Case study: How Nike became one of the greatest-marketed company in the world ?
Founded originally under Blue Ribbon Sports in 1964 by famous coach Bill Bowerman and Phil Knight in Oregon, the company adopted the name Nike in 1974. The firm started its operations by importing running shoes from Japan before becoming the world’s largest sportswear company in 1980 (Statista 2018). Nike is a multinational sportswear corporation that designs, develops, and markets worldwide high-quality footwear and athletic apparel. Besides the original brand Nike, the company counts various brands acquired over the last decades, such as Converse or Jordan brands.
What makes Nike’s case interesting?
Nike constitutes an interesting case to analyze through its unique selling approach that causes the brand’s international success. Before marketing became recognized as a crucial aspect of any B2C’s operations, Phil Knight had already identified it as essential and shifted the company focus on it “For years, we thought of ourselves as a production-oriented company, meaning we put all our emphasis on designing and manufacturing the product. But now we understand that the most important thing we do is market the product” (Forbes 1992). This aspect of the company has even led the Financial Times journalist Sara Germano to ask in a recent article, “is Nike a marketing company that makes great shoes or is it a shoe company that makes great ads?”.
This odd ambiguity makes it interesting to analyze Nike’s strategy that put them on the top of the world.
Nike’s case study is dedicated to every direct-to-consumer brand, evolving in an extremely competitive environment, looking to create brand attachment through emotional advertising to boost sales and create a loyal customer base. Indeed, with the emergence of various alternative brands, it’s fair to assume that customers have more options than before, as the latest e-commerce technologies and social media have removed numerous barriers to enter an industry. Victory in the retail sector isn’t about how many responses you can get through direct advertising.
The key lies in what proportion of consumers you are able to convert into repeat customers and, ultimately, brand loyalists.
And “no one is doing this better than Nike” (Forbes 2020). It is why companies should get inspired by Nike’s strategic approach that gave the firm a significant competitive advantage (Statista 2018). This case study offers a fascinating insight into what it is to be an innovative leader, always ahead of the next trend, in a highly competitive, fast-changing industry-driven continuously by consumer’s desires changes.
Environment
The sportswear industry is a brand-new industry that took off in 1970 alongside the Running Boom (Fat Buddha 2020). Since then, this trendy industry never stops to grow, and evolve in many different ways. Making it a profitable industry and attracting more competitors to share the market with.
Fitness became a lifestyle as people started to adopt sportswear products in the way they dress daily; they began to pay more attention to their health and became more fitness conscious.
The pandemic brought additional changes to the industry as people started to home-workout (Shaban 2021), favoring the emergence of new actors such as Peloton that provided an offer that didn’t yet exist, resulting in the surge of the company total revenues by 66% (Thomas 2020). Many competitors, such as Adidas or Lululemon, have been trying to establish themselves as a better alternative, offering new products and visions to customers always eager for freshness and newness. But so far, no one has managed to close the gap built by Nike (Statista 2018).
Moreover, the growing middle class in Asia has led every brand to mark out this emerging market as their key target market, and it constitutes one of the main challenges for the company in 2020 (Mohit Oberoi 2020)
This case study focuses on Nike’s response, which aims to maintain its competitive advantage regarding these growing threats toward its position of leader and reference.
Nike’s Goal
Nike and its competitors share the same superordinate goal of increasing their sales and win market shares. However, due to the position it occupies, Nike has an additional challenge to tackle, which is to stay at the top and broader the gap between the company and its competitors. According to Bain & Company, acquiring a new client costs a company six to seven times as much as keeping a current one (Totka 2017).
Nike has understood the value of customer loyalty and has undertaken the right actions to expand it. Maintaining its market leader position will be achieved through staying “on the top of changes in consumer taste and preferences as evidenced by changes in fashion” (Media 2016) to attract new consumers and increase customer loyalty as “consumers have more brand choices than ever before” (Council 2021).
