Essay: Nike analysis

Reading Phil Knight’s book “Shoe Dog: A Memoir by the creator of NIKE” was a true eye opening in understanding the origins of such a well know brand.
In 1964, this American runner from Oregon University decided to start a project with his coach, Bowerman. Blue Ribbon was then launched right after and evolved quite quickly: 2 years later, it opened its first retail store in Santa Monica and signed off a 3-year contract with a Japanese company. The company faced a certain number of difficulties but still launched Nike in 1971. After singing Michael Jordan, Nike truly started expanding in 1976 by reaching out to three Olympics athletes increasing the company’s publicity.
With the release of their first ad in 1980 and becoming public, Phil Knight made his “small crazy idea” (Knight, 2016, p14) a true success which is today perceived as one of the most promising companies in the world.
Nowadays, Nike is considered as the world’s leading brand of athletic apparel, equipment and footwear (Baron, 2018). The brand sells its products through three main brands: Nike, Hurley and Converse as well as Nike Golf and Jordan. It has since 1976 expanded its national reach to an international one by having shops in around 200 countries dispersed throughout North America, Europe, Asia and some emerging markets. The brand focuses on key sports: Running, Football, Basketball, Sportswear, Men and Women’s training and action sports.
Being a consumer product company, NIKE must be up-to-date with the customer’s needs which explains the challenging and highly competitive environment. With its main competitors being Adidas and Reebok (Bhasin, 2018), NIKE must always innovate and foresee potential changes in customers’ demand. To achieve this, such companies strongly depend on their clientele’s opinion defining their brand image and reputation. Failing to match their demand would lead to a decrease in revenues and therefore growth. This explains why it is key for NIKE to constantly offer products that customers will need using a build-in connection with them online and in retail
Being the head of the market, NIKE has an even bigger role to make sure to stay on top of all innovations. It is therefore interesting to see how the brand has managed to reach this position in the ranking, and especially after analysing its marketing communication strategy. Present both online and offline, the brand has put an emphasis on social media due to its customers segmentation. With millions of followers across all platforms and its constant innovation, NIKE has made a real community for itself. Yet, there are still potential ways to improve its brand value by involving more customers or focusing not only Phil Knight’s sport of origin: running.
Introduction
Colin Caepernick and Serena Williams have something other than sport in common: both are Nike Sponsored Athletes whom have had an eventful year. Indeed, Williams was criticized for her outfit at the French Open (Gaines, 2018) and Caepernick not hired again in the NFL after kneeling down during the national anthem in protest to police racial violence (Grahan, 2018). Nike took matters in its own hand and made Caepernick the face of its 30th anniversary of the infamous “Just Do It” slogan (Turner and Martin, 2018) as well as publicly supporting Serena after her outfit was banned from the French Open (Appendix 1).
Yet, how did a globally reputed brand, whose consumers either burn shoes or on the contrary buy them as a support for a campaign, became so famous?
This paper will therefore question focus on Nike’s marketing communication strategy, focusing mostly on its use social media as a communication tool. By showing how Nike “does it”, this report will finish off with recommendation on how to improve the brand’s value through social media.
Nike englobes three different companies: Nike, Hurvey and Converse and focuses on three different segments: Apparel, Footwear and Equipment (Annual Report, 2018). The brand made the top 50 of World’s Best Employers and Top Regarded Companies in 2018 and was ranked as 18th Most Valuable Brand by Forbes in 2018 (Forbes, 2018).
In order to understand Nike’s marketing communication strategy success, it is key to analyse it using the 6 Marketing Mix framework
a. Mission:
Nike’s mission is well defined on their website: “Bring inspiration and innovation to every athlete in the world.” (Annual Report 2018). An athlete is an individual with a body and this is the core driver of the Nike brand – sport unites, and they are looking to bring sports to everyone in a society.
By developing new technologies helping the customer excel or through a constant update regarding all changes, their objective is to support their athletes. In fact, one can read on Nike’s website that: “Our mission is what drives us to do everything possible to expand human potential […] by making a positive impact in communities where we live and work.” (Nike News, 2018). This reflects Nike’s mentality: focus on the customer’s needs, often omitted by certain companies when designing their communication strategy. (Fournier, Dobscha and Mick, 1998).
b. Market:
Targeting an efficient market is key to success which, if not well done, results in product failure (Cooper and Kleinschmidt, 2011, p18). As obvious as it seems, Nike’s consumers are mainly sports-men and -women, although Nike does seem to target more women, young athletes and runners (Lutz, 2015).
