How Nike Became Successful and the Leader in the Sports Product Market

Old Nike logo               PMoiE8tk

                                                  Nike Logo 5                                                                           Nike Logo 6

 

This article will cover how Nike became the leading company in sports brand apparel. Nike was founded in 1964 by Bill Bowerman and Phil Knight with $1200 in the bank. 9 The company was originally called "Blue Ribbon Sports", which later became "Nike Inc" in 1971, named after a Greek goddess of victory. 5 This article will discuss various strategies and marketing tactics Nike utilized to rise up to the top of their industry.  Please note that Profitworks does not necessarily endorse all of the strategies Nike practices, but simply finds this an interesting company to study. Profitworks provides online marketing services that drive businesses to become the leader in their market. We challenge you to take one thing you learn from this article and implement in your business and see if it does not make a significant impact on the success of your business. 

 

This article will cover:

1. Nike's Strategy to Become the Leader in their Market

  • Nike Has Established their Brand and Logo through Extensive Marketing Investment
  • Nike Focuses on Selling the "Emotional Benefits" of their Product
  • Nike Embraces New Technologies
  • Nike Provides a Wide Variety of Products To A Large Number Of Sports To Capture Greater Market Share
  • Nike Focuses on Product Quality and Creating Products that Help Athletes Perform Better
  • Nike Buys Out Competing Sport Product Brands

2. Statistics on Nike's Leadership
3. How Does Nike Respond to Competition?

  • Nike Thrives and Excels Because of Competition Existing
  • Nike Stays Ahead of their Competitors In Terms Of Technology & Marketing

4. How Does Nike Position their Brand?

  • Nike Utilizes Emotional Branding  
  • Nike Co-brands with Various Sports & Top Athletes

5. How Does Nike Maintain Leadership?

  • Nike Maximizes Marketing Money with Sports Endorsements
  • Nike Utilizes Social Media to Present their Digital Marketing

6. How Does Nike Respond to Failures and Setbacks?
7. Examples of Nike's Marketing
8. Nike's Values
9. Other Interesting Facts
10. References

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Nike's Strategy to Become the Leader in their Market

Nike Has Established their Brand and Logo through Marketing

"No company in the world spends as much money on sports sponsorships as Nike.." 47

Nike invests in marketing and this can be seen in their 2014 fiscal report.  "...Nike spent $3.031 billion on what they call “Demand Creation.” Nike’s a little fuzzy on what that means (marketing can be anything from a TV ad buy to a collaboration with a niche shop). According to Matt it's "Nike-speak for 'Advertising.'" That means that Nike spends about $100 per second on advertising." 40 Nike is spending almost the same amount on marketing that Under Armour makes in sales.  This article discusses the importance of marketing that Nike focuses on in 2016, "Nike spent $3.3 billion on marketing in the last year, while Under Armour did $3.96 billion in sales in the last year." 29

Nike spends over $3 Billion in advertising a year 47

Nike promotes their products with having celebrities, professional and college athletes with sponsorship agreements. 11 Nike's first athlete to endorse their products was a Romanian tennis played named Ilie Natase. 12 Nike also invested in marketing early on in their establishment.  Currently, Nike focuses on sponsorships, internet marketing, email marketing, and utilized multimedia marketing campaigns. 12 

Click Here to View the List of Nike's Sponsorships

Some examples of Nike's Sponsorships are: 13 & 14 

  • Golf - Tiger Woods
  • Basketball - Michael Jordan, Lebron James, and Kobe Bryant
  • Baseball - Albert Pujols and Joe Mauer
  • Hockey - Alex Ovechkin
  • Soccer - Ronaldinho and Cristiano Ronaldo
  • Tennis - Roger Federer and Serena Williams
  • Football -  Peyton Manning, Drew Brees, Eli Manning, and Joe Flacco

In 1982, Nike produced their first advertisement. Nike has been given various awards for their advertisements (Emmy award twice for best commercial, Advertiser of the Year in 1994 and 2003). 15  See below for the Emmy award winning commercials.

