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The footwear giant has set up a Web site where soccer fans can network
Few companies define 20th century marketing better than Nike (NKE ). The athletic shoemaker's famous swoosh emblem and a string of ad campaigns, starting with its iconic "Just Do It" series, set the gold standard for getting a clear message to a mass audience. But when Nike crafted its World Cup strategy, it decided to try something new: online communities. The centerpiece is Joga.com, a social networking site for soccer fans it quietly launched in February with Google. (GOOG )Members in 140 countries can blog, create fan communities around their favorite teams or players, such as Brazilian superstar Ronaldinho, organize pickup games, download videos, and rant against the encroaching commercialism of the game. And though the program was launched during the World Cup, it continues beyond the tournament It's a huge U-turn for the mighty marketer -- and a recognition that it needs to get consumers' attention in entirely new ways beyond blasting top-down mass messages. Nike was forced to be innovative after rival Adidas Group (ADDDY ) got a World Cup exclusive deal to broadcast ads in the U.S. But by monitoring conversations on social networking sites and blogs, where people already are shaping Nike's brand, the sneaker giant knew this was an opportunity to try something different. Says Trevor Edwards, Nike's vice-president for global brand management: "Gone are the days of the one big ad, the one big shoe, and the hope that when we put it all together it makes a big impact." JOGA BONITO The Joga.com social networking site, one of the biggest by a large consumer company, is just one piece of a $100 million multilayered campaign known as Joga Bonito (Portuguese for "play beautiful"). Last fall, Nike started feeding video clips that spotlight Nike-sponsored soccer players onto popular video sharing sites, including YouTube and Google. It created JogaTV, a virtual soccer TV station, where it releases a new video clip every few days and fans can upload their own clips. Is it working? Nike officials say they reached their World Cup goal of signing up 1 million members by mid-July, when the tournament ended. "By enrolling consumers in shaping the marketing, Nike is figuring out what kind of microcontent audiences want and nurturing deeper bonds of loyalty and advocacy," says Pete Blackshaw, chief marketing officer at Nielsen BuzzMetrics, which tracks online conversations for companies. Yet like a lot of companies trying to build online communities, Nike doesn't know if this will filter down to the bottom line. The company says sales of its soccer gear are booming but admits it's too early to credit that directly to its community bear hug. What's more, this kind of marketing can be tricky. One of Nike's top soccer videos, for instance, shows Ronaldinho slipping on a pair of new white Nike soccer cleats and booting a soccer ball four times off the goal crossbar -- the equivalent of a baseball hitting off the left field foul pole into foul territory. It has been viewed by 7.5 million people, making it one of the most popular clips online, but also the most controversial because it was digitally altered. Nike executives, who won't say whether they did the editing, are clearly
isn't it? SWOT Analysis Nike. and products can be made more cheaply elsewhere (to the same or better specification). Phil Knight (Founder and CEO) is often quoted as saying that 'Business is war without bullets. However. the income of the business is still heavily dependent upon its share of the footwear market. Says CEO Mark G.amused by the controversy. • Nike is a very competitive organization. Can you tell one sports retailer from another? So margins tend to get squeezed as retailers try to pass some of the low price competition pressure onto Nike. This makes a very lean organization. like it or not. Nike is strong at research and development. Retailers tend to offer a very similar experience to the consumer. Nike is a global brand. Still. Inc. The brand is fiercely defended by its owners whom truly believe that Nike is not a fashion brand." Which is the point of brand marketing. Nike does have its own retailer in Nike Town. However Nike sponsored the top athletes and gained valuable coverage. • • Weaknesses. However. • • The organization does have a diversified range of sports products. and Phil Knight even has it tattooed on his ankle. Opportunities. If prices rise.' Nike has a healthy dislike of is competitors. However. Reebok went to the expense of sponsoring the games. most of its income is derived from selling into retailers. Its famous 'Swoosh' is instantly recognisable. Nike considers the results promising. Strengths. Nike did not. It is the number one sports brand in the World. The retail sector is very price sensitive. At the Atlanta Olympics. Nike will move production. They then manufacture wherever they can produce high quality product at the lowest possible price. But the flap could hurt its credibility. as is evidenced by its evolving and innovative product range. Parker: "A strong relationship is created when someone joins a Nike community or invites Nike into their community. consumers that wear Nike product do not always buy it to . This may leave it vulnerable if for any reason its market share erodes. It does not tie up cash in buildings and manufacturing workers. • Product development offers Nike many opportunities. Nike has no factories.