Their strategy to reach out to customer is initiated by contracts and agreements with sports clubs (PSG, FC Barcelona), events (Ryder Cup), athletes (Tennis player, Serena Williams) and other influencers such as model Bella Hadid or actor, Kevin Hart (Slater and Lloyd, 2004). Through this sponsorship, the company is able to advertise itself without paying any actual media fee (idem, p193).
Using the FCB grid (Appendix 2),Vaughn (1980) defines the purchase process of an individual is based on four different types of products exist involves either economical, responsive, psychological or social motives.
Using this framework, the Nike products can be defined as a Medium involvement- High feeling.These purchases are driven by emotions and “subconscious desires” but also based on “peer-imitation, visibility and role status” (Ratchford and Vaughn, 1989).
c. Message:
When thinking of Nike, many think of the famous mantra “Just do it” pitched by the advertising company Wieden+Kennedy back in 1988 (Bella, 2018). The aim behind such a message is that with the good tools in their hands, anyone can achieve their set goals.
Take for example Nike’s success at the 2016 Olympic Games. In its campaigns, Nike’s aim was to highlight the athlete’s personal success by reflecting their stories. The Shareholders’ letter from Nike’s 2017 Annual Report shows how the story to be communicated is to “push the limits of human potential”. This is done by the company through a constant increase in the confidence within each and every athlete at any time to make sure they achieve what they set their mind to (Parker, 2017)
By doing so, the company made the customers understand that “people have the power to write their own future by embracing the qualities of hard work and determination to overcome any challenges” (Hu, 2018).
In 2018, the brand’s message had evolved with a stronger focus on customers. Nike’s Chairman, Mark Parker signed off his letter by mentioning how all the goods, services, platforms developed throughout the year were made from “the same source: the voice of the athlete” with the aim “to know athletes better than ever”.
Their main strategy has yet not changed in two years: use success stories and prove that by being daring, one becomes special which leads to winning. This is done using an emotional appeal through warmth and compassion. In fact, it is often the case that the issue Nike supports generates a lot of debates and their answer to it shocks the world. The Colin Kaepernick Campaign for example divided the population: some burning off their shoes and others buying them to support the NFL player (Carrington and Boykoff, 2018).
Nike is renowned for supporting topical issues making each advertising published a little controversial (Union Room, 2010).
Nike delivers its messages through well-known sportsmen and sportswomen to reflect their image: Roger Federer, Cristiano Ronaldo, Michael Jordan, Lebron James, etc. through different platforms such as Youtube (Margot VS Lily series), where they are mostly present, Facebook, Twitter, Snapchat, Instagram, Pinterest, etc.
Lately, Nike has been mostly focusing on delivering online ads but they still aim to deliver an altruist message by organising “community outreach initiatives” (e.g. MENTOR, PeacePlayer Internationals) (Nike Global Community Impact, 2018)
Nike’s advertising and promotion costs include all costs from contracts to “complimentary product, television, digital and print advertising and media costs, brand events and retail brand presentation” (Nike, 2018, p77). This “demand creation” cost has increased since 2017 by 7% (idem, 2018) coming to 3,577million dollars due to “sport marketing and advertising” (p80).
Nike’s marketing communication has been able to deliver their story through mostly owned and earned type of media thanks to all sponsorships rather than a paid-for on as it saves costs.
They do still have print ads included in the “Demand Creation” costs but reviewing their 2018 Annual report, the aim for the brand is to now focus more on social media rather than any other platforms.
In order to measure the impact a story which Nike posts about, it is key to look at the sales as well as get some feedback from the major shareholders and employees (e.g. athletes, retailers). Using Nike Support on Twitter, the brand is actually capable of getting immediate feedback from the customers themselves and answer any question (Figure 2).
he table below clearly shows that Nike dominates the international market. Indeed, compared to Adidas and Reebok, the brand’s interest peaked in September 2018 while still maintaining a larger share of interest over the last 5 years compared to the other brands. This can be explained by the Jordan Brand and PSG launch, the Chicago marathon and most importantly the Colin Kaepernick Ad “Believe in something. Even if it means sacrificing everything” (twitter.com, 2018).