Note to the reader: This report could have covered other aspects of Nike’s strategy, such as its social media strategy, or its direct-to-consumer sale strategy, allowing Nike to stay a leader in its industry. However, I chose to focus exclusively on the company’s emotional marketing approach as it is a unique facet of Nike’s strategy and at the core of Nike’s success.
Strategy: Inspire customers through emotional advertisement to build a strong brand image and generate loyal customers.
In 2008, Mark Parker, Nike’s chief executive, wrote, “Our world is changing. The digital age is fueling change at its fastest rate in history. Power is in the hands of consumers. They have near infinite choices and unlimited access to those choices. To be relevant, to be accepted, a company must bring its authentic self to market” (Germano 2021).
Two years later in a press release, Nike declared that its mission was “to bring inspiration and innovation to every athlete in the world, and if you have a body, you are an athlete” (Nike 2010). These statements echo Nike’s emotional aspect of its strategy. Indeed, besides manufacturing innovative sports equipment that suits athletes well, Nike’s principal strategy is to attract customers through emotional advertisement and sport superstar sponsorships to provide inspiration to its consumers and create a brand attachment.
As Chris Isidore from CNN explained in 2015, “No company in the world spends as much money on sports sponsorships as Nike (CNN 2015).” The journalist is referring to the uniqueness of Nike’s marketing strategy that consists of investing massively in what the company calls “Demand Creation” to build Nike’s brand image (CNN 2015). This strategy seems appropriate as it’s the same strategy that initially placed the company on the top and allowed Nike to overtake in 1980 its greatest and eternal competitor Adidas (Banjo & Bain 2015). To stay ahead, Nike has decided to follow its winning strategy that enables the company to attract new customers and create customer loyalty.
I brokedown Nike’s emotional advertisement strategy into four critical points. This report will cover what actions the company has undertaken to construct its unique brand image.
Create an authentic progressive brand status and reinforce it.
Nike has always made sure to not fall into the same category as other sportswear brands, as the company aspires to be more than just a footwear firm. Through the values that Nike publicly defends, the brand has acquired itself a progressive and modern image where athletes are outsiders that are glorified through a mix of coolness, righteousness, and heroism.
The organization often stands up for justice, fairness and equality. Indeed, Nike pays close attention to preserving its unique status in the sportswear industry and never hesitates to take risks and strong positions to defend its belief and values. The brand is aware that customers like to identify themselves to specific brands they share values and beliefs with (Pickard-Whitehead 2020). Such an image has been acquired by staying loyal, no matter what, to Nike’s values, even when the public opinion is divided. Nike often insists on its progressive status through different campaigns. For instance, Lebron James and Megan Rapinoe were advertised, saying, “We have a responsibility to make this world a better place” in 2019 (Nike 2020).
Moreover, Nike usually picks athletes at the center of debates to deliver its most meaningful message through commercials. In 2018, Nike released what was potentially its most divisive ad ever made, a spot starring Kaepernick and explicitly praising his stance in condemning racial inequality.
The ads divided the country and caused an outcry between customers on social media with hashtags like #JustBurnIt or #BoycottNike. Despite a significant decline at first, the brand had enjoyed almost continuous growth for nearly a month, with five consecutive trading sessions, in particular, beating its historical records three times since its listing on the stock market in 1980 (Amsili 2018). Under the spotlight, Nike was at the center of debates about how activist consumer-facing businesses should be or whether they should participate in social justice injustices as a successful way to attract consumers.
The company has also placed its support regarding women’s rights at the center of its values. Since its creation, Nike has committed to female empowerment, motivating women to start their athletic careers. To this effect, the company has established women-focused marketing campaigns and put gender equality into the spotlight. In 2020, Nike launched its “Dream Crazier” commercial, starring the most successful female athletes who have overcome mediatized and challenging setbacks, such as Simone Biles, Ibtihaj Muhammad, Zeina Nassar, or Serena Williams (Umur 2020). The commercial shows a sequence of clips in which women athletes are criticized by misogynist remarks such as hysterical and crazy. The video also shows athletes becoming tougher as opposed to the Contemporary stereotype of quiet and fragile women (Nike 2020).