In 1962 knight started blue ribbon sports based on his business plan in his MBA the precursor company to Nike.e. sunglasses and jewellery. Such consumer price sensitivity is a potential external threat to Nike. to provide high quality running shoes designed especially for athletes by athletes. and buy the cheaper of the two. Threats. There are many markets that have the disposable income to spend on high value sports goods. consumers need to replace shoes. building upon its strong global brand recognition. This creates its own opportunities. The market for sports shoes and garments is very competitive. There are also global marketing events that can be utilised to support the brand such as the World Cup (soccer) and The Olympics. Competitors are developing alternative brands to take away Nike's market share. Bowerman who was an expert for innovative and new products they have started their partnership with 500$. the retail sector is becoming price competitive. Such high value items do tend to have associated with them. In early days knight worked part time but soon he realized that there is a need of full time attention to grow the BRS. He got partnership with Mr. In 1965 he hired the Jeff Johnson who was also a runner and with a degree of anthropology. He visited many places including Japan to fulfill his concept in designing the good shoe for the athletes. Some would argue that in youth culture especially. The idea behind BRS was simple. • • • Nike is exposed to the international nature of trade. Johnson opened the company first .• • participate in sport. The model developed by Phil Knight in his Stamford Business School days (high value branded product manufactured at a low cost) is now commonly used and to an extent is no longer a basis for sustainable competitive advantage. At that time shoe industry was dominated by two germen companies’ adidas and Reebok. As discussed above in weaknesses. Brief History of Nike Phill knight MBA student who grew up in Oregon. since product could become unfashionable before it wears out i. This is an issue that faces all global brands. emerging markets such as China and India have a new richer generation of consumers. This ultimately means that consumers are shopping around for a better deal. Such an exposure could mean that Nike may be manufacturing and/or selling at a loss. the consumer could go to the store along the street to compare prices for the exactly the same item. Nike is a fashion brand. So if one store charges a price for a pair of sports shoes. The business could also be developed internationally. There is also the opportunity to develop products such as sport wear. high profits. It buys and sells in different currencies and so costs and margins are not stable over long periods of time. For example.
After that they have introduced Air Jordan shoes. nylon upper. Complimentary print ads were run in mass market and narrowly targeted niche publications. doubling sales and profit annually. The air Jordan line sparked a new wave of momentum for Nike. In early 1980 the new category such as fitness and aerobic introduced. Manufacturing his own line of athletics shoes required choosing a new marketable brand name so Nike with a “fat check mark” logo came into being. By 1980 the company had 2700 employees and sale of 270$ million defeating the adidas with 50 % market share. a market segment that had thus far remained largely unaddressed by Nike. By 1971 Nike decided to venture out on his own he struck a deal with nisho iwai. Air Max was a huge success for Nike. In 1987 Nike lost the market share lead to Reebok with 30 % Reebok and 18 % Nike. durable. Nike first layoff occurs in 1984 followed by two money quarter loosing quarters in 1985. while Reebok tried to breath life . 6th largest Japanese trading company. Instead on copying Reebok decided to continue the performance and devoted more attention to basketball here Nike set out a new marketing formula related to shoes color. Throughout the remaining decade.8 million and company employed. Just like Nike Reebok also paid too little attention to a consumer desire for performance related products in the late 1980. American of all ages has used these shoes. This time it was Reebok who got lost in the midst of transition. Around this time Reebok made a batch of aerobic shoes with soft garment lather they also introduced new attributes and benefits consideration to athletics to industry. Nike also sponsored a runner john Anderson who wins the first Boston marathon. As a result the growth of Nike started to tail off as competitors such as Reebok. The new trends were dominated by women. Within the category sub brands were also developed. At the Olympic trial in 1972 Nike brand name unveiled the moon shoes with new innovation.retail outlet in 1966. Nike literally missed out on the fastest growing segment of the industry. In 1978 the company officially changed its name form blue ribbon to Nike because of its best reputation. This situation forced Nike to chart a new direction with a fresh approach to market sot they put the spot light on the consumer-not just the product and become more market oriented. Aerobic trend began to tail off in 1988. New technology was to be used first with the Air Max running shoes. They also sponsored a tennis star marcorial by the end of 1974 Nike revenue has reached a $4. In 1967 bowerman developed the marathon running shoes with a light weight. Marketing concept required both new advertising and new technology so Nike has focused on both. clothes. the Nike brand experienced phenomenal growth. athletes logos and its first ever wide spread mass market TV advertising. Here Nike choose to define each sport separately as a category and applied their marketing formula in different ways for different category new categories range from cross training and water sport to out door and walking. For other shoes Nike also use celebrity endorsement.
