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MANAGEMFNT

Applications
Marketing
Does Marketing Create or Marketing
Satisfy Needs? Shifts in Marketing
Marketing has often been
defined in terms of satisfying
tomers' needs and wants, cus_ Consjder the three kev forces driving the new
Critics, however, marntain marketing
marketing goes beyond that realities. How are tnev tikety
that and;r"r,;;;;;ds ano to in lhulrtrruZ Wf-lrt
that did not exisr before. They wants other major trends or iorces "f.,ungl
I

sumers to spend more money

feel ;;;; con_
might unJct mart"etllgz
";""urage
than they shoutJ on gooOs
and services they do not really need.

Excellence
l:ut:rgd 12 TV spots in alt, subily challenged a generation
of athietjc enthusiasts to chase
their goali. lt was a natu_
Nike ral manrfestation of Nikes ,r,l,ro"
oi"#ir emiowerment
Nike hit the ground running through sports.
in 1962. Originally known
Blue Bibbon Sports, the
company fo"r"LO on providing
as As Nike began expanding overseas, the
high quality running shoes pany learned that its com_
designeO for ,tf-tf"r"" by U.S._style"ads *-urJ"ru"n
retes. Founder phirip xnisht ath_ aggressive in Eurooe, Asia, ' as too
bel;v;; ;;h_;;;h.shoes for Nike realized rt had and a";th America.
,,authenticate,"lis
could be manufactured ,t
,r:lnuo prices if .to
other countries, so it focused OranO in
"o,iputit]ue
lfl iJ,ffi 9"r,,"#;::??,Nike,scommii,Jn"t"too".,snins bait outside the United
;"';;;;"r;alred foot_
cult foJrowing amons u st"J"""1t;tJletes helped build a
States)
sponsor of youth leaques,
;;;;"''u1,,u" u, ,
";; ano nJtiJnat teams.
Iocal ctuOs,
Nike believed in a ,,pyramid However. for Nike to ouito
oi iinrun"",, where the autnentlJiv-a,ionn",," soccer
preferences of a audience, consumers had
small to see professional
.^ "'
athletes us_
enced the proouci ing its product, especially
athletes who;";
marketing campaions""ooo"I;;; ;,i:",::.r,[y;
ifl3,"1J.,"# Nike's big break came in
have always teatureJ Jcclmprisrreo 1994 when the Brazilian
For example, runner Steve pi"i""tj*ihe team (the only national team^for
111"1"r., wnicn nui
fVif<e uny ruut
riJl sookesperson, had an i""""r""t com- sponsorship) won the Wortd
111v! Cup. Th"i""r;; ;;sformed
matched Nike's spirit. that Nike's rnternational imaoe
"liiiude rrom a J"rrolny inro a
up.then _rookie emotjon, "r"rn",
arbgianc;, J# ioentri-
.,",nI",,?uj,")I:^:g"o suard M jchaer Sill'1r,il"r.,:pj::::1,?_1
cation,
a s a s p o k s pie,. ;,
: ; ;; ; ; ;;'. ; ; # .ij'_"# Nikes newalliance.with soccer helped propel l
e
: i9, "
!comer, .
brand's gromh internationally the
but he personified superior tn 2003,
bet paid off-the Arr Jordan O"iilrrrr"". Nike,s surpassed U.S. revenues revenues
"";;J
flew off the shelves and
i,r" ,fiO"",."rO.uti .hou" lol.the iiot'tir","Jio in 2oot,
Nike acquired Umbro, a British
revenues ,r,, ,rr"'inrn
Iootwear apparel, and
,uk"i oi,rlcl"nrerutuo
miltion jn rhe first $1OO
es on" ,;;;;, srated,
vea1alo19 ,

"Few marketers have .

