Greek goddess of victory, something that the company has had over its long years of operation. The company later again changed its name to Nike, Inc. in 1978, offering its shares to the public in an IPO in 1980 (Zawawi & Razak, 2017).
The IPO and investment in advertising helped Nike grow to its current status as the world’s leading sports merchandize manufacturer. Although it already had a 50 percent market share of US athletic shoes market, the company wanted worldwide domination. Therefore, “In 1984, Nike signed University of North Carolina basketball star Michael Jordan in hopes that his endorsement would spur greater interest in the Nike name. Nike needed a new way to branch out and capture a more diverse customer base” (Spence, 2008, p. 7). The Jordan campaign was a success having raked in $946,371 in its first year and surpassed the $1 million mark by 1986.
The campaign and reliance on advertising have been part of Nike’s arsenal for success over the years, helping it surpass. Nike has also become one of the most viable and valuable corporations in the world since it has impressive revenues. Along the way, Nike acquired some of the world’s best athletic merchandizing companies including Umbro, Cole Haan, Bauer Hockey, Starter, Hurley International and Converse. However, to focus on “its core businesses” Nike has since sold off some of these subsidiaries remaining with Converse and Hurley International as its key subsidiaries (Brettman, 2012).
Over the years, Nike has expanded its offerings from the initial running shoes to virtually all sports disciplines through different brands. The Nike, Jordan, Hurley and Converse brands are among the most popular of the company’s offerings. The Nike Brand offers products in eight key categories including golf, basketball, football (soccer), action sports, men’s training, women’s training, running, and sportswear (Zawawi & Razak, 2017). The Jordan Brand is especially basketball centric, as men’s training comprise the company’s American football and baseball offerings. According to Nike’s 2015 Annual Report, the company “also markets products designed for kids, as well as for other athletic and recreational uses such as cricket, lacrosse, tennis, volleyball, wrestling, walking and outdoor activities” (Nike, 2015, p. 65). While the primary purpose of the company’s products is athletic use, consumers wear a huge percentage of the company’s products for casual or leisure. Sportswear (sports-inspired lifestyle products), basketball, running and soccer are obviously the top-selling of the company’s products and will most likely continue in their stellar performance given Nike’s innovation in the categories (Nike, 2015).
At the center of Nike’s commercial and brand success and awareness has been marketing and advertising. Center for Applied Research (n.d.) contends “The Nike brand has become so strong as to place it in the rarified air of recession-proof consumer branded giants, in the company of Coca Cola, Gillette and Proctor & Gamble” (p. 1). Nike’s rise in ranks to become one of the most valuable sportswear and merchandize companies in the world is attributed to proper and effective brand management. In particular, the “Just Do It” campaign of the 80s marked the beginning of the rise of Nike as a company and as a brand.
Nike experienced one of the biggest slumps in sales in its history in 1987. The company had just laid off about 20 percent of its workers and was in dire need of a new strategy to improve its performance in the market. Moreover, Reebok (at the time Nike’s main competitor), commanded largest market share in sportwear and was fast squeezing Nike’s dwindling market share (Center for Applied Research, n.d.). Adding to Nike’s woes at the time was its focus on pro male athletes, who were only a fraction of the potential market for the company. The economic recession that had schools cutting on sports programs for budget necessity added to Nike’s woes as not many school made sports equipment purchases. Moreover, Reebok’s introduction of aerobic shoes that had captured the attention of fitness-oriented women, who were buying its (Reebok) sneakers in their droves, drove sales away from Nike’s products. In its bid to turn things around, Nike involved Weiden+Kennedy, an advertising agency, to help in a marketing campaign that would change the company’s fortunes.
Worth mentioning is that at the time of these woes, Nike had not built a strong brand name for itself, one of the most important things (brand name) for any company. A strong brand name is an asset and a competitive advantage for any company. It is important to note that “Consumers are willing to pay more for brands that they judge to be superior in quality, style and reliability. A strong brand allows its owner to expand market share, command higher prices and generate more revenue than its competitors” (Center for Applied Research, n.d., p. 1). Before the “Just Do It” campaign, Nike was deficient in brand name recognition, a factor that contributed to its tribulations at the time.
Reebok’s onslaught necessitated Nike to take a different approach in the “Just Do It” campaign. The company gambled with the idea of seducing the public into accepting sneakers as a fashion statement. The campaign specifically aimed at showing consumers that wearing Nike sneakers was cool. It (the campaign) initially focused on females and teenagers, later expanding to 18-40-year-old males (Center for Applied Research, n.d.). Perhaps the genius of the campaign was its ability to link the product to consumer needs. Obesity being a national concern and a jogging craze taking over the nation, the “Just Do It” campaign pushed people (ordinary and from all backgrounds) into exercising. Thus, while Reebok’s focus was on aerobic sneakers, Nike expanded its reach to all, driving people into exercising in Nikes.
