CASE STUDY ANALYSIS

Title : NIKE

Rationale/Background

Nike originally is known as Blue Ribbon Sports. The company focused

on providing high-quality running shoes designed for athletes by athletes.
The Founder Philip Knight believed that high tech shoes for runners could
be manufactured at competitive prices if imported from abroad. Nike’s
commitment designing innovative footwear for serious athletes helps build a
cult following among U.S. consumers.

Nike believed in a ―pyramid of influence‖ where the preferences of a

small percentage of top athletes influenced the product and brand choices of
others. Nike’s marketing campaigns have always featured accomplished
athletes. For example, runner Steve Prefontaine, the company’s first
spokesperson, had an irreverent attitude that matched Nike’s spirit. In
1985, Nike signed up with basketball rookie Michael Jordan as a
spokesperson. He was still an up and comer but he personified superior
performance. Nike’s decision paid off and they launched the first Air Jordan
line of basketball shoes that earned the company more than $100 million in
the first year alone. In 1988, Nike aired the first ads in its $20 million ―Just
Do It‖ ad campaign. The campaign ultimately features 12 TV spots in all
that challenged a generation of athletic enthusiasts to chase their goals. It
was a natural manifestation of Nike’s attitude of self-empowerment through
sports.

As Nike began expanding overseas, the company learned that its U.S.-
style ads were seen as too aggressive in Europe, Asia, and South America.
Nike realized it had to ―authenticate‖ its brand in other countries, so it
focused on soccer (called football outside the United States) and became
active as a sponsor of youth leagues, local clubs, and national teams.
However, for Nike to build authenticity among the soccer audience,
consumers had to see professional athletes using its product, especially
athletes who won. Nike’s big break came in 1994 when the Brazilian team
(the only national team for which Nike had any real sponsorship) won the
World Cup. That victory transformed Nike’s international image from a
sneaker company into a brand that represented emotion, allegiance, and
identification. Nike’s new alliance with soccer helped propel the brand’s
growth internationally. In 2003, overseas revenues surpassed U.S. revenues
for the first time, and in 2007, Nike acquired Umbro, a British maker of
soccer-related footwear, apparel, and equipment. The acquisition made Nike
the sole supplier to more than 100 professional soccer teams around the
world and boosted Nike’s international presence and authenticity in soccer.
The company sold Umbro in 2012 for $225 million.
 Nike honed in on China and developed an aggressive marketing
strategy that countered Adidas’s sponsorship of the Olympic Games. Nike
received special permission from the International Olympic Committee to
run Nike ads featuring Olympic athletes during the games. In addition, Nike
sponsored several teams and athletes, including most of the Chinese teams.
This aggressive sponsorship strategy helped ignite sales in the Asian region
by 15 percent.

Nike continues to partner with high-profile and influential athletes,

coaches, teams, and leagues to build credibility in these categories. For
example, Nike aligned with tennis stars Maria Sharapova, Roger Federer,
and Rafael Nadal to push its line of tennis clothing and gear. To promote its
line of basketball shoes and apparel, Nike has partnered with basketball
superstars such as Kobe Bryant and LeBron James. In golf, Nike’s swoosh
appears on many golfers but most famously on Tiger Woods. In the years
since Nike first partnered with Woods, Nike Golf has grown into a $523
million business and literally changed the way golfers dress and play today.
Now Wood’s powerful influence in Golf made a new fashion statement for
golfers.

Nike is the biggest sponsor of athletes in the world and plans to spend
more than $3 billion in athletic endorsements between 2012 and 2017. The
company also has a history of standing by its athletes, such as Tiger Woods
and Kobe Bryant, even as they struggle with personal problems. It severed
its relationship with Lance Armstrong in 2012, however, after strong
evidence showed that the cyclist doped during his time as an athlete and
while competing during all Tour de Frances. Nike released a statement
explaining, ―Nike does not condone the use of illegal performance enhancing
drugs in any manner.‖ Prior to the scandal, the company had helped develop
Armstrong’s LIVESTRONG campaign to raise funds for cancer. It designed,
manufactured, and sold more than 80 million yellow LIVESTRONG
bracelets, netting $500 million for the Lance Armstrong Foundation.

Nike also focuses on innovations that could help the company grow
not just as an apparel and shoes company but on other products as well.
Nike expanded Nike+ to focus on key growth areas like basketball and
exercise and recently launched Nike+ Basketball, Nike+ Kinect, and
Nike+Fuelband, a bracelet/ app that tracks daily activities.