Click Above To Watch The Firs Ever Nike Commercial

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Click Above for Emmy Award Nike Morning After Video

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Click Above for Nike Emmy Award Commercial - Move

 

Nike Focuses on Selling the "Emotional Benefits" of their Product 10

Nike sells a lifestyle, it taps into an emotional part of the consumer that wants to aspire to live healthier and to find their own "greatness". It is noted that Bill Bowerman did not sell his shoes with his marketing strategy, but the emotional benefits of feeling good about jogging and healthy living. 10 One writer observed that Nike mentions their product minimally in their advertisements, but focuses on the benefits of exercise. 23 & 16 

Below is an example of Nike having 6 NFL stars to go back to their high schools and work with their football teams. There is minimal showcasing of Nike's products or even mention of their brand.

Click to Watch 6 NFL Stars Go Back to their High Schools

Below is an example of a video advertisement with Lebron James that again Nike barely mentions their brand, but focuses more on the story and has the "heroism" theme and theme of perseverance.  This advertisement has over 10 million views on Youtube.

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Click Here to Watch an Example of How Nike Barely Mentions their Brand with Lebron James Story

 

Nike Embraces New Technologies 10

Nike has developed and established a variety of new technologies associated with their brand. For example, Nike developed a shoe that will auto-lace when you put your heel in the shoe. 16 It is noted that it took them 10 years to create HyperAdapt 1.0. 

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Click Above to Watch a Video on the HyperAdapt 1.0

Nike is constantly being innovative with the development of their shoes. They have done things to make the shoe lighter and sturdier such as Flyknit. They also have developed a shoe called Nike Air Vapormax that has eliminated foam and has replaced it with air bags. 17  In 2006, they also developed a shoe that connected to an i-pod to track the pace and distance of the walker or runner. 16 

free rn flyknit 2017 big kids running shoe 

Flyknit shoe 18 

 

Nike Provides a Wide Variety of Products To A Large Number Of Sports To Capture Great Market Share

Nike has a variety of sporting products for everyone. This includes sports equipment and apparel for baseball, ice hockey, track and field, soccer, surfing, yoga, tennis, basketball, lacrosse, skateboarding, combat sports, cycling, wrestling, volleyball, cheerleading, auto racing, aquatic activities, cricket, and golf. 11 & 15  In addition to shoes and sport equipment, they also provide clothing (tracksuits, sport shorts, sports bras, and casual clothes such as shirts, jeans, jackets, socks, hats), watches, apps, backpacks, purses, wallets, gloves, sunglasses, hair-bands, scarves, belts, etc. 19 Not only does Nike have a variety of options of products, but Nike also owns Hurley, Converse, and Jordan brands. By offering more products to more people, in more markets than any other sports company, they are able to capture a far greater market share of the market than any other company. 

hurleyconversejordanproduct

20, 21, & 22

 

Nike Focuses on Product Quality and Creating Products that Help Athletes Perform Better

Like most leaders in the market, Nike values the consumer and the importance of providing a quality product. Their brand is associated with providing top-notch product for athletes that help them perform better. One article notes how Nike has been consistent in their message to consumers that they stress the importance of their needs and preferences. 10 The message is to consumers that Nike wants to make your life better at something you are passionate about (whether that is basketball, running, jogging, etc) and to improve your overall health.

In 2016, it is noted that Nike won the Olympics for the United States athletes who wore their sneaker brand. See below for the chart comparison of Nike and their competitors and how one may argue Nike's product helped the athletes perform better. 40

olympic medals rio 2016 sneaker brands

Below is a graph suggesting that Nike's NBA players have better results in the game when wearing their sneakers: 29 

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Just Doing It 30

 

Nike Buys Out Competing Sports Product Brands

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Statistics on Nike's Leadership

It is noted that Nike owns 48% of the athletic footwear market in the United States. Specifically for the basketball footwear, Nike has 96% of the share. See below for a chart of Nike having 96%. 25 In 2016, Nike's sales revenue was 32.46 billion. Below is a chart that shows Nike's revenue worldwide from 2005 to 2016 in USD. 26

Global

 

Further Leadership Statistics about Nike: 27

  • Nike sales revenue in 1996 was $6.4 billion USD and has grown to $32.46 billion USD as of 2016 
  • Nike has 31% of the global athletic footwear market 
  • There are 700 Nike stores globally  
  • There are 45 countries that have a Nike office 

Below is a chart that details Nike's revenue for North America: 28 

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The chart below shows how in 2015, Nike is dominating in their market in the United States for basketball shoes. A perfect example of their leadership in the basketball market.