geographically and personally relevant to local consumers abroad. to adopt Nike's future program. Nike could concentrate on developing its brand in the manner that they desire. Nike ad also created the ad “the wall”. Nike applied its marketing formula. Nike continued pushing the performance of its shoes and aired their first ad “just do it” the campaign marked the launch of a category. France. “The beastie boys” tour as the trip became known. Nike inventory control system also helped Nike to better gauge consumer response and plan production Nike sweetened its relationship with retailers such as foot looker by also giving them early look at new lines as well as the rights to exclusively sell certain models. Blending performance and attitude towards consumer through strategic product development endorsement and advertising. nevertheless now they had greater control over its marketing. After that there is second round of “just do it” advertising featured the highly acclaimed “be knows commercial”. By 1990 sales had surpassed $2 billion and Nike had reel aimed the market share from Reebok in the united state. Nike European history started in 1980.into the fashion segment. so successful in the united state was the harder sell n. cross training shoes. Nike spent 7 years of struggle to build its presence in Europe during this period Nike focused on aggressive and expensive shoes. European market consist of five primary markets Germany. To other categories including tennis and baseball Nike continued to launch product innovation with air huarche technology in 1991. designed for athletes who played more than one sport. The “just do it” campaign challenge a generation of athlete tic enthusiasts to chase their goal no matter how difficult or exclusive they might seem. Most importantly Nike advertising stayed true to its obsession with high performance. Form 1987 to 1991 kottkamp tried to get control on distributors and finally by the end of 1991 he had successfully regained control of 90% of Nike European distribution. whenever they wanted from the adidas warehouse.000 square foot . In 1987 they have run expensive advertising campaign to help assess Nike’s position and look for ways to take control of the Nike brand. In 1989 Nike attempted to blend centralized and localized work. To better consolidate its operation Nike built a $138 million. Italy. Nike wanted consumer to believe that they have the perfect shoes. At that time adidas was no 1 athletic shoe company in united state. Spain. Getting European retailer who were used to ordering whatever they wanted. Although Nike made a lot of efforts in the European market but they were not as much popular even they purchased the distributors licensing in Europe but nothing bring out the more fruits for the Nike. The most popular sport in Europe was soccer. 750. Although Nike faced a lot of successes and they did not spend the time and the money “authenticating” the brand in the united state the problem was that the Nike image was taken too fashion oriented and not performance oriented they created the more credibility by involving in the sponsorship during the 1994world cup individual contract with the players to wear the Nike shoes. track and field and tennis. It was also the aim of the Nike to become seen as more culturally.
collective bargaining agents WEAKNESSES . apparel. SWOT ANALYSIS v Strength v Weaknesses v Opportunities v Threats STRENGTHS · Nike is enjoying strong brand equity among their customers · Company have good relationship with suppliers and vendors · Production system process. Nike's innovative product development.centralized distribution center in lakdaal Belgium / lakdal Belgium.5 billion company to $12 billion by decade ends and to manage as one brand around the world. putting out more than one shoe style. on average. Throughout the 1990 Nike marketing and advertising program was able in its own marketing terms. Finally in 1996 knight publicly set a corporate goal of growing the $6. every day and bold advertising demonstrated that the brand was as much about attitude and imagery as shoes and clothing. sports marketing and retail while maintaining relatively constant retail distribution and premium pricing strategies. advertising. procedures. To meet its corporate goal of “enhancing people lives through sports and fitness “ and “keeping the magic of sport alive” Nike's unique approach creatively blended footwear. reflect the element of excellence · Strong brand recognition · Internet sales · Growing international presence · Superior research and development department · Strong financial returns · Strong sense of culture in the working environment · Great celebrity spokespersons · Automatic replenishment system · Successful experience being competitive · Nike doesn’t own any factories · Successful marketing campaigns · Nike is enjoying competitive advantage over their competitors by sheer dominance · Company is maintaining good company relationship with labor.
