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Nike’s marketing strategy is an important component of the company’s success. Nike is positioned as a premium-brand, selling well-designed and expensive products. Nike lures customers with a marketing strategy centering around a brand image which is attained by distinctive logo and the advertising slogan: “Just do it”. [40] Nike promotes its products by sponsorship agreements with celebrity athletes, professional teams and college athletic teams. However, Nike’s marketing mix contains many elements besides promotion. These are summarised below.
Advertising In 1982, Nike aired its first national television ads, created by newly formed ad agency Wieden+Kennedy, during the New York Marathon. This was the beginning of a successful partnership between Nike and W+K that remains intact today. The Cannes Advertising Festival has named Nike its ‘advertiser of the year’ on two separate occasions, the first and only company to receive that honor twice (1994, 2003). [41] Nike also has earned the Emmy Award for best commercial twice since the award was first created in the 1990s.
The first was for “The Morning After,” a satirical look at what a runner might face on the morning of January 1, 2000 if every dire prediction about Y2K came to fruition. [42] The second Emmy for advertising earned by Nike was for a 2002 spot called “Move,” which featured a series of famous and everyday athletes in a stream of athletic pursuits. [43] In addition to garnering awards, Nike advertising has generated its fair share of controversy: Beatles song
Nike was the focus of criticism for its use of the Beatles song “Revolution” in a 1987 commercial, against the wishes of Apple Records, the Beatles’ recording company. Nike paid $250,000 to Capitol Records Inc. , which held the North American licensing rights to the Beatles’ recordings, for the right to use the Beatles’ rendition for a year. Apple sued Nike Inc. , Capitol Records Inc. , EMI Records Inc. and Wieden+Kennedy advertising agency for $15 million. 44] Capitol-EMI countered by saying the lawsuit was ‘groundless’ because Capitol had licensed the use of “Revolution” with the “active support and encouragement of Yoko Ono Lennon, a shareholder and director of Apple. ” According to a November 9, 1989 article in the Los Angeles Daily News, “a tangle of lawsuits between the Beatles and their American and British record companies has been settled. ” One condition of the out-of-court settlement was that terms of the agreement would be kept secret.
The settlement was reached among the three parties involved: George Harrison, Paul McCartney, Ringo Starr; Yoko Ono; and Apple, EMI and Capitol Records. A spokesman for Yoko Ono noted, “It’s such a confusing myriad of issues that even people who have been close to the principals have a difficult time grasping it. Attorneys on both sides of the Atlantic have probably put their children through college on this. ” Nike discontinued airing ads featuring “Revolution” in March 1988. Yoko Ono later gave permission to Nike to use John Lennon’s “Instant Karma” in another ad.
Minor Threat ad In late June 2005, Nike received criticism from Ian MacKaye, owner of Dischord Records, guitarist/vocalist for Fugazi & The Evens, and front-man of defunct punk band Minor Threat, for appropriating imagery and text from Minor Threat’s 1981 self-titled album’s cover art in a flyer promoting Nike Skateboarding’s 2005 East Coast demo tour. On June 27, Nike Skateboarding’s website issued an apology to Dischord, Minor Threat, and fans of both and announced that they tried to remove and dispose of all flyers.
They state that the people who designed it were skateboarders and Minor Threat fans themselves who created the ad out of respect and appreciation for the band. [45] The dispute was eventually settled out of court between Nike & Minor Threat. The exact details of the settlement have never been disclosed. Chinese-themed ad In 2004, an ad about LeBron James beating cartoon martial arts masters and slaying a Chinese dragon in martial arts offended Chinese authorities, who called the ad blasphemous and insulting to national dignity and the dragon. The ad was later banned in China.
In early 2007 the ad was reinstated in China for unknown reasons. [46] Sponsorship Niketown at Oxford Street, London Main article: Nike sponsorships Nike pays top athletes in many different sports to use their products and promote/advertise their technology and design. Nike’s first professional athlete endorser was Romanian tennis player Ilie Nastase, and the company’s first track endorser was distance running legend Steve Prefontaine. Prefontaine was the prized pupil of the company’s co-founder Bill Bowerman while he coached at the University of Oregon.
Today, the Steve Prefontaine Building is named in his honor at Nike’s corporate headquarters. Besides Prefontaine, Nike has sponsored many other successful track & field athletes over the years such as Carl Lewis, Jackie Joyner-Kersee and Sebastian Coe. However, it was the signing of basketball player Michael Jordan in 1984, with his subsequent promotion of Nike over the course of his storied career with Spike Lee as Mars Blackmon, that proved to be one of the biggest boosts to Nike’s publicity and sales.
During the past 20 years especially, Nike has been one of the major clothing/footwear sponsors for leading tennis players. Some of the more successful tennis players currently or formerly sponsored by Nike include: James Blake, Jim Courier, Roger Federer, Lleyton Hewitt, Juan Martin del Potro, Andre Agassi, Rafael Nadal, Pete Sampras, Marion Bartoli, Lindsay Davenport, Daniela Hantuchova, Mary Pierce, Maria Sharapova, Serena Williams. Nike is also the official kit sponsor for the Indian cricket team for 5 years, from 2006 till end of 2010.