Perhaps the most important factor for the success of the campaign was that Nike grounded itself as a brand in the minds of consumers as well as linked its products to consumer needs. The campaign reassured consumers of not only the “coolness” of the brand, but also the quality of products that the company produced. Nike effectively portrayed its quality using celebrity sports figures including Bo Jackson, John McEnroe and Michael Jordan (Center for Applied Research, n.d.; Zawawi & Razak, 2017). To drive the message of quality, Nike ran the campaign featuring Michael Jordan, a basketball sensation at the time, in a pair of Nikes for a whole season. The campaign then succeeded in convincing consumers of the durability of the products the company was selling.
The campaign additionally linked to the company’s strategy, which was shifting from a focus on marathoners and fitness enthusiasts to the greater American population. “Just Do It” campaign in essence marked Nike’s renaissance. The company had made a decision to begin targeting new consumers—all Americans regardless of their age and gender, as well as fitness level. Highlighting the change in focus was one of the ads that had 80-year-old Walt Stack in Nike Air (Center for Applied Research, n.d.; Gianatasio, 2013; Zawawi & Razak, 2017). Even more is that the campaign convinced consumers that wearing Nikes was smart and hip given the shoes’ design for comfort and that everyone was wearing them respectively.
The success of the campaign is mostly attributed to timing. Obesity, being a concern, and Americans buying exercising material in large quantities meant that providing variety in the equipment guaranteed sales for equipment manufacturers. Moreover, body worship was at an all time high in the 80s, making the use of celebrity sports personalities in the campaigns even more effective. More people additionally desired a healthy lifestyle, which Nike’s campaign perfectly packaged in the sneakers it advertised. The campaign’s additional success came from the fact that it included some humor appealing to the customers’ wants while imploring them to take charge of their physical fitness (Center for Applied Research, n.d.). Perhaps the greatest measure of the campaigns success was the eventual deletion of the word “Nike” in subsequent advertisements, with the Swoosh and the words “Just Do It” sufficing.
While the “Just Do It” campaign was arguably one of the best campaigns in the 20th century and continue to be the company’s tagline in the 21st century, recent ad campaigns, while equally great in passing Nike’s intended message, have been a source of controversy. The “Equality Everywhere” campaign for instance, that featured athletes including LeBron James, Serena Williams, Kevin Durant, Victor Cruz and Dalilah Muhammad among others, purposely for supporting equality in sports and other spheres of life was termed hypocritical (Davies & Quinn, 2017). The hypocrisy accusations are in reference to allegations that the company’s products are made in sweatshops in Asia, where workers in factories contracted by the apparel company make less than minimum wage.
In the campaign’s tagline ‘equality has no boundaries’ and featuring athletes from diverse backgrounds critics pointed to the lack of equality in Nike’s manufacturing factories in Asia. The critics argued that while the company continued to improve its bottom line, the workers responsible for making the products remained underpaid and worked in deplorable conditions (Davies & Quinn, 2017). Nike, along with other multinational corporations have routinely been accused of running sweatshops through contactors who do not observe equality in paying their labor force. This is even as the multinationals continue to make huge profits from the products made by workers living and working in deplorable conditions while making peanuts (Greenhouse, 2010). The success of the “Equality” campaign, therefore, is in balance as consumers, most who want clean and fair-trade products, put the company at task on the sweatshop accusations.
Marketing and advertising are and will remain the most important tools for companies seeking to reach out to consumers. Advertising makes consumers aware of products in the market, help in driving of sales and most importantly in establishing a brand image for businesses. A well-executed advertising campaign has the potential of building a brand, elevating it to a high status in addition to building loyalty for the brand among customers. Nike’s “Just Do It” campaign is a testament to what a marketing campaign can do. Executed at a time when the company was at its worse, the campaign helped prop up Nike’s sales, its position and brand image, enabling it surpass all its rivals. “Just Do It” campaign is reminiscent of Apple’s “Think Different” campaign, which also helped Apple climb to the top of the technology world. By focusing on what was important and heeding to customers’ needs, the campaign easily resonated with the consumers. Moreover, by taking advantage of the craze that was present at the time and answering or rather meeting consumers halfway in their desire to achieving fitness, the campaign created a notion of a brand that listened to consumers and gave them exactly what they wanted. Using known and celebrated celebrities cemented the quality and value of Nike as a brand, enabling it to earn a respectable and prestigious spot in the hearts of its customers. For companies seeking to grow their brands, market share and customer loyalty, quality and response to customer’s needs should be top their to-do list, while investing in clever and relatable advertising campaigns.
References
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Davies, G. & Quinn, L. (2017). ‘Hypocritical’ Nike is slammed for politically correct ad which promotes diversity despite claims that the firm mistreats its workers in poor countries. Mail Online. Retrieved from http://www.dailymail.co.uk/news/article-4220316/Nike-slammed-hypocritical-equality-ad.html.
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