so retiably
N ike th e lJI !, 00,,",," iili! il31', #;,:H::Hi.ffiX?
and sign athietes who transcerO O""n u[rl i"o ioentirv teams around the world and
boosted Nikes international
great lf,Lil. to such presence and authenticjty,
effect,,, "0"r,, in soccer, fne c"ompany sotO
Umbro in 2O12for $225
,,,,"1!-,:?ju;^)p^1fo the first ads in its $20 miilion.
"Just Do tt,'ad campaigr. i.L;;;;;, ;il.;,,#i5; miiljon ln recent years, Nike,s internatjonal
focused on emerging markets. efforts have been
During the 20og Summer
 DEFINING MARKETING FOR THE NEW
Olympics in Beijing, Nike honed in on China and devel-
oped an aggressive marketing strategy that countered
Adidas's sponsorship of the Olympic Games. Nike re-
ceived special permission from the lnternational Olympic
Committee to run Nike ads featuring Olympic athletes dur-
ing the games. ln addition, Nike sponsored several teams
arketing and athletes, including most of the Chinese teams. This
r? What aggressive sponsorship strategy helped ignite sales in the
Asian region by 15 percent.
ln addition to expanding overseas, Nike has success-
fully expanded its brand into many sports and athletic cat-
egories, including footwear, apparel, and equipment. Nike
continues to partner with high-profile and influentid athletes,
coaches, teams, and leagues to build credibility in these
categories. For example, Nlke aligned with tennis stars
Maria Sharapova, Roger Federer, and Rafael Nadal to push
its line of tennis clothing and gear. Some called the famous
2008 Wimbledon match between Roger Federer and Rafael
Nadal-both dressed in swooshes {rom head to toe-a five-
hour Nike commercial valued at $1 0.6 million.
)ration To promote its line of basketball shoes and apparel,
natu- Nike has paftnered with basketball superstars such as Kobe
rrment Bryant and LeBron James. ln golf, Nike's swoosh appears
on many golfers but most famously on Tiger Woods. ln the
com- years since Nike first parlnered with Woods, Nike Golf has
IS tOO grown into a $523 million business and literally changed the
rerica. way golfers dress and play today. Tiger's powerful influence
nd in on the game and his Nike-emblazoned style has turned
foot- the greens at the majors into "golf's fashion runway."
)asa Nike is the biggest sponsor of athletes in the world
eams. and plans to spend more than $S Oittion in athletic
ioccer endorsements between 2012 and 2017. The com-
pany also has a history of standing by its athletes,
such as Tiger Woods and Kobe Bryant, even as they
azilian struggle with personal problems. lt severed its rela-
ry real tionship with Lance Armstrong in 2012, however, after
rrmed strong evidence showed that the cyclist doped during
into a his time as an athlete and while competing during all
ientifi- Tour de Frances. Nike released a statement explain-
rel the ing, "Nike does not condone the use of illegal perfor-
,CNUES
mance enhancing drugs in any manner." Prior to the
2007, scandal, the company had helped develop Armstrong's
'elated
LIVESTRONG campaign to raise funds for cancer. lt
made designed, manufactured, and sold more than 80 million
ioccer yellow LIVESTRONG bracelets, netting $500 million for
ational the Lance Armstrong Foundation.
y sold While Nike's athletic endorsements help inspire and
reach consumers, its most recent innovations in tech-
nology have resulted in more loyal and emotionally
REALITIES CHAPTER ] 29
connected consumers, For example, Nike's lead in the
running category has grown to 60 percent market share
thanks to its revolutionary running application and com-
munity called Nike+ (plus). Nike+ allows runners to
engage in the ultimate running experience by seeing
their real-time pace, distance, and route and by giv-
ing them coaching tips and online sharing capabilities.
Nike expanded Nike+ to focus on key growth areas like
basketball and exercise and recently launched Nike+
Basketball, Nike+ Kinect, and Nike+Fuelband, a brace-
let/app that tracks daily activities.
Like many companies, Nike is trying to make its com-
pany and products more eco-friendly. However, unlike
many companies, it does not promote these efforts. One
brand consultant explained, "Nike has always been about
winning. How is sustainability relevant to its brand?" Nike
executives agree that promoting an eco-friendly message
would distract from its slick high-tech image, so efforts like
recycling old shoes into new shoes are kept quiet.
As a result of its successful expansion across geo-
graphic markets and product categories, Nike is the top
athletic apparel and footwear manufacturer in the world.
ln 2O14, revenues exceeded $27 billion, and Nike domi-
nated the athletic footwear market with 31 percent market
share globally and 50 percent market share in the United
States. Swooshes abound on everything from wrist-
watches to skateboards to swimming caps. The firm's
long-term strategy, however, is focused on running, bas-
ketball, football/soccer, men's training, women's training,
and action sports.
1. What are the pros, cons, and risks associated with
Nike's core marketing strategY?
2. lf you were Adidas, how would you compete with Nike?
Sources: Justln Ewers and T m Smart, "A Designer Swooshes ln," U.S.
News & Warld Repaft, January 26, 2OO4, p. I 2; "Corporate Media Executive
of the Year," Delaney Rep1ft, January 1 2, 2oO4, p. 1, Barbara Lippert,
"Game Changers: lnside the Three Greatest Ad Campalgns of the Past
Three Decades," ,4dtveek, November 17 , 2OOB, "1 0 Top Nontraditional
Campaigns," Adveftising Age, December 22' 2Aa3' p. 24; Chris Zook and
James Allen. 'Growth Outside the Core," Harvard Business Revlew, December
2003, p. 66; Jeremy IVlullman, "NIKE; What Slowdown? Swoosh Rides
Games to New High," Advertising Age, October 20, 2008, p 34; Alllson
Kaplan, 'Look Just Like Tiger (unt I You Swing)," lmerlca s lntelligence Wtre'
August 9, 2009; Reena Jana and Burt He m, "Nike Goes Green, Very
Quietly," Euslressryeek, June22,2OO9; Emily Jane Fox and Chris lsidore,
"Nlke Ends Contracts w th Armstrong," CNNMoney cam, Odober 17, 2A1 2'
Nike Annua Report 201 2.
30 pA[!T"1 C"] {d n ffi H ST A N ffi I t't {:l ilil r\ [t ii{ il"
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Excellence Since its launch, Google has expanded far beyond

