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Superbrands case studies: Nike

Originally published in Consumer Superbrands Volume IV, May 2001. The book reviews the UK's strongest consumer brands as judged by the independent Superbrands Council.

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Case study provided by the Superbrands organisation.

Market

Sportswear has been a thriving market in recent years. From the moment training shoes began to be seen on the streets in the 1970s, the sports share of the total footwear market has expanded steadily, reaching 21.5% in 1998. UK sports footwear sales in 1998 were £1.05 billion, and the figure is set to top £1.20 billion by 2002 (Source: Mintel 1998). Footwear accounted for an estimated 30% of the consumer sports goods market in 1998, with a further 52% accounted for by clothing, and equipment (18%) making up the balance.

Globally this is a market in which brand is all-important, dominated by 'the big three' -- Nike, Reebok and Adidas. These companies have succeeded in evolving their products into lifestyle icons for millions of consumers across the world. In emerging markets 'the big three' brands are aspired to as symbols of modern sophistication, but they remain equally desirable in the US, Western Europe and other highly developed countries.

Achievements

Nike's growth has been phenomenal. Globally it is a $9 billion company and the largest in its market, having started as recently as 1971. Europe has been the star region for Nike recently, with revenues growing by 23% annually from 1996 to 2000. Britain is Nike's second-biggest market and Nike is the UK market leader, despite being a company with American origins in a country which is obsessive about football. Possibly Nike's greatest achievement in the UK has been to bring a new dynamism to football marketing.

History

The roots of Nike are on a running track at the University of Oregon, which is where the two founders met. Bill Bowerman was the track and field coach there, and during his tenure Oregon produced no fewer than 33 Olympians. He was so determined to help his athletes excel that he made shoes for them by hand in his spare time. Phil Knight was one of his runners. Together they founded Blue Ribbon Sports, the company that became Nike. Initially they each put up $500 to buy some Japanese sports shoes which Knight sold at high school track events out of the back of a car. Their first major athlete endorser was Steve Prefontaine, holder of every US record from 2,000 to 10,000 metres.

The Nike name made its debut in the 1972 Olympic Trials. The company grew steadily until it held half of the booming US running footwear market by 1979. In that year Nike introduced AIR technology. It became number one in the US sports shoe market in 1981. The company grew rapidly as its basketball business took off and expansion took place in other areas such as tennis and baseball, spearheaded by high-profile athletes such as John McEnroe.

The mid 1980s were awkward times. The company had to overhaul much of its infrastructure and failed to take advantage of the aerobics boom. However it emerged stronger and more competitive. One reason for this was Nike's relationship with a young basketball star called Michael Jordan. His first signature shoe, the Air Jordan, was banned by US basketball authorities and became so prized that an unofficial secondary market developed with prices well above retail. 1987 was a momentous year in which 'Visible Air' was introduced for the first time, seen in a ground-breaking commercial set to the Beatles' song 'Revolution', which somehow caught the spirit of mass enthusiasm for playing sport and being physical. In that year Nike also introduced the first Cross-Trainers, multi-functional shoes for people with multiple sporting interests.

In order to be a truly global company, however, Nike recognised that most of the rest of the world was in love with football, a sport which wasn't particularly popular in the US. Nike's early football products lacked a real advantage, but as they steadily improved, supported by great athletes and good advertising, Nike became a dynamic major brand in football. In the UK the company's profile was boosted by its association with football stars such as Ian Wright and Eric Cantona. During the 1990s UK sales grew by 600% and in 1999 London got its own Niketown -- a superstore dedicated exclusively to Nike products.

Another important development, reflecting the fact that Nike is an athletic brand rather than a youth brand, was the company's expansion into golf. Nike began to work with Tiger Woods in 1996 and he won the US Masters by twelve strokes the following year.

Product

Since Nike was set up by someone who made shoes in his garage and someone else who ran in them, it is not surprising that product is important. The product goal is simple -- to enhance athletic performance. That simple goal has led to some impressive innovations.

The first highlight was the Waffle outsole. Inspired by his wife's waffles, Bill Bowerman poured rubber into a waffle iron. The resulting outsole was durable, light, well-cushioned, and had good traction. It was initially known as the Moon Shoe for its unique footprint.

In 1980 Nike Air arrived, courtesy of a former NASA engineer called Frank Rudy. His idea of using pressurised gas to cushion impact was pitched to a few shoe companies, but only Nike took it up. Shoes with air-filled urethane bags were tried out by Phil Knight and his staff on training runs. Initial scepticism soon evaporated as they realised that here was something that not only felt good, but really worked in preventing injury.

