The Birth of Nike: How Two Men and $1000 Created a Global Brand

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1. HISTORY

1960s

Bill Bowerman and Phil Knight founded Nike Inc. as Blue Ribbon Sports with a handshake and only $1,000 in capital in 1964. The partners first began their relationship at the University of Oregon where Bowerman was Knight’s track and field coach. While attending Stanford University, Knight wrote a paper about breaking Germany's domination of the U.S. domestic athletic shoe industry by distributing low-cost, high-quality Japanese athletic shoes to American consumers. In an attempt to realize his theory, Knight visited Japan and built an agreement with the Onitsuka Tiger company, a manufacturer of quality athletic shoes, to sell Tiger shoes in the United States.

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Since Bowerman and Knight each had full-time jobs, they needed someone to manage the growing requirements of Blue Ribbon Sports. Jeff Johnson, a runner himself, became the first full-time employee of Blue Ribbon Sports in 1965, and quickly became an indispensable man for the start-up company. Knight sold Tiger’s shoes at local track meets grossing $8,000 of sales in their first year.

In 1966, Bowerman, who had designed shoes for his university athletes in the past, worked with Tiger and designed the Cortez running shoe. The shoe was a worldwide success for the Onitsuka Tiger Company and was sold at the first Blue Ribbon Sports store. The company’s profits grew quickly. During the same year, BRS (Blue Ribbon Sports) also opened its first retail store, located on Pico Boulevard in Santa Monica, California. 1970s

In 1971, BRS, with some creditor’s support, started manufacturing its own line of shoes, and therefore its relationship with Onitsuka Tiger started to fall apart.

Knight and Bowerman were ready to make the jump from being a footwear distributor to designing and manufacturing their own brand of athletic shoes. The first BRS’ shoe was a soccer shoe that bore the Nike brand name, referring to the Greek Goddess of Victory, and the Swoosh trademark, which was designed by a student at Portland University for a fee of only $35. 1972 marked the definite breakup of the BRS/Tiger relationship.

BRS soon changed its name to Nike, Inc. and debuted itself at the Olympic trials, which were about to be held in the same year. In 1973, Steve Prefontaine was the first prominent track star to wear Nike shoes. The late 70’s and early 80’s also saw other important athletes such as John McEnroe, Carl Lewis, and Joan Benoit sporting Nike shoes. Nike popularity grew so much that in 1979 they claimed 50% of the U.S. market and the company went public in December of that year with 2,700 employees and by selling 2 million shares on the New York Stock Exchange. 1980s

The 1980’s were marked by revenues of more than $1 billion, the formation of Nike International Ltd., and the "Just Do It" campaign (1988), which was chosen by Advertising Age as one of the top five ad slogans of the 20th century. The series of this campaign included three advertisements with a young athlete named Bo Jackson, who espoused the benefits of a new cross-training shoe. By the mid-1980s, Nike slipped from its position as industry leader, partly because the company had miscalculated on the industry boom, giving new competitors an almost completely open field to develop the business.

Fortunately though, the debut of the new signature shoe for an NBA recruit by the name of Michael Jordan in 1985 helped strenghten Nike’s bottom line. In 1989, Nike’s business exploded, thanks in part to the incredibly popular “Bo Knows” advertiement campaign. Nike also expanded its product line by including specialty apparel for a variety of sports. By the end of the decade, Nike had regained its position as the industry leader. This was the only time a company in the athletic footwear/apparel industry had accomplished such a challenge. Nike has been in that position ever since. 1990s

In 1990, Nike surpassed the $2 billion mark in revenue with 5,300 employees worldwide. In November of the same year, Portland became the first home to a new retail experience called Niketown, which would earn numerous architectural design and retail awards and produce several other Niketown locations both around the USA and internationally.

Throughout the 90’s, Nike’s revenues kept increasing and reached $8.8 billion in 1999. These revenues grew because of several improvements in shoe technology and excellent marketing campaigns. In 1992 international revenues reached $1 billion for the first time and accounted for over one-third of our total revenues. Such growth continued throughout the 1990's as Nike kept focusing our on major sporting events like the World Cup, and the next generation of celebrity athletes, such as Tiger Woods, Lance Armstrong, and the women playing women’s professional basketball (WNBA). At the end of the 90’s, Nike’s goal, is to become a truly global brand. 2000s

At the beginning of the 2000s, Nike introduced a new footwear cushioning system called Nike Shox, which debuted during Sydney in 2000. Just as Nike’s products have evolved, so has Nike’s approach to marketing. The 2002 “Secret Tournament” campaign, by being Nike’s first truly integrated, global marketing effort, was a multi-faced consumer experience in support of the World Cup, quite different from the traditional “big athlete, big ad, big product” formula. “Secret Tournament” incorporated advertising, the Internet, public relations, retail and consumer events to create excitement for Nike’s soccer products and athletes in a way no single ad could ever achieve.

This new integrated approach has become the founding element for Nike marketing and communications. Today, Nike continues to seek new and innovative ways to develop superior athletic products, and creative methods to communicate directly with consumers (Nike Free, Nike+ and Nike Sphere are some examples of this technique); in fact, over 40% of Nike Inc.’s sales come from athletic apparel, sports equipment, and subsidiary ventures. Nike Inc. has been able to attain this premier position through "quality production, innovative products, and aggressive marketing." Acquisitions

As of November 2008, Nike, Inc. owns four key subsidiaries: Cole Haan (1988), Hurley International (2002), Converse Inc. (2003), Umbro (2008), and Nike GOLF (2009).