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31

Forbes discusses the most valuable brands and puts Nike at the highest position for apparel category.  In 2014, it is noted the brand value is of 27.5 billion. 24

 

How Does Nike Respond to Competition?

Nike Thrives and Excels Because of Competition Existing

Analysts state, “Brands like Adidas and Under Armour are all doing new things,” Poser says. “When Nike’s competition is doing a lot, Nike tends to respond even better. When nothing is going on, Nike leads the pack, but it’s not as innovative–the urgency isn’t there in general. Have you ever gone into a really good restaurant when the place is dead and the service is terrible? And then go back to the same restaurant when it’s busy and the service is great? When you’re being challenged, you get busy, you hustle, and you do everything better.” 32 

Nike Stays Ahead of their Competitors

For example, Nike launched their website (1999) before their competitors: Foot Locker (2000 launched) and Adidas (2006 launched website). This is 7 years ahead of Adidas.  It also is noted that it can be reflected in the website sale results - Nike in 2011 had more than four times the sale than Adidas. 33 Nike was one the first sports brand companies to utilize social media. 33 Nike also tries to stay ahead of their competitors with their advancements in the technology in their products (i.e. auto-lacing shoes).


How Does Nike Position their Brand?

nike logo evolution

Nike Logos 7

Nike Utilizes Emotional Branding  

There are various articles that suggest Nike has emotional branding which plays on the idea of heroism (you the consumer being able to find your strength and greatness). It is noted that they tell stories of the struggle and perseverance of an individual (whether professional or average-day citizen) that is combating an "internal villain" (thoughts we struggle in our mind - i.e. laziness, self-worth, fears) and it ends in victory. 34, 35, 36, & 37 Nike tries to pull on something that resonates with everyone with their slogan "Just do it", a mantra for individuals to claim when they tackle their goals. 39  

Here is an example of emotional branding advertising that is not Nike:

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Click Above to Watch Gatorade - Make Defeat Your Fuel

Below are examples of Nike's use of emotional branding:

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Click Above to Watch Nike Video - "Come out of Nowhere"

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Click Above to Watch Nike Video - "Everything You Need is Already Inside You"

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36

Nike also tackles empowering women with emotional branding:

Screenshot 2014 10 27 at 10.15.24 PM

36

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Click Above to Watch Women in Sports Nike Video

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Click Above to Watch Nike Advertisement - What Will They Say About You

 

Nike Co-brands with Various Sports

Nike and Olympics

Nike was criticized for not being an Olympic sponsor in 1996, but investing in sponsorships of athletes and a Nike Centre right outside the athletic village, which upset competitors like Adidas who spent over 50 million dollars to become an official sponsor. 37 Nike's golden shoes on Olympic athlete Michael Johnson was a strategic marketing technique for Nike.  Nike did a variety of creative marketing techniques that would suggest Olympics, but never mention it in the advertisement. 38 There are now more strict rules about companies doing marketing techniques like these. 37 As a result, In 2016, Nike was an official sponsor for the Olympics in Rio.