Like many companies, Nike is trying to make its company and

products more eco-friendly. However, unlike many companies, it does not
promote these efforts. One brand consultant explained, ―Nike has always
been about winning. How is sustainability relevant to its brand?‖ Nike
executives agree that promoting an eco-friendly message would distract from
its slick high-tech image, so efforts like recycling old shoes into new shoes
are kept quiet. The firm’s long-term strategy, however, is focused on
running, basketball, football/soccer, men’s training, women’s training, and
action sports.
Issues and concerns

1. Nike is trying to make its company and products more eco-friendly.

Nike becoming eco-friendly does not promote the company’s efforts.
Promoting an eco-friendly message would distract from its slick high-
tech image, so efforts like recycling old shoes into new shoes are kept
quiet. (effect)

2. As Nike began expanding overseas, the company learned that its U.S.-
style ads were seen as too aggressive in Europe, Asia, and South
America. Nike realized it had to ―authenticate‖ its brand in other
countries. For authenticity, consumers had to see professional
athletes using its product, especially athletes who won. (cause)

Point of View

Dirk – Jan Van Hameren – Chief Marketing Officer

Statement of the Problem

What marketing strategy should be applied in order to sustain the status

quo of Nike as the leader of the shoes and athletics wear industry?

Objectives

1. To determine a way for the company to create an alternative strategy

that would not use eco-friendly ways on their advertisements and
promotions.

2. To identify approaches to intensify the acquisition of substantial

information about the needs of the customers and not only athletes.

3. To formulate a strategy that will penetrate the market effectively.

Areas of Considerations

1. Nike originally is known as Blue Ribbon Sports. The company focused on

providing high-quality running shoes designed for athletes by athletes.

2. Founder Philip Knight believed high-tech shoes for runners could be

manufactured at competitive prices if imported from abroad.
3. Nike’s commitment to designing innovative footwear for serious athletes
helped build a cult following among U.S. consumers.

4. Nike believed in a ―pyramid of influence‖ where the preferences of a small

percentage of top athletes influenced the product and brand choices of
others. Nike’s marketing campaigns have always featured accomplished
athletes. Steve Prefontaine, the company’s first spokesperson, had an
irreverent attitude that matched Nike’s spirit.

5. In 1985, Nike signed up then-rookie guard Michael Jordan as a

spokesperson. Jordan was still an up-and comer, but he personified
superior performance. Nike’s bet paid off—the Air Jordan line of
basketball
shoes flew off the shelves and revenues hit more than $100 million in the
first year alone.

6. In 1988, Nike aired the first ads in its $20 million ―Just Do It‖ ad
campaign.
The campaign, which ultimately featured 12 TV spots in all, subtly
challenged a generation of athletic enthusiasts to chase their goals. It was
a natural manifestation of Nike’s attitude of self-empowerment through
sports.

7. As Nike began expanding overseas, the company learned that its U.S.-
style
ads were seen as too aggressive in Europe, Asia, and South America. Nike
realized it had to ―authenticate‖ its brand in other countries, so it focused
on
soccer (called football outside the United States) and became active as a
sponsor of youth leagues, local clubs, and national teams.

8. Nike’s big break came in 1994 when the Brazilian team (the only national
team for which Nike had any real sponsorship) won the World Cup. That
victory transformed Nike’s international image from a sneaker company
into
a brand that represented emotion, allegiance, and identification. Nike’s
new
alliance with soccer helped propel the brand’s growth internationally.

9. In 2003, overseas revenues surpassed U.S. revenues for the first time,
and
in 2007, Nike acquired Umbro, a British maker of soccer-related footwear,
apparel, and equipment. The acquisition made Nike the sole supplier to
more than 100 professional soccer teams around the world and boosted
Nike’s international presence and authenticity in soccer. The company
sold
Umbro in 2012 for $225 million.
10. Nike received special permission from the International Olympic
Committee
to run Nike ads featuring Olympic athletes during the games. In addition,
Nike sponsored several teams and athletes, including most of the
Chinese
teams. This aggressive sponsorship strategy helped ignite sales in the
Asian
region by 15 percent.

11. Nike aligned with tennis stars Maria Sharapova, Roger Federer, and
Rafael
Nadal to push its line of tennis clothing and gear. Some called the
famous
2008 Wimbledon match between Roger Federer and Rafael Nadal—both
dressed in swooshes from head to toe—a five-hour Nike commercial
valued
at $10.6 million.

12. Nike has partnered with basketball superstars such as Kobe Bryant and
LeBron James. In golf, Nike’s swoosh appears on many golfers but most
famously on Tiger Woods.

13. In the years since Nike first partnered with Woods, Nike Golf has grown
into a $523 million business and literally changed the way golfers dress
and play today. Tiger’s powerful influence on the game and his Nike-
emblazoned style has turned the greens at the majors into ―golf’s fashion
runway.‖

14. Nike is the biggest sponsor of athletes in the world and plans to spend
more than $3 billion in athletic endorsements between 2012 and 2017.

15. It severed its relationship with Lance Armstrong in 2012, however, after
strong evidence showed that the cyclist doped during his time as an
athlete
and while competing during all Tour de Frances. Nike released a
statement
explaining, ―Nike does not condone the use of illegal performance
enhancing drugs in any manner.‖ Prior to the scandal, the company had
helped develop Armstrong’s LIVESTRONG campaign to raise funds for
cancer. It designed, manufactured, and sold more than 80 million yellow
LIVESTRONG bracelets, netting $500 million for the Lance Armstrong
Foundation.