Through its slogan, “It’s all crazy before you do it,” Nike inspires women to be crazy if it’s what is needed to accomplish big successes. There is no doubt that these advertising campaigns will go down in history, given the response. In addition to the record global adhesion, the firm’s CEO also mentioned another, perhaps even more important fact: “This campaign has brought the slogan ‘Just Do It’ to a new generation” (Amsili 2018). These successful campaigns increased brand-customer attachment, and the trend was confirmed in terms of sales, registering a growth of 10% in revenues on a year-on-year basis (Vizard 2018).
Nike is taking part in the debate by highlighting inequality, calling out stereotypic gender norms, and merging its marketing strategy with societal problems. It shows Nike’s understanding that a simple brand that embodies meaningful combats, which are exacerbated by emotions, can evolve into a much more meaningful organization that appeals to consumers for its values and create a valuable connection with the consumer.
Create a tech-forward image by embracing new technologies.
If Nike reigns in the sportswear industry, it’s also because it has been able to continually innovate to offer athletes better-performing products. And it continues to cultivate this sense of innovation to continue to provide high-performance products. Since its creation, Nike has always tried to be the most advanced technologically in the industry and broadcast it worldwide.
It has allowed the company to enjoy a futuristic brand image. From its disruptive iconic waffle sole designed in 1972 that was quickly adopted by runners and promoted by them, to its recent innovations without forgetting its cultural apparition in the movie Back from the Future, which arouse admiration and wonderment across the globe (LSDLS 2016), Nike has always worked on sending an innovative and pioneer brand image to the world. As Nike’s industry is determined by alterations in customer taste and preference (Media 2016), the company is aware that technology is an essential facet of its image since its customers are fond of technology (Dhasarathy et al. 2020). The company chose to embrace new technologies as it knows that’s what its consumers are sensitive and responsive to, such as modernism, freshness, and futurism.
To that effect, in 2017, Nike has created and developed a series of innovative products enhancing the consumer’s experience and Nike’s visionary image. For instance, the company took ten years to design a pair of shoes that auto-lace when you insert your heel in the shoe, the HyperAdapt 1.0 (Sonnet 2017):
The objective behind creating innovative products is to send the message to its consumers and potential consumers; Nike embodies the future. To improve its product development and be continuously inventive, Nike segmented the company by sports, allowing every team to focus strictly on one specific sport (Media 2016). This unique approach fostered Nike’s development for its cutting-edge projects: the running segment, for instance, designed and released Nike Run Club, a fitness app that allows the brand to gain a deeper understanding of how customers acted. “A runner wants more than just running shoes. They want a whole set of services,” says Trevor Edwards, Nike ex-brand president (Germano 2021).
Innovation can occur through many different alterations: lighter shoes, alternative soles, or ultra-breathable and more flexible mesh. The important thing is that Nike needs to sufficiently innovate to be in line with the advanced and modern image the brand has acquired to sustain its customer loyalty and continue to attract new customers.
Inspire people through aspiration
Nike has been effective in engaging with a particular consumer segment. Indeed, Nike’s products and marketing are designed for athletes. Nike is offering to them something more than sportswear equipment; it’s offering aspiration. And that’s what allowed Nike to develop one of its most significant assets today, its devoted customer base (people who only swear by Nike). The main goal of its advertisements is to stimulate customer feelings (Germano 2021). Every commercial is meticulously designed to appeal to intense emotions and show the customer that he can realize his desires with Nike products.
One Enemy identified
Nike declared war on laziness and other internal troubles as the brand makes sure to draw its consumers’ attention toward this internal enemy. Nike marketing is a hymn of effort and triumph of potential consumers over their vices. The brand emphasizes the struggles and persistence required (from a professional or an average-day citizen) to battle our “internal enemy” (laziness, low self-esteem, or bad mood). It always ends in triumph.