Michael Johnson time cover 2016   Michael Johnson nike gold shoes 02 2016

37

In 2016, it is noted that Nike won the Olympics for the United States athletes who wore their sneaker brand. See below for the chart comparison of Nike and their competitors. 40

olympic medals rio 2016 sneaker brands

Nike and FIFA

Nike has fluctuated with being sponsors at FIFA and other years Adidas has been the sponsorship.  Yet, even though they are not necessarily the sponsors, Nike finds unique ways to showcase their brand. 41 In 2010, "The Nielsen Company analyzed online blogs, message boards, and social networking sites and found that the sports shoe and apparel giant (Nike) was more frequently linked to the World Cup than any of the tournament’s official partners and sponsors." 42 Nike is receiving the benefits in showcasing their brand and product without having to necessarily pay the sponsorship fees. Nike experienced negative attention as a result of the FIFA scandal in 2015.  Below you can see an image of three major companies and how the brand suffered from the scandal. The scandal included bribery and drug-related allegations. 43 

Nike social sentiment 2 copy

44

NFL and Nike

Nike established a contract with NFL in 2012 for five years. In 2015, Nike added 3 more years with NFL without an auction, which some would say was a very beneficial move for the company. 45 

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Click Above to Watch NFL Nike Color Rush 2016 Design Innovation

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 Nike's Uniform 2016 NFL 1

NBA and Nike

Adidas gave up their connection with the NBA for apparel and jerseys in 2015.  Starting in 2017/2018 Nike will have an eight-year contract to provide jerseys and apparel for the NBA league. As noted below, Nike has also had major NBA and WNBA players be a part of their promotions and products (I.e the Jordan line). Nike is introducing a first for NBA, as previously there has not been a company's logo on the uniforms. 46 

 

Nike NBA logo native 1600

NBA Nike 2

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Michael Jordan and Nike 3

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Michael Jordan Advertisement 4

nike womens line delle donne article4

WNBA Jewell Lloyd Nike Advertisement 8

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How Does Nike Maintain Leadership?

Nike Maximizes Marketing Money with Sports Endorsements

"No company in the world spends as much money on sports sponsorships as Nike.." 47

Nike invests in marketing and this can be seen in their 2014 fiscal report.  "...Nike spent $3.031 billion on what they call “Demand Creation.” Nike’s a little fuzzy on what that means (marketing can be anything from a TV ad buy to a collaboration with a niche shop). According to Matt it's "Nike-speak for 'Advertising.'" That means that Nike spends about $100 per second on advertising." 40 Nike is spending almost the same amount on marketing that Under Armour makes in sales.  This article discusses the importance of marketing that Nike focuses on in 2016, "Nike spent $3.3 billion on marketing in the last year, while Under Armour did $3.96 billion in sales in the last year." 29  As noted earlier, Nike invests in marketing with advertising and brands to include well-known athletes.  Nike has also shifted from not only targeting the elite sector of athletes but allowing consumers to explore their inner athlete - to become fit and healthy with Nike's products. You can see this shift in how Nike has a saying that "if you have a body, you are an athlete." 48 One article points out, "...professional and college athletes as a group only contained about one million people, whereas the fitness universe was at least 150X larger." 49 

 

Nike Utilizes Social Media to Present their Digital Marketing

"It (Nike) has the most followers and subscribers on all social channels." 39 See below of graphs that indicate how many subscribers on a variety of social media networks and how Nike dominates in each of these areas.

Screen Shot 2016 12 20 at 2.55.07 PM

39

 

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50

nikeinstagram

Here is a screenshot of the Nike Instagram Account - You can see a mixture of photos and videos with over million views on the videos and thousands of likes and comments.

nike vs adidas on social media 2016 1024x512

51

Nikefacebook

Screenshot from one of Nike's videos on their Facebook page. As you can see there have been over 6.5 million views.

Screen Shot 2016 12 20 at 2.57.03 PM

39

niketwitter

Here is a screenshot and an example of Nike's Twitter page.  There are over 7 million followers of the end of June 2016.

 

How Does Nike Respond to Failures and Setbacks?