its search capabilities with numerous other products, ap-
plications, and tools that benefit both consumers and
Google businesses. The goal behind each product was to help
ln 1998, two Stanford University PhD students, Larry users find information they need and to help them get
Page and Sergey Brin, founded a search engine company things done better, faster, and easier than before. Today,
and named it Google. The name plays on the number Google's wide range of products and seryices fall into the
googol-1 followed by 1OO zeroes-and refers to the following categories: Web (Web Search, iGoogle, Google
massive quantity of data available online that the com- Chrome), Mobile (Mobile, Search for Mobile, Maps for
pany helps users find, Google's corporate mission is "To Mobile), Media (Picasa, Google Play, Youtube.com, whtch
organize the world's information and make it universally Google acquired in 2006 for $] .65 billion), Geo (Earth,
accessible and useful." As such, the company focuses Maps), Home & Office (Docs, Gmail, Calendar), Social
first and foremost on creating the perfect search engine. (Google+, Blogge|, Specialized Search (Patents, Finance,
Google search works because it uses the millions of links Scholarly Papers), and Innovation.
on other Web sites to help determine which sites offer the As the world becomes more mobile, Google is bet-
most valuable content. The company has become the ting big in the mobile category. ln 2008, Google launched
worldwide market leader for search engines through its Android, a mobile operating system that went head to
strategic busrness focus and constant product innovation. head with Apple's iPhone. The biggest differentiation be-
Google creates and distributes its products for free, tween the two was that Android was free, open sourced,
which in turn has attracted a host of online advertisers and backed by a multimillion-dollar investment. That
seeking targeted advertising space, About 96 percent of meant Google wanted its padners to help build and design
its revenues come from online advertising, which means Android over the years. The investment paid off, and by
that creating new advertising space is critical to the 2010, Android became the number-one mobile operating
company's growth. Google sells advertising space on its system in the market.
search pages through a program called AdWords, which As Google expanded into mobile technology, it quickly
is linked to specific keywords. Hundreds of thousands became the leader in mobile advertising with 75 percent
of companies use AdWords by buying "search ads," market share for search ads and approximately 50 percent
little text-based boxes shown alongside relevant search market share for all mobile ads. ln 2012, Google entered
results that advertisers pay for only when users click on the mobile device category when it purchased Motorola
them. Google also runs an advertising program called and launched the Nexus 7, a sleek tablet that competed di-
AdSense, which allows any Web site to display targeted rectly with the iPad and Kindle. As Google looks toward the
Google ads relevant to the content of its site. Web site future, the company wants to offer the ultimate mobile solu-
publishers earn money every time their visitors click on tion-Google mobile devices along with mobile services so
these ads. users can use all Google all the time.
In addition to offering prime online real estate for Google's ultimate goal is to reach as many people
advertisers, Google adds value by providing tools so as possible on the Web whether by PC or by mobile
businesses can better target their ads and understand devices. The more users on the Web, the more advedising
the effectiveness of their marketing. Google Analytics, for Google can sell. Google's new products not only accom
example, is free to Google's advertisers and provides a plish this goal but also make the Web a more personalized
custom reporl detailing how lnternet users found the site, experience,
what ads they saw and/or clicked on, how they behaved Google has enjoyed great success as a company
on the site, and hOw much traffic was generated. and a brand in its short lifetime. From the beginning, it
With its ability to deploy data that enable up-to- has strived to be one of the "good guys" in the corporate
the-minute improvements in a Web marketing program, world, supporling a touchy-feely work environment, strong
Google supports a style of marketing in which the adver- ethics, and a famous founding credo: "Don't be evil."
tising resources and budget can be constantly monitored Google currently holds a 67 percent market share for core
and optimized. Google calls this approach "marketing searches in the United States, significantly greater than
asset management," implying that advertising should be Microsoft's 17 percent and Yahoo!'s 15 percent market
managed like assets in a portfolio depending on the mar- shares. Globally, Google holds a more dominant lead,
ket conditions. Rather than following a marketing plan with 85 percent market share over Yahoo!'s B percent
developed months in advance, companies use the real- and Microsoft's 3 percent. Google's revenues topped $59
time data collected on their campaigns to optimize the billion in 2013, and the company was ranked the second
campaign's effectiveness and be more responsive to the most powerful brand in the world with a brand value of
market. $107 billion. ln addition, Google's $400 billion market
 DEFINING MARKETING FOR THE NEW REALITIES CHAPTER i 31