16. Nike+ allows runners to engage in the ultimate running experience by

seeing their real-time pace, distance, and route and by giving them
coaching tips and online sharing capabilities. Nike expanded Nike+ to
focus
on key growth areas like basketball and exercise and recently launched
 Nike+ Basketball, Nike+ Kinect, and Nike+Fuelband, a bracelet/ app
that
tracks daily activities.

17. Like many companies, Nike is trying to make its company and products
more eco-friendly. However, unlike many companies, it does not promote
these efforts. One brand consultant explained, ―Nike has always been
about winning. How is sustainability relevant to its brand?‖ Nike
executives
agree that promoting an eco-friendly message would distract from its
slick
high-tech image, so efforts like recycling old shoes into new shoes are
kept
quiet.

18. Nike is the top athletic apparel and footwear manufacturer in the world.
In
2014, revenues exceeded $27 billion, and Nike dominated the athletic
footwear market with 31 percent market share globally and 50 percent
market share in the United States.

Alternative Courses of Actions

1. Hameren should conduct a research and interview about the different

countries’ national sports to authenticate Nike’s brand.

Advantage  This will address the authenticity concern on the

Nike’s brand in other countries.
 This is a good tool where the Marketing can
acquire primary information about the needs
and concerns of each country.
 The result of the research will be accurate, and
not limited.
 The level of acceptance is high because the
national sports in different countries are iconic,
it is where the locals take pride.
Disadvantage  It will take some of their time.
 It may be a cause of delay in the delivery of
products.

2. Hameren should conduct a needs analysis based on Nike’s being eco-

friendly on the company’s advertisements and promotions.

Advantage  Hameren has the opportunity to observe and

listen to the views and review not only on
athletes but as well as the locals of each
 country.
 Hameren can get ideas based on the suggestion
and comments of the locals and the country’s
athletes.
Disadvantage  This might not be done on timely basis due to
Hameren’s busy schedule as the Chief Marketing
Officer.

3. Hameren should conduct a meeting to discuss the proposed

marketing strategy and to know the result of the research and
interview.

Advantage  Since Hameren and his department worked on

this research for some time, should there be
questions and issues they can easily modify the
said marketing strategy.
 The Marketing department will work more
efficiently.
 They can build and create better plans in the
future.
Disadvantage  The team will be averse to work since the entire
team has to do all of the work.

Recommendation

I recommend ACA # 1 Hameren should conduct a research and interview

about the different countries’ national sports to authenticate Nike’s brand.

Plan of Actions

Key indicators Description

1. Hameren should  To form a marketing team that will
conduct a research specialize on conducting a research and
and interview interviewing of the national sports
about the different commission of various countries on their
countries’ national national sports.
sports to  Hameren can use the research and now
authenticate Nike’s apply the strategy that the team has
brand. formulated.
 Hameren can prioritize properly on how to
capture the interests of the athletes and
the locals of each country, and design the
products based on the preferences of the
 people living in those areas.
2. Hameren should  The fact that Nike is known to be a high
conduct a needs class, durable shoes and sportswear
analysis based on Company. They should find a locally
Nike’s being eco- sourced material that could be more
friendly on the versatile and flexible and not that harmful
company’s to the environment.
advertisements  As for the advertisement and Promotions,
and promotions. the team, especially on the advertisement,
the team should find an area that signifies
eco-friendliness and will show that Nike’s
materials are not harmful to the
environment.
3. Hameren should  Conducting a meeting on the assigned
conduct a meeting department is an effective way to solve
to discuss the issues and concerns. As to the marketing
proposed strategy, the team should be open to the
marketing strategy feedback and from there create a better
and to know the plan and product. As a brand to be
result of the credible and authentic.
research and
interview.

Reference:

Kotler P., and Keller K. L. 2016, ―Marketing Management 15th edition; Nike-
Marketing Excellence, p.54-55

(taken from the sources stated after the case)

Justin Ewers and Tim Smart, ―A Designer Swooshes In,‖ U.S. News & World
Report, January 26, 2004, p. 12; ―Corporate Media Executive of the
Year,‖ Delaney Report, January 12, 2004, p. 1;

Barbara Lippert, ―Game Changers: Inside the Three Greatest Ad Campaigns

of
the Past Three Decades,‖ Ad week, November 17, 2008; ―10 Top
Nontraditional Campaigns,‖ Advertising Age, December 22, 2003, p.
24;

Chris Zook and James Allen, ―Growth Outside the Core,‖ Harvard Business
Review, December 2003, p. 66;

Jeremy Mullman,―NIKE; What Slowdown? Swoosh Rides Games to New

High,‖
Advertising Age, October 20, 2008, p. 34;
Allison Kaplan, ―Look Just Like Tiger (until You Swing),‖ America’s
Intelligence
Wire, August 9, 2009;

Reena Jana and Burt Helm, ―Nike Goes Green, Very Quietly,‖
BusinessWeek,
June 22, 2009;

Emily Jane Fox and Chris Isidore, ―Nike Ends Contracts with Armstrong,‖
CNNMoney.com, October 17, 2012; Nike Annual Report 2012.