Nike received a lot of negative public relations around having their products made in sweatshops 33 & 52

  • Underpaid workers 
  • Child labour 
  • Poor working conditions and hazardous environments

In response to this negative attention, Nike established:

  • A code of conduct for suppliers
  • Nike enforces labour to the age of 18 years old for factory footwear positions and 16 years old for apparel and equipment
  • Introduced SHAPE - Safety, Health, Attitudes of management, People Investment, and Environment program
  • New training 
  • Regular audits by external firms
  • Established a 101 Transparency Program
  • Invested interest and participation in international and non-for-profit organizations (Ex. UN Global Impact)

Nike was the first sportswear brand to be upfront with the public about who they are using for their contracted factories.  This occurred in 2005 and it helped redeem the negative attention they received prior. 52 

 

Examples of Nike's Marketing

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Click Above for Examples of Nike's Marketing Strategy

It is noted that Bill Bowerman can be linked to the jogging craze that occurred in the late 1960s and 1970s. Bill wrote various books and articles about the benefits of jogging.  It is noted that one of Bill's books that he wrote about jogging was done with a cardiologist. See below for a graph that details the timeline of Nike's contributions. 10

Blog Ben NikeMarketingStrategy runningboom

Some writers highlight and list different digital marketing campaigns that Nike has utilized over the years: 58 & 59
1) Livestrong - this campaign coincided with Nike's sales increasing more than 45%.

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Click Above to Watch Video on Chalkbot Nike's Livestrong Campaign

2) Fuel Your Team - over 6 million members that are linked to this campaign. This campaign is linked with Nike+ and Fuel Band.

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Click Above for a Nike Fuel Case Study Video

3) The Chance - in 2010 Nike targeted young people to win Nike Academy for a year. It is noted that the Chance helped promote Nike and increase their fan-base. "Participants created more than 17,000 Facebook pages which reached an additional 5.5 million fans. Furthermore, 2,000 user-generated videos and 28,000 player posts were created and the brand received 3.4 million YouTube views." 58

4) Times Square Billboard - Allowing people to design their own Nike shoe and have it up on the billboard.

5) The Chosen - A campaign focusing on niche sports (snowboarding, skateboarding, skating, surfing, BMX)

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Click Above to Watch Chosen Nike Advertisement

As stated before, Nike's advertisements often have minimal mention of their product, but focus on telling a story.  Below are some examples on Instagram that use the power of a photography/imagery to tell a story and have a positive association with their brand.

Nike Shoes

Here is a picture from Instagram on the Nike account.  Below the picture has the description: "Greetings from mile one. It's here where you and a few of your fastest friends can enjoy a short, breathtaking stay. Relax, dig in your toes, and chase the sunset. Wish you were here. Find your fast at Nike.com/Zoom. #sofast" 60

 

 Nike Surfing

Here is another picture from Instagram on the Nike account.  Below the picture has the description: "It's not always sunshine and sand. #justdoit" 60

 

Nike's Values

Nike claims to be socially conscious and invests back into the community.  Their website has a section where they talk about helping kids get healthy and active and their passion to help communities and creating global change. 53 Nike is also associated with Product Red which the mission of the agency is to prevent HIV transmission from mother to infant. 54 Nike discusses how they try to eliminate the global issue of climate change.  They make a statement saying "double the business with half the impact." 55 See below for a chart that demonstrates their plan to eliminate carbon emissions.

Nike SPI Our Vision E native 1600

Decoupling v3 withTitle.ai original

Other Interesting Facts

Click to Watch Nike's History in 3 Minutes

  • The swoosh logo was designed by Carolyn Davidson (graphic design student in Portland) and Nike purchased the logo for the price of $35 dollars. 7
  • Co-founder Bill Bowerman experimented with his wife's waffle maker to make the criss-cross tread design on the shoe. 10
  • In 2016, Fortune.com 56 shows that Nike has a majority of minorities working for them which is the first time this has happened. It is also noted that the gender ratio is fairly equal with women at 48%, it is also indicated that women are only at 41% for management roles. 

nike diversity

 
History of the Athletic Shoe: 57 

History of Athletic Shoes

 

Nike's timleine of owning various brands and selling them:

nike the innovation machine 6 638

Acquisition Timeline 33

Click here for Other Nike Facts and Statistics

References

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  47. http://money.cnn.com/2015/06/05/news/companies/nike-endorsement-dollars/index.html
  48. https://www.youtube.com/watch?time_continue=16&v=oSWEd4o-BdE
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  54. http://news.nike.com/news/nike-red-releases-a-limited-edition-collection-to-raise-awareness-on-world-aids-day 
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