More recently, to obtain maximum performance, Nike shoes have used materials ranging from Kevlar to recycled old shoes manufactured in anything from silver mesh to shiny gold.

In clothing, one of Nike's technological advantages has been the FIT system, a four-fabric layering system that can cope with heat, cold, snow, wind, and copious amounts of sweat. People who have worn it rarely go back to cotton.

Nike equipment has also introduced innovations with real practical value. The Triax running watch gave runners numbers they could read and buttons they could find, in an asymmetrical format that sat better on the wrist.

Recent developments

Since Nike was set up by someone who made shoes in his garage and someone else who ran in them, it is not surprising that product is important. The product goal is simple -- to enhance athletic performance. That simple goal has led to some impressive innovations.

The first highlight was the Waffle outsole. Inspired by his wife's waffles, Bill Bowerman poured rubber into a waffle iron. The resulting outsole was durable, light, well-cushioned, and had good traction. It was initially known as the Moon Shoe for its unique footprint.

In 1980 Nike Air arrived, courtesy of a former NASA engineer called Frank Rudy. His idea of using pressurised gas to cushion impact was pitched to a few shoe companies, but only Nike took it up. Shoes with air-filled urethane bags were tried out by Phil Knight and his staff on training runs. Initial scepticism soon evaporated as they realised that here was something that not only felt good, but really worked in preventing injury.

More recently, to obtain maximum performance, Nike shoes have used materials ranging from Kevlar to recycled old shoes manufactured in anything from silver mesh to shiny gold.

In clothing, one of Nike's technological advantages has been the FIT system, a four-fabric layering system that can cope with heat, cold, snow, wind, and copious amounts of sweat. People who have worn it rarely go back to cotton.

Nike equipment has also introduced innovations with real practical value. The Triax running watch gave runners numbers they could read and buttons they could find, in an asymmetrical format that sat better on the wrist.

Promotion

Nike is famous for its advertising as well as its athletes. They are the twin pillars of Nike promotion. The company does not hire athletes simply as mobile posters. They are the brand as much as products, advertising, or the people who work at Nike. The Nike personality has received contributions from such diverse characters as Ian Botham, Marion Jones, Steve Ovett, Seb Coe, Ronaldo, Sonia O'Sullivan and the England rugby team. In this way a multi-faceted brand has been created. Instead of presenting one consistent, manicured proposition, Nike has over time delivered a wide variety of messages and exposed a number of different aspects of its personality. This is true to the athletic experience, and keeps the brand fresh.

Nike's advertising has been as diverse as its athletes. Much of it has featured top names, but not all. One of the commercials that launched 'Just Do It' featured an elderly runner in his 80s with false teeth. Ordinary athletes, people who might not even describe themselves as athletes, have found direct inspiration from Nike advertising. Nike adverts have featured celebrities as diverse as Dennis Hopper, Spike Lee and Bugs Bunny. A famous basketball star, Penny Hardaway, was given a puppet as an alter ego. The Brazilian football team was famously let loose in an airport during the 1998 World Cup.

Much Nike advertising appears to have been created without reference to marketing textbooks or batteries of research data. It frequently lacks an explicit product message, even a consistent endline, and has encompassed a wide variety of different advertising ideas. But the resulting 'post-advertising' has certainly struck a chord with a generation highly attuned to the tricks of the marketing trade.

In the UK, Nike has run advertising developed for a variety of intended markets, from London only, right through to global campaigns. Highlights have included some famously provocative posters, the 'Parklife' commercial celebrating the world of Sunday League football and the transformation of a Tube station into a tennis court for Wimbledon 1997. A year later, after England's traumatic exit from the World Cup, the company caught the mood of a shell-shocked nation with its 'Condolence' television advertisement.

Brand values

For a company which has such a strongly defined personality, it may be surprising that there is no single list of brand values that is given to new employees and used to judge all marketing activity. Things do get written down, but fundamentally the Nike values are passed on through an oral tradition. And they are company values as much as brand values. The Nike brand comes over as risk-taking, competitive, irreverent and overwhelmingly consumed by sport. This is reflected in the people who work for the company.

Things you didn't know

  • Nike is the name of the Greek goddess of victory. The name came to Jeff Johnson, the company's first employee, in his sleep.

  • The Swoosh logo was designed for a fee of $35 by a young design student in Portland, Oregon. Later, she was given some Nike stock.

  • The 'Just Do It' line was conceived by advertising copywriter, Dan Wieden.

  • One of Nike's most memorable and offbeat advertisements featured the endorsement of the fairytale characters, the Three Little Pigs.

    © 2002 Superbrands Ltd

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