In order to understand Nike’s marketing communication strategy, it is important to examine the tools used. This can be done using Nike’s Communication mix
As seen from the table, Nike’s marketing communication strategy strongly relies on social media. With more than 1,182 stores around the world (Annual Report, 2018, p56) and a strong presence on smartphones through their applications (e.g. Nike+Run Club ranked 17th best health and fitness app by AppStore), a lot of their communication goes through social media.
Interestingly enough, Nike uses 2 different types of marketing strategy: one focuses on the period around a product launch and the other concerns more an event-related method regarding all their sponsorship.
Take for example, the PGA Tour Championship with Tiger Woods where Nike advertised the athlete post win after 5 years (Joseph, 2018) (Appendix 3). Even during the World Cup in 2014, Nike published their “Risk Everything” videos using well-known footballers Ronaldo and Neymar and an #askZlatan interactive campaign. After the launch of their Football App, Nike promoted the brand through 6 million USD worth of campaigns where “at least 1/3 […] were on mobile devices” (Fidelman, 2014).
They also develop specific apps for a certain segment of their customers such as the “Nike SNEAKRS” made especially for sneakerheads (Nike.com, 2018).
Nike had already a strong influence on digital platforms, but it grew even stronger in 2018 where the brand published its 4th quarter revenue with a 13% increase thanks to “a companywide, end-to-end digital transformation” (Baron, 2018).
Yet, with a strong presence on social media, Nike still maintains a “retail domination” (Kim, 2018) by opening a store in Dubai, considered as the largest one in the Middle East.
Their aim is still clear to the public: “Bring inspiration and innovation to every athlete in the world.” (Annual Report 2018) which they do by picking athletes with a strong message and sharing it where most of its customers can be found: social media.
III. Social Media Analysis:
a. Objectives of Nike
Sport can be as broad as one wants, and Nike understood that trend. Indeed, a brand will not interact in the same way with “Sunday athletes” as they will with professionals. A football fan will not be as interested as a basketball fan in a basketball promotional video. Nike has therefore opted for a precise and in-depth segmentation to develop a full presence on all social media platforms (e.g. Facebook, Twitter, Instagram, Youtube, Pinterest, etc.) This explains the multitude of platforms focusing on specific sports and products: Nike Football, Nike Sportswear, Nike Training Club app. Nike’s first objective behind its strategy is to efficiently use a multi-branding strategy enabling it to answer any demand from any customer.
As seen from the table below, Nike decided to diversify on a horizontal and vertical basis: using 5 of the major social media platforms (Facebook, Twitter being the most popular ones and Instagram, Youtube, Pinterest being the most visual ones).
Vertically, Nike’s strategy was established in order to respond to its customer in the simplest way. On Facebook 15 Nike accounts are properly differentiated. Some accounts are dedicated to a sport (Football, Running, Basketball). This enables the company to better target their customers and therefore offer the right product. Some others are Services linked, such as Nike Training Club and finally some accounts are only product related (e.g. Nike Hypervenom
Other pages are also exclusive to certain platforms or to a segment of its customer: Nike Support is specific to Twitter, Nike Women available Youtube, Pinterest, Twitter and Instagram. Additionally, each sponsored athlete has a page as well where they tend to promote the company close to events.
b. Nike+ Community:
In 2011, Jesse Stollak, Nike’s Global Digital Brand and Innovation Director at the time, mentioned that Nike’s ultimate goal was to be connected with the consumer wherever he is. With such segmentation, Nike wants to prove it takes care of all its customer, whatever level, gender or sports. She later on mentioned that their aim was to reach a point where there is a direct interaction between the customer and the company (L’autremedia.com, 2014).
Many sports brands have their own platforms, but Nike differentiated itself even more with the creation of its own community: Nike+. This platform links anyone on it with their friends and shares all results from any physical activity done Just like on any social media, the brand offers a wide number of products specific to a certain activity: Training Club for women, Fuel Brand to measure the physical activity of the individual or Nike Basketball for amateurs.
With its own social media, the company reaches its strategy’s second objective: make customers participate and interact with the brand and other customers within the same community.
c. Social Media Analysis and Comparison
In order to understand NIKE’s social media strategy, it is important to compare it to its competitors on its strongest platforms as well as based on its services on such platforms. For the sake of this report, as Nike publishes mostly videos, this paper will focus its comparison between Puma, Adidas and Nike on their Youtube accounts.
