Former University of Oregon track coach and co-founder of Nike Bill Bowerman once said: “If you have a body, you are an athlete!” (Nike Inc., n.d.) It is this way of thinking that describes the root of Nike’s approach to marketing. Every person is a potential athlete or “consumer”. This is a common thinking in the realm of athletics but when Bill Bowerman said this, it was in direct reference to the shoe industry. From their marketing strategies to their selling philosophies, Nike has developed one of the most recognizable and demanded names and logo ever. Nike, which is the name of the Greek Goddess of Victory, was born in 1972 when Blue Ribbon Sports (BRS) launched its first branded shoe at the U.S. Olympic track and field trials. A former University of Oregon track team member Phil Knight created Blue Ribbon Sports.
At Oregon, Knight was coached by the legendary Bill Bowerman and then went on to become alumnus of the Stanford School of Business. BRS was crafted in 1962 when Knight made a deal with Onitsuka Tiger Company, a Japanese shoe company, to import their shoes to the United States. Knight had the idea to sell a low cost shoe with a very high quality, with high aspirations of taking Adidas out of the top spot in the athletic shoe market. In 1964, Bill Bowerman decided to join Knight as a partner at BRS to create a joint quest to be number one. Bowerman redesigned the Tiger shoes while Knight acted as the accountant/personal seller and the two went on the road to sell their newly crafted sneakers at track meets and local shoe stores. By 1966, Blue Ribbon Sports opened its first store in Oregon, which is where Nike is still currently headquartered.
Knight and Bowerman managed the store with the only one employee, Jeff Johnson. By 1972 BRS was able to subcontract its own shoe line and began selling Nike Brand shoes. Over the next decade Nike expanded almost double its size each year from the previous year. BRS officially became Nike in 1978 and opened manufacturing plants all over the U.S. Nike was a household name for most athletes by early 1980’s. Today, Nike is the world’s leading designer, maker and distributor of athletic footwear, apparel, equipment and accessories for a series activities, as well as sports-inspired civic shoes.
The company’s target market is in the Americas, Europe, Middle East, Africa and Asia Pacific, with its headquarters in Beaverton, Oregon. Nike employs around 38,000 people to produce footwear for running, training, basketball and soccer use. The company also sells tennis, golf, baseball, football, bicycling, volleyball, wrestling, cheerleading, aquatic activities, hiking, outdoor activities and other athletic shoes. The company provides these products for men, women and children. As the leading global footwear brand, Nike reported revenues of $7.0 billion for first quarter, 2014.
Identification of Target Market(s)
In its beginning Nike’s focus was primarily on track and field, and for the most part track athletes were their target market. One of the first individuals to endorse a Nike product was a man who exemplified their style and way of conducting business, Steve Prefontaine. Prefontaine was a household name in the late seventies and has gone down in history as one of the best American track and field athletes ever. Prefontaine was a friend of Knight and had been coached by Bowerman at the University of Oregon. Prefontaine embodied what Nike wanted as its differential advantage of other companies, due to his brash attitude, high talent level, and cavalier mentality. This is why Steve Prefontaine and Nike were a tremendous tandem in the early years of Nike’s existence. Athletes are still currently the majority consumers of Nike’s products.
This is because of the usefulness that goes along with the items. Nike focuses on these consumers by means of agreements with sports team, college sponsorships, and endorsement with individual athletes. Through this, Nike is able to reach an extensive number of consumers and clients who are likely to purchase their products. Nike pays particular focus on the athlete more than other individual consumers. However, a secondary market came to light in the 1980s. During the period from 1985-1987, Nike dropped back down to number two in the running of the shoe market. Sales had dropped off because the running boom of the late 70’s and 80’s had begun to diminish, the NBA was becoming increasingly marketable, and consumers tended to wear their court shoes on the street. (Katz, 1993) Nike began to notice an entire market that the company had been avoiding, everyday athletic activities. These activities were things done by everyday people and not just the serious athlete.
Fortunately for Nike, in 1985 their star was brought to light by a rookie basketball player with amazing talent and a nice smile, his name is Michael Jordan. Jordan came to Nike at a time when the marketability of the NBA was increasing. NBA games were being nationally televised during prime time television hours and weekends. This gave Nike the perfect platform to develop and market their new star and the products that he endorsed. During the first few years Nike introduced Jordan to the public and Jordan familiarized himself with the American public. Nike ran a series of ads with Jordan and film director Spike Lee. These ads were aired during prime time television hours and were solely targeted for pre-teen school students.
These ads displayed an expressed message to “Stay in School.” The ads presented kids with a national figure that was selling both school and Nike’s products, how could parents deny their children the shoes of such a virtuous spokesman? Jordan was a figure that children adored, looked up to and tried to the best of their ability to copy. Nike used this to display a positive image for their company and to sell their products.