A. so in a sense they are putting all their eggs in one basket which is risky · Questionable factory working conditions OPPORTUNITIES · Economic component are good. and jewelry · Broaden locations of Nike Town and actual Nike stores THREATS . vision and long term objectives need improvement · It needs improvement in marketing management · HRM needs improvement · Lack of stores catering to the active females · Poor employment practices at their international manufacturing sites giving a bad reputation · Heavy dependency on footwear sales · Issues with Footlocker · The retail sector is very price sensitive · Most of Nike profit margin comes from the shoe sector. portray reasonably good situation · Opportunity for Nike is that Nike is equipped to internalize the social shift · Nike is reasonably poised to take care of articles of legislation · USA political stability apparently seems favorable · Nike is reasonably implementing the contemporary technology related to athletic shoe industry · Customer use of company’s products change from athletic purpose to a fashion item · Development of international trade (GAAT and NAFTA) · Generation Y children (born between 1979 and 1994) will reach 60 million · General demand for clothing/footwear for leisure activities continues to increase · Growing e-commerce’s positive effect since one of company’s competitive advantages is Internet sales · Women demand for athletic footwear and clothing is increasing significantly · US market tied to domestic business cycle · Contest for market share in Europe · Importance of fashion experiment and core competencies · Owners truly believe that Nike is NOT a “Fashion Brand” but some consumers feel different · Could develop sport wear. economic condition in U.S. sunglasses.· Mission.
· Social shift and USA experiencing social shift in terms of people are seeking out convenience and value from their transaction · Legislation are being passed frequently in USA · Technological changes do bring about significant transition and that is being experienced in athletic shoes industry as well European business environment inclusive of reasonably favorable · Competitors which copy company's business model (high value branded product manufactured at a low cost) · Reebok's strong presence with 204 factory direct stores · Adidas-puma. . Moreover. It was recently ranked as the world’s 31st most valuable brand in terms of its brand value – USD10. and political instability · Labor and political unrest in the suppliers countries · Cost orientated customers vs. golf being a very elite game. This might have probably been true had Nike chosen the traditional path to building its equity in the golfing arena. company’s higher-end market Branding and Celebrity Endorsements Nike is known around the world for being one of the most iconic brands. But Nike chose to associate with the best golfer in the world and have him endorse the brand. top European competitor · The impact of foreign currency fluctuation and interest rates. Nike is also very well known for another aspect and that is its consistent use of celebrities to endorse the brand. Nike has remained the leader in its category. Nike has emerged highly successful in golf. equipment and accessories. In fact one of the most successful collaborations between a brand and a celebrity is that of Nike and Michael Jordan. Nike had no experience in golf before. Nike pulled off a very similar coup in the sports industry when it joined forces with the ace golfer Tiger Woods to enter the golf category with its apparel. This channel now being used by many brands around the world raises some crucial questions about ways brands are built and also about the impact such collaborations have on branding.8 billion – by the annual Business Week’s global top 100 brand survey. Is associating with a leading celebrity the easiest way to build a brand? Should celebrity endorsement be the principal channel of brand communications? How can brands decide on potential brand endorsers? What are the advantages and disadvantages of such endorsements? Is celebrity endorsement always beneficial to the brand? How does a celebrity enhances a brand image? Answers to these and many other related questions are the content of this article. In spite of many market maneuvers (such as the recent merger between Adidas and Reebok). it was generally considered that a brand like Nike would not be very successful. So successful was the collaboration that Nike and Jordan launched a new brand variant called the Air Jordan line of sport shoes. As is known today.