Nike beat Adidas and Puma by bidding highest (US$43 Million total). Nike also sponsors some of the leading clubs in world football, such as the Brazil National Team, Portugal National Team, Netherlands National Team, US National Team, Manchester United, Arsenal, FC Barcelona, Inter Milan, Juventus, Shakhtar, Porto, Steaua, Red Star, Corinthians, Club America, Aston Villa, Celtic and PSV Eindhoven. Nike will also sponsor Dundee United from summer 2009. Nike sponsors several of the world’s top golf players, including Tiger Woods, Trevor Immelman and Paul Casey.
Nike also sponsors various minor events including Hoop It Up (high school basketball) and The Golden West Invitational (high school track and field). Nike uses web sites as a promotional tool to cover these events. Nike also has several websites for individual sports, including nikebasketball. com, nikefootball. com, and nikerunning. com. Who would have imagined it? After years on top, Nike suddenly looks like a world-class marathoner who, in midrace, questions whether he’s got what it takes to keep on running.
Nike’s symptoms of distress: a global glut of shoes, flat sales in key markets, and declining profits. Moreover, the global brand champ that captured its own winning corporate mindset with the “Just do it” ad slogan has a new pitch, “I can”–to which investors seem to be retorting, “No, you can’t. ” Losing faith, they have knocked Nike stock from its all-time high of $76 about a year ago to a recent $46. What happened? While Nike has tripped on fickle fashion trends and heightened competition before, its main obstacle today appears to be its own success.
Here’s why: BIG-BRAND BACKLASH. When he founded Nike in 1972, CEO Phil Knight contended that if “five cool guys”–the best and most popular athletes–wore his shoes, other people would want to as well. The strategy worked wonderfully, of course, and now Nike controls an astounding 47% of the U. S. athletic-shoe market. But the brand has become too common to be cool. “I call it the Izod syndrome,” says John Horan, publisher of Sporting Goods Intelligence, referring to the once-hip golf shirt. “Nike is everywhere. Brand expert Watts Wacker, chairman of the consulting firm FirstMatter, believes that the ubiquity of the Nike logo–the over-Swooshing of America–turns off important core consumers, the 12- to 24-year-olds. “When I was growing up, we used to say that rooting for the Yankees is like rooting for U. S. Steel,” Wacker says. “Today, rooting for Nike is like rooting for Microsoft. ” THE MARLBORO MISTAKE. Indeed, many cool-conscious youngsters have gravitated to other brands such as Adidas (which sells sneakers at lower prices) and Timberland (a leader in the outdoorsy “brown shoe” trend).
Instead of responding with hotter products or lower prices, Nike did what many overconfident giants do (think Marlboro, pre-Marlboro Friday): It raised its prices ahead of inflation. “Retailers loaded up, but the products weren’t necessarily reaching consumers’ closets,” says Josie Esquivel, who follows Nike for Morgan Stanley Dean Witter. Now, Nike is paying with price cuts–in the 50% range–on last year’s models (except the irrepressible Air Jordan line). THE (ASIAN) ECONOMY, STUPID.
Nike’s inventory glut is messiest in Asia, largely because the company operates few outlet stores there. (In the U. S. , Nike sells almost half of its leftover shoes through its 41 factory stores and the rest through discounters like T. J. Maxx. ) Also, Nike was particularly ill prepared for Asia’s economic collapse because Knight has long believed his company’s sales are recession-resistant. Management expected revenues in Asia to almost double this year, from $1. 2 billion, but retailers canceled orders at alarming rates.
It looks as though sales will rise marginally at best. WAFFLING ON WALL STREET. Nike worsened its woes by failing to acknowledge them soon enough. “Early last year, there was a major crack in the dam,” says analyst Esquivel. “It took them over two months to say, ‘Oops, we have problems. ‘ ” She lowered her rating on the stock from buy to hold last May, just before Nike warned that profits would fall short of expectations. As more negative news followed, some analysts complained that management was hard to reach for information.
One executive, CFO Robert Falcone, antagonized major shareholders and left in January. Will Nike get back up to speed? Probably–it’s one of the world’s most powerful brands, and Knight is resilient as well as smart. But the recovery will be long and painful. Knight and his senior managers are currently working on a plan to close facilities and reduce Nike’s work force worldwide. A big restructuring charge will hit profits hard this year, and growth will likely be slow during the next few years.
In order to recover, Nike will certainly need fresh products to excite bored consumers. “The lineup for the coming year looks okay,” says Ralph Parks, president of Foot Action, the second-largest athletic-shoe specialty retailer. “It looks better than 1997’s, but I’m not sure the core consumer is quite ready to jump back in. ” Most important, Nike needs a new vision–of itself and its brand. This task belongs to Knight, who turned 60 a few weeks ago and says he plans to work