Based on the figure below Nike has a greater number of videos and subscribers, although Adidas is clearly close. Nike does have most “likes” (94.1%) between the three companies and although it has more followers, Adidas’ videos have more views. Respectively 11 videos viewed around 2 million times compared to 5 videos viewed 10 million times in December.
Using the audit below, it is also clear that, thanks to Nike’s Support account on Twitter with more than 533k tweets since its launch in 2008, Nike takes their customers’ opinion seriously by answering any question on this platform.
Additionally, with a great focus on social media, explaining the high strategic fit, Nike has been trying to follow their customers’ progress. With a strong tracking analysis, Nike has managed to become not a brand to its customer but a friend, as Stollak mentioned (Swallow, 2011).
Their paid social media analysis is not to be taken so seriously as it is quite self-productive thanks to the sponsorship. It has even reached the point where the customers advertise the brand on its own through apps (e.g. Nike+Run Club) or by sponsored athletes supporting each other (e.g. Tiger Wood with Colin Kaepernick) (DiMeglio, 2018).
Clearly, with a final score of 7.25/10 and based on the earlier the comparison with Reebok and Adidas, Nike is in fact “the world’s most popular sports brand” (Baron, 2018)
With Nike ranked 1st in the Top 100 Brands for Millenials (rankingthebrands.com, 2018), it can be hard to figure out what to change in order to improve the company’s value.
Yet, as mentioned in their 2018 annual report: “Consumer connection and affinity for brands and products, developed through marketing and promotion; social media interaction; customer support and service; identification with prominent and influential athletes, public figures, coaches, teams, colleges and sports leagues who endorse our brands and use our products and active engagement through sponsored sporting events and clinics” (p58).
This simply shows that Nike relies a lot on their customers and sponsored individuals (and vice versa). By having such a bond with them, the company is not obliged to advertise their brand as much as companies whose sponsored athletes are less well known.
Based simply on their website, news.nike.com, it is clear that their focus nowadays is mostly about Sneakers (LeBron 166 “SB White”, Flyknit 2, …), Innovations (Nike Air Vapormax 2019) and Featured Apparel (NATIVE’s football jerseys), Footwear or even videos. Throughout all events in the last month and upcoming one, Nike doesn’t seem to be focused on events as much as it was in 2015 where they organized more than 20 events (mostly marathons).
Nike is a sports brand after all. Back in 2014, its Spring/Summer 2015 Collection brought together 65million women across their digital community (Nike News, 2014). Clearly, with such a buzz, Nike could potentially bring people together in real life and on social media, increasing its community.
For this matter, Nike could potentially improve its brand equity by potentially using their social media strategy revenue to the benefit of marketing more events (e.g. Using the Nike+ Community).
Additionally, Nike was the first company other than Snapchat to sell a product on this social media platform. This had a huge impact on the Air Jordan III as they sold out in 23minutes (Dickey, 2018). Yet, this is not the first time Nike did so as they manage to sell “Nike SB Dunk High Momofuku” linking a restaurant to the company (Dunne, 2017) These innovations have made Nike’s product launch ever more interesting and segmented. Interestingly enough, the app Snapchat could be used for more than a product launch: follow up of an event and post interview with their main athletes depending on the event. This could bring the customer closer to the athlete making Nike a down-to-earth, customer friendly company
Conclusion:
Following Jesse Stollak’s comments in 2011, Nike is now present everywhere, at any time and for any types of customers. As shown throughout this paper, the brand has imposed itself onto the principal social media platforms by offering sets of products and services corresponding to the different customer segments: women, footballers, amateurs looking for motivation. Their connected products and smartphones applications has also enabled the brand to strengthen its role as “partner” of all athletes. Finally, the creation of the Nike+ Community, centralized on the utilisation of the company’s products, confirms the success of Nike and their social media strategy.
Nike does not just focus on famous athletes anymore to promote its products as in the 1990s. Today, the brand focuses on social media and innovation so to increase its customers’ engagement.
Still, the company has been currently facing backlashes due to their latest ad. It could be interesting to question whether Nike should continue or not with such controversial ads.