the credibility factor of the celebrity greatly influences the acceptance with consumers. Nike has established a very strong brand identity and a brand personality over the years. • Attractiveness of the celebrity: This principle states that an attractive endorser will have a positive impact on the endorsement. What Nike did was to use celebrity endorsement as one of the main channels of communicating its brand to a highly focused set of customers. The next section addresses this issue. and lifestyle. • • . there is hardly any hugely successful collaboration as those of Nike’s. celebrity endorsement was thought to provide a distinct differentiation. personality. many aspiring brands in Asia have jumped on to this celebrity endorsement bandwagon. stature in the society or expertise in the field to the brand. It has been proved that an endorser that appears attractive as defined above has a grater chance of enhancing the memory of the brand that he/she endorses. Nike’s association with Tiger Woods was one of the parts of an entire branding process that Nike has been practicing consistently. As celebrity endorsements act as an external cue that enable consumers to sift through the tremendous brand clutter in the market. Contrary to this. Credibility is defined here as the celebrities’ perceived expertise and trustworthiness. When a brand signs on a celebrity. nothing can be far from the truth. the personal credibility of the celebrity is crucial. Essentials of celebrity endorsements Even though to an observer it may seem that Nike’s success is totally based on Tiger Wood’s association with the brand. athletic competence. and lifestyle. Before any brand signs on a celebrity. But over the years. Even though endorsements have taken on a quasi-industry stature. There are many reasons for such a happening. Credibility of the celebrity: This principle states that for any brand-celebrity collaboration to be successful. So. most of the brands in Asia that have used celebrity endorsements have used it as the main brand building tool. Meaning transfer between the celebrity and the brand: This principle states that the success of the brand-celebrity collaboration heavily depends on the compatibility between the brand and the celebrity in terms of identity.Celebrity Endorsements – A brief introduction Endorsement is a channel of brand communication in which a celebrity acts as the brand’s spokesperson and certifies the brand’s claim and position by extending his/her personality. regional and international brands. The endorser should be attractive to the target audience in certain aspects like physical appearance. positioning in the market vis-à-vis competitors. intellectual capabilities. these are some of the compatibility factors that have to exist for the brand to leverage the maximum from that collaboration. In a market with a very high proliferation of local. they should consider three main aspects. As a brand. popularity.
companies should be on the constant lookout for emerging celebrities who show some promise and potential and sign them on in their formative years if possible to ensure a win–win situation. have a positive image in the society. practically it might be difficult to find celebrities that satisfy all these three conditions. Selecting unique endorsers: Companies should try to bring on board those celebrities who do not endorse competitors’ products or other quite different products. Celebrity endorsements – Do’s and Dont’s All brands must be aware of some of the important aspects of celebrity branding as discussed below: • Consistency and long-term commitment: As with branding. More importantly. • • • • • • . companies should ensure a match between the brand being endorsed and the endorser so that the endorsements are able to strongly influence the thought processes of consumers and create a positive perception of the brand. companies should view celebrity endorsements as long-term strategic decisions affecting the brand. Three prerequisites to selecting celebrities: Before signing on celebrities to endorse their brands. one obvious result could be the potential overshadowing of the brand by the celebrity. conduct and public image of the endorser continuously to minimize any potential negative publicity. companies can selectively emphasize one factor over the other. companies need to ensure that they meet three basic prerequisites. so that there is a clear transfer of personality and identity between the endorser and the brand. One of the most effective ways to do this is to ensure that celebrity endorsement contracts are effectively drafted. Depending on the nature of the brand and the kind of product being used. companies should try to maintain consistency between the endorser and the brand to establish a strong personality and identity. Constant monitoring: Companies should monitor the behavior. and be perceived as having the necessary knowledge (although it might be difficult for a celebrity to meet all three prerequisites) Celebrity–brand match: Consistent with the principles discussed earlier. keeping in mind any such negative events. namely the endorser should be attractive.Even though these three major principles must be adhered to by companies. Companies should ensure that this does not happen by formulating advertising collaterals and other communications. Timing: As celebrities command a high price tag. Brand over endorser: When celebrities are used to endorse brands.