Consumer Decision Making Process
“Consumers believe that the firm makes better shoes. Whether or not that is true, Nike has been a magician as a marketer.” (McIntyre, 2011) When a consumer purchases a product, usually there is a five step process in making a decision. The steps are need recognition, information search, evaluation of alternatives, purchase, and post purchase behavior. (Perreau, 2013) Nike tries to make this decision process easier with their advertisements. For example, the Nike fuel band is one of Nike’s newest products and people didn’t know much about it when it came out so Nike used an ad that caught ones attention, but that’s not all. Nike’s commercial explained what this product is in great detail. Just by watching the commercial, Nike completed the first three steps for you, making your life a bit easier.
In many cases consumers skip steps one through three and buy products on impulse, as Nike would put, they “just do it”, but in this case Nike does the “leg” work for you. This is an example of the magic in Nike marketing. However, it’s obvious that Nike hasn’t actually used a wand on its customers and there is no proof which can measure that a Nike pair of shoes is better than an Adidas pair of shoes or another brand, so it must be magic, right? The answer is “No”, it’s the brand image and product position that is the driving force being Nike sales. The two concepts are why we buy Nike rather than another brand. Brand image refers to the schematic memory of a brand. (Hawkins, 2012, p. 335) Simply, it is what people think of and feel when they hear or see a brand name and is the set of associations consumers have learned about a brand. (Hawkins, 2012, p. 335)
Product positioning is a decision by a marketer to try to achieve a defined brand image relative to competition within a market segment. (Hawkins, 2012, p. 335) Lastly, the ability to benefit from a brand image is called brand equity. (Hawkins, 2012, p. 335) According to Aaker (2013) “brand equity has four dimensions – brand loyalty, brand awareness, brand associations, and perceived quality, each providing value to a firm in numerous ways.” The core of building the equity for Nike is brand association. Nike associates its brand with famous athletic celebrities that exemplify the personality of the brand; they are achievers, winners, determined, accomplishment oriented, and nontraditional. The most famous example for brand association ever was the collaboration between Nike and Jordan.
This association personified Nike as a superior top performing brand. The depth of this personification became permanent, even after Jordan was no longer there. Also, Nike associates with top sport events by sponsoring many major league sports, including the National Basketball Association. Through its brand association, Nike increased its brand awareness. Nike communicated its celebrity associations through TV ads, which increased their sales dramatically. In addition, one of the most important sources of Nike brand equity is the high perceived quality. Although, in today’s market, most of Nike’s consumers are the public that use their shoes just for walking, Nike is committed to design their shoes according to the high standards of professional competition. Seeing a winning athlete wearing a Nike shoe in a professional competition authenticated the quality perception in the minds of the customers. Lastly, Nike has a good relationship with its customer, which creates some sort of brand loyalty.
Nike’s ideals and goals remain the same as those of the days of Steve Prefontaine and Bill Bowerman. Nike’s Phil Knight is not slowing down as he continually signs new colleges on as Nike endorsed schools, even purchasing a portion of the NFL’s Dallas Cowboys. Nike has reached a point where they can count on the Nike name promoting itself, and yet they continue to produce innovative ideas. These ideas have been productive and entertaining promotional tools. In the case of Nike, it should continue to market itself towards people of all ages who wish to be active and still comfortable. This marketing strategy has been particularly successful as its capability to reach many athletes, and according to Nike that is anyone with a body.
Nike focuses on the consumers who embrace product understanding and closeness, which allows the company to set a higher cost than its competitors. This is a marketing strategy of Nike which calls for superior pricing points in order to push the supposed value of the product. This strategy has also proven successful for the company. Lastly, the more reliable the distribution of the product is improves the sales and results in more profits. Product delivery at the required time to the consumer not only affects usefulness it also results in a high level of customer’s satisfaction as well as loyalty. It goes without saying that Nike’s customers are satisfied and loyal.
Aaker, D. (2013, September 13). What Is Brand Equity and Why is it Valuable? | Aaker on Brands | Prophet. Retrieved from http://www.prophet.com/blog/aakeronbrands/156-what-is-brand-equity-and-why-is-it-valuable Hawkins, D. (2012). Mp Consumer Behavior With Ddb Data Disk (12th ed.). Irwin Professional Pub. Katz, D. (1993, August 16). Triumph of the Swoosh. Sports Illustrated, 53-73. McIntyre, D. A. (2011, March 18). Nike’s Brand Strength: A Round Of Prices Increases – MarketWatch. Retrieved from http://www.marketwatch.com/story/nikes-brand-strength-a-round-of-prices-increases-2011-03-18 Nike Inc. (n.d.). NIKE, Inc. – About NIKE, Inc. Retrieved from http://nikeinc.com/pages/about-nike-inc Nike Inc. (n.d.). NIKE, Inc. – History & Heritage. Retrieved from http://nikeinc.com/pages/history-heritage Perreau, F. (2013, October 25). The 5 stages of Consumer Buying Decision Process. Retrieved from http://theconsumerfactor.com/en/5-stages-consumer-buying-decision-process/