Indeed, All Nike advertisements drive customers to work harder, push further, and never give up. Nike plays on its consumers’ need to be meaningful. Nike’s strength is that appealing to such emotions doesn’t concern only athletes; everyone shares the same desire to be meaningful. That makes Nike’s strategy universal. Indeed, through its emotional branding, Nike touches on the heroism myth that drives consumers to live healthier and ascend their own “greatness”. Nike’s ads do not focus on winning titles or trophies. Instead, to reach the largest audience inside its segment targeted, Nike emphasizes the grind, the effort, and the hustle it requires to be the greatest. Nike’s story is about the passion that drives your inner athlete’s spirit. Nike is attempting to promote a universal sentiment that resonates in all of its consumer’s heads: “Just do it,” an anthem pushing people to accomplish their goals.
Nike’s emotional marketing strategy consists of building a brand identity that guarantees future consumers that the organization responds to their desires and appeals to their emotions. Nike has understood that emotional advertising is compelling when a consumer feels attached to a company towards, he feels an emotional connection, passion, or loyalty. These sentiments may be unconscious.
In reality, Nike’s advertisements barely reference any of their merchandise. Bill Bowerman, Nike’s co-founder, likes to remind that he didn’t sell his shoes for their design or technology but for “the emotional benefits of feeling good about jogging and healthy living” (Keller 2016). Indeed, when one purchases a Nike product, one buys the lifestyle associated and chooses to expose it around him.
Build a winning brand image through champions endorsement.
Nike’s main way to reach emotionally the most people relies on athletes’ superstar’s endorsement. Nike selects high-profile sports stars; the company signed a $1 billion lifetime deal with athletes like LeBron James, who counts more than 80 million followers on Instagram (Instagram 2021), or Cristiano Ronaldo, who counts more than 267 million followers on Instagram (Instagram 2021) to deliver the message the company wants to send to its target audience. These deals might seem overly expensive for +30 years old athletes, but many studies identified them as a bargain. Indeed, a report from Hookit, an AI-powered company that analyzes how brands maximize sponsorships value, observed that Cristiano Ronaldo’s strong presence on social media generates an astounding $474 million in value for Nike in 2016 only, across 330 posts through Facebook, Instagram, and Twitter (Badenhausen 2018).
“Cristiano is one of the top influencers on the planet who has effectively leveraged his social following and engagement into a media powerhouse to drive tremendous value for his sponsors. He’s been incredibly effective at integrating his sponsors into the content he shares with his over 240 million global followers,” says Scott Tilton, Hookit’s co-founder (Badenhausen 2018). In 2016, Ronaldo shared 1,510 posts that resulted in a total of 443.5 million social interactions.
After leading Portugal to the victory in the Euro 2016, Cristiano posted on Instagram a pic celebrating his recent triumph. He included Nike’s slogan Just Do and logo in the image, with the caption “When a team and nation believe, anything is possible”. The post collected more than 1.5 million likes and more than 10,000 comments (Instagram 2016).
Nike’s outcome? $5.8 million in media value (Badenhausen 2018).
Football contributes to $2 billion in sales annually for the brand. It sounds intriguing that a company would spend half of what it makes for a football player. However, Nike’s interest in Cristiano Ronaldo’s isn’t only for the value he generates while playing on the pitch and in advertisements. His importance lies in the image he embodies that Nikes wants to be linked with, combined with his gigantic social media coverage. The aura of Nike’s ambassadors, which are considered the best sportsman of the century, tends to reinforce Nike’s winner image (Cloke 2011) as consumers’ affinity toward specific icons can significantly impact their perception of the brand
Moreover, athletes significantly influence shifting customer habits, customer’s tastes and priorities, and customer purchasing decisions (Badenhausen 2018). For example, Lebron James’s fans are likely to buy Nike’s basketball products if they see Lebron using the same equipment (Suttle 2019). Fundamentally, what these athletes are doing the best is to “embody Nike’s win-at-all-costs ethos”.
