Brand Management: Nike Case Study
Nike Incorporated is the world’s leading supplier of athletic shoes,
apparel, and sports equipment based in the US state of Oregon. It has
revenues in excess of USD$7 billion in 2014 and employs over 30,000 people worldwide. Founded in 1964 by Blue Ribbon Sports (BRS) by Bill Bowerman and Philip Knight and officially becoming Nike, Inc., in 1978, the company takes its name from Nike, the Greek goddess of victory.
Nike markets its products under its own brand as well as Nike Golf, Nike
Pro, Nike+, Air Jordan, Nike Skateboarding, Team Starter, and subsidiaries including Cole Haan, Hurley International, Umbro, and Converse. In addition to manufacturing sportswear and equipment, the company operates retail stores under the Niketown name. Nike sponsors many high-profile athletes and sports teams around the world, with the highly recognise trademark of ‘Just do it’ and the Nike swoosh logo.
The company operated as a distributor for a Japanese shoemaker, making
most sales at track meets out of Knight’s car. The company profits grew
quickly and in 1966, BRS opened its first retail store on Pico Boulevard in
Santa Monica, California.
Nike produces a wide range of sports equipment from running shoes to
jerseys, shorts, baselayers, etc. for a wide range of sports including track
and field, American football, baseball, tennis, rugby, lacrosse, basketball,
and cricket. Nike positions its products in such a way as to appeal to a
youthful, materialistic market. It is positioned as a premium performance
brand. However, it also engineers shoes for discount stores like WalMart, under the Starter brand.
In an effort to target the low-end athletic goods market, Nike purchased
the parent company for the Starter athletic clothing brand in 2004 for
USD$43 million and in 2007, the sports supplier Umbro for £285 million.
Nike sells its products in the US and approximately 160 countries worldwide through more than 25,000 retailers. Nike also sells its own
products thorough nike.com which allows customers to design their own
shoes and have them delivered directly from the manufacture. Nike sells
its products in international markets through independent distributors,
licensees, and subsidiaries.
Nike’s marketing strategy is an important component of the company’s
success. Nike lures customers with a marketing strategy centring around
a brand image identified by a distinctive logo and advertising slogan’ Just
do it’ and promotes its products by sponsorship agreements with professional teams and celebrity athletes. Nike was the official kit
sponsor for the Indian cricket team for five years from 2006 or 2010 and
uses its websites as promotional tools to cover these events. Nike has
signed top athletes in different sports to promote its products such as
golfers Tiger Woods and Rory McIlroy and track and field athletes Carl
Lewis, Jackie Joyner-Kersee, and Sebastian Coe. Nike has also signed
well-known individuals such as film director Spike Lee to promote their
product line. However, it was the signing of basketball legend Michael
Jordan in 1984 with the subsequent promotion of Nike over the course of
his storied career.
However, Nike’s extensive use of adverting and other media has caused
several controversies that have gathered substantial publicity. In one
incident, consumer activist Marc Kasky filed a lawsuit in California
regarding newspaper advertisements and several letters Nike distributed
in response to criticisms of labour conditions in its factories. Kasky
claimed the company made representations that constituted false
advertising. Nike responded that the false advertising laws did not cover
the company’s expression of its views on a public issue and that these
were entitled to First Amendment protection. The local court agreed with
Nike’s lawyers but the California Supreme Court overturned this ruling
claiming the corporation’s communications were commercial speech and
therefore subject to false advertising laws.
In another incident, Nike had to repay $250,000 to Capitol Records Inc.
which held the North American licensing rights to the Beatle’s recordings
for the right to use the Beatles’ rendition of ‘’Revolution’ for a year. Nike
later discontinued airing ads featuring ’Revolution in March 1988. Then,
in 2004 an ad about LeBron James beating cartoon martial arts masters in
martial arts offended Chinese authorities who called the ad blasphemous
and insulting its national dignity. The ad was later banned in China. In
early 2007, the ad was reinstated in China for unknown reasons.
Questions
- What are the brand images and sources of equity for the Nike brand?
How transferable are these associations? - Are sponsorship and endorsement vital to Nike’s business? For
instance, what effect would Nike becoming an official sponsor for the
Olympics have on the company’s relationship with consumers? - How important is fashion’ to Nike? Is it a performance apparel
company or a fashion company? What is more important for Nike
when it enters a new market like China? Fashion or performance? - Critique Nike’s current marketing efforts. Identify the strengths and
weaknesses of these efforts? What would you do differently and why?