rlirlrzation in 2O14 edged out companies like Walmaft Sources: www.google.comi Catherine P Taylor, "Goog e Flex," Adilleek,
)yond r1
March 20, 2006, cover story; Richard Karp nsk, "Keywords, Analytlcs
j, ap- l I Microsoft to become the second most valuable com- Help Def ine User Lifet me Va u e," Adveftising Age, Apr I 24, 2006' p. S2'
i and 1 rry in the world.
, Danny Gorog, "survivai Guide," Herald Sun, March 29, 2006; Ju e Sch osser,
help "Google," Faftune, Oclober 31 , 2005, pp. 1 68 69; Jefferson Graham'
"Google's Proflt Sails Past Expectat ons ," USA Taday, October 21 , 2005;
n get Dan Frommer,"Google's Android lvlobile Platform ls Getting Huge,'
cday, With a porlfolio as diverse as Google's, what are the Ativeftising Age, October B, 2009; Rita Chang, "Goog e Set for Richer
o the company's core brand values? Advert sing on Smartphones." Adveftising Age, October 5, 2009; 'comscore
cogle Releases September 201 2 U.S. Search Eng ne Rank ngs," comScore.com,
What's next for Google? ls the company right to put October I 1 , 2012t C ake Cain Mi ler, "As Google Changes, lts Revenue
s for
so much focus on Mobile? Keeps Rising," TheNewYarkTintes, Juy 19, 2012: Roben Farzad, "Googe
,vhich
at $4OO B llon: A New No. 2 in Market Cap," Bla1nberg Businessweek'
:adh, February 12,2144.
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