earned 14 cents an hour making Nike running shoes. The article also claimed that Sadisah would have to work for more than 44. 10 hours a day for a month. Celebrity ROI: Even though it is challenging to measure the effects of celebrity endorsements on companies’ brands. Social Responsibility: The Nike Story An odd couple was featured in the 1992 edition of Harpers Magazine. then channels such as celebrity endorsements can provide the cutting edge as it did for Nike. Over the next five years Nike experienced a remarkable public backlash. companies should have a system combining quantitative and qualitative measures to measure the overall effect of celebrity endorsements on their brands.000 years to earn as much as Jordan had recouped from his Nike endorsement deal. the article revealed. • • These guidelines are intended to provide companies a useful framework that they can use while deciding on the celebrities to endorse their brand. After working six days a week. Critical reports appeared . As branding evolves as a discipline companies must be extra cautious to utilize every possible channel of communication rather than just a celebrity endorsement. Trademark and legal contracts: Companies should ensure that the celebrities they hire are on proper legal terms so that they don’t endorse competitors’ products in the same product category. The other was a young Indonesian worker called Sadisah. The darkest chapter in Nike's history and a new era in brand management had begun. Sadisah. One was a sports phenomenon called Michael Jordan. thereby creating confusion in the minds of the consumers. rather it is one part of the communication mix that falls under the broader category of sponsorship marketing. he earned enough money to buy a single Nike shoe at its US retail price.• Celebrity endorsement is just a channel: Companies must realize that having a celebrity endorsing a brand is not a goal in itself. Conclusion The important aspect that companies must note is that celebrity endorsements cannot replace the comprehensive brand building processes. When all other steps in the branding process is followed and implemented.
Initially. have to produce an Operating and Financial Review that includes CSR material. Nike also began to work with many of its most vehement critics. .in publications as diverse as The Economist and Rolling Stone and charities such as Oxfam and Christian Aid joined in. Then there was Nike's remarkably focused brand architecture and identity: everything it made was branded with the iconic Swoosh. students protested against Nike's links with slave labour working conditions and forced their sports teams to sever lucrative sponsorship deals with the now infamous sportswear brand.' was his response. For decades. Nike had tendered almost all of its production to factories in developing markets. the opening of NikeTown retail stores were turned into tense. For those who believe brands can acquit themselves with decency and transparency in the global economy. often violent. While these elements were strategic advantages in developing the brand. Michael Moore raised the issue of underage workers with a clearly uncomfortable Phil Knight. The internet was ablaze with anti-Nike sites. former strengths became vulnerabilities. they were also the reasons activists and journalists singled it out. Why was Nike so heavily criticised? The answer was its brand. but so had almost every other big clothing company. Around the world. Nike was the clear market leader and the company with the highest levels of global brand awareness. On US university campuses. As then-chief executive Phil Knight observed in 1998. by law. A huge CSR department was set up. Knight announced a radical six-point plan which would see Nike introduce independent monitoring. 'Tell it to the United Nations. reporting directly to Knight. For UK companies that. forced overtime and arbitrary abuse'. In the 1997 documentary The Big One. it should be required reading. In 1998. It stands as a remarkable document because for the first time a global clothing brand revealed all of its production locations. many featuring cleverly altered versions of Nike's identity such as the 'Swooshtika' and slogans such as 'Nike: Just Don't'. It also had an influential and well-known founder in Phil Knight. standoffs between local police and protesters. 2005 saw the publication of Nike's second Corporate Responsibility Report. the brand had become 'synonymous with slave wages. the sixth-richest man in the US. In the new era of brand activism. the Nike response was a textbook example of how not to handle corporate social responsibility (CSR). the status of labour policies in those locations and the systematic manner in which it intended to improve its suppliers' employment practices. it is a work of great importance. raise minimum working age requirements and set formal targets for improving conditions for workers in contract factories overseas.
Nike's 108-page report for its fiscal year 2004 encompasses an audit of about 630. 44% B. . The remaining 16% of factories were ungraded because of insufficient information. focusing on factory processes and policies and workers' views. such as employing underage workers. 17% attained a C Grade and 8% were rated D. . paying less than a legal wage or providing dangerous working conditions. . 15% were rated A.. indicating serious failures.Of the factories audited during 2004. . .. NIKE'S CORPORATE RESPONSIBILITY REPORT.The company has created the M-Audit system to give a clearer view of working conditions in such factories.30 SECONDS ON.Local Nike-trained auditors spend an average of 48 hours carrying out each M-Audit. Each site is then awarded a grade from A to D depending on its overall performance.000 workers in more than 700 contract factories.