Todd Doyle, Matthew Whitlock
November 29, 2007
Principles of Marketing Management
Professor Noorian
The Nike Advertising Campaign
Nike Inc. was started by Phil Knight. The former University of Oregon distance
runner is now the CEO of a $12.3 billion sports company. Knight and Nike started a
sports business revolution in the 1970s by changing old fashioned tennis shoes into
highly specialized equipment and promoting them as symbols of athletic success. Along
the way, Nike has endorsed some of the biggest names in sports history to promote their
products. Some of these names include; Michael Jordan, Tiger Woods, Andre Agassi,
Jerry Rice, Ken Griffey Jr., and Lebron James, just to name a few. The Nike “Swoosh”
logo has come to symbolize not just sports culture, but street culture, as the appeal of star
athletes who endorse Nike has carried onto city streets. All of this has made Nike the #1
Manufacturer and Marketer of athletic footwear and apparel.
When people think Nike, they think basketball. Nike is the leading seller in
basketball apparel. This includes Nike sneakers, shorts, headbands, wristbands, T-shirts,
socks, etc. Nike has used athletes such as Michael Jordan, Kobe Bryant, and Lebron
James to promote and advertise their equipment. Young kids around the world grow up
imitating their favorite basketball players, whether it’s imitating their moves, fighting to
wear their jersey numbers, or wearing the same basketball sneakers as them. Recently,
Nike Basketball has used Lebron James as their main man to promote their equipment.
The newest advertisements feature Lebron James in commercials playing “The Lebrons.”
“The Lebrons” is a family that consists of the old wise man, the afro sporting hipster,
current Lebron, and a young teenage Lebron. All of the roles are played by James. Nike
is successfully using his success and appeal to advertise their basketball sneakers.
Nike Football has used great athletes such as Jerry Rice, Deion Sanders, and Bo
Jackson to advertise their equipment, footwear, apparel, and accessories. This football
season Nike has come out with the new slogan “Leave Nothing” to promote the Nike
Football products. A recent commercial showcases one of the NFL’s top linebackers,
Shawn Merriman, and one of the NFL’s top running backs in Stephen Jackson. The
commercial shows Shawn Merriman breaking through blocks and making crunching
tackles on running backs and quarterbacks. At the end of Shawn Merriman’s segment it
has him sacking the quarterback and the ball is fumbled and picked up by Stephen
Jackson. It then focuses on Stephen Jackson running with the ball, eluding defenders and
breaking through tackles. At the end of the commercial, Jackson is reaching for the end
zone and just before he gets there, the commercial goes black and it says, “Leave
Nothing.”
In Nike’s pursuit to dominate sports apparel, they decide to attack the soccer
market. They do this by advertising both domestically and internationally during one of
the biggest events in the world, The FIFA World Cup. In the 2006 World Cup, Nike
came out with their “Joga Bonito” commercials. When translated to English, Joga Bonito
means “play beautiful.” An example of this was when they advertised the World Player
of the Year, Ronaldinho. The advertisement featured him playing soccer as a little kid
and him playing presently. It shows him scoring goals and the celebrations he made as a
little kid and the celebrations he makes right now. Besides goal scoring, he also is shown
making fancy moves around defenders in both stages of his life. To conclude the
commercial, Ronaldinho is all alone next to the goal (after eluding all the defenders), so
he kneels down on the ground and hits the ball in with his head.
Nike has emerged on the golf scene as well. Golfers now have a choice of playing
golf with Nike Golf Clubs, hats, gloves, balls, shoes, etc. And since the emergence of
Tiger Woods, one of the greatest athletes in the history of sports, people have been
purchasing these Nike Golf products. This is because Nike endorsed Tiger Woods and
therefore uses him to promote their Golf attire. Television ratings for golf are
substantially higher when Tiger Woods is playing in a tournament. People want to see
him play, and when they do, they see him wearing nothing but Nike products.
A very memorable Nike advertisement came with the help of Tiger Woods. Tiger
was out on a golf course by himself when he picked up a golf ball and started bouncing it
off of his sand wedge. This juggling act went on for thirty seconds as he juggled the ball
with the club behind his back and then through his legs. He then hit the ball up higher
into the air, took a full swing, and before the ball hit the ground he struck the ball and hit
it straight down the fairway.
Nike has also come out with the new Nike Dri-Fit Technology. The Dri-FIT
fabric helps keep you comfortable and dry by moving moisture from your skin to the
outside for rapid evaporation. Basketball game shorts, golf attire, and baseball jerseys are
available with the Nike Dri-Fit Technology. In addition, they also have the Nike ThermaFit Technology. This fabric insulates your body by trapping tiny pockets of air, keeping
you warm and comfortable without bulk.
Through Nike.com, you can not only purchase their wide array of products, but
you can also customize apparel. For example, you can customize your own duffel bag
with your choice of color, your name, number, and more. Also, you can make a statement
with graphics, icons, and your personal motto and add it onto a shirt. If you want to
design your own sneaker, you can do that as well by designing your own Nike Shox
sneaker. You can choose the colors. For example, the base color, accent color, and
swoosh color. After that, you can choose to personalize the sneaker by adding your name,
number, team name/nickname, motto, etc. If for some reason, none of the Nike sneakers
intrigue you, you can always design a pair to your liking.
When Nike was first founded it was primarily a running shoe company. This
worked well for them for many years. By the early 1980s they had supplanted Adidas as
the number one running shoe brand in the United States of America. However, as the
decade wore on the national interest in distance running was diminishing. Executives
were unsure of how to battle against this drop in interest until they realized they were
neglecting a substantial portion of the athletic shoe market. They realized that they should
be marketing shoes for all types of athletic events, instead of just concentrating almost
exclusively on running shoes.
So while they had the plan in place of extending their product lines to include all
sports they were still missing the advertising plan. Luckily they happened to stumble
upon perhaps the greatest advertising athlete of all time in Michael Jordan. Nike signed
Jordan in 1985 and immediately began producing Air Jordan sneakers. Together Nike
and Jordan helped launch each others image and corporate success into a new level.
Most people will agree that Michael Jordan is the greatest basketball player of all
time. What they fail to realize is that before he was signed to Nike, Jordan was looked at
as another very good NBA player. He was not even the number one draft pick coming out
of college. However once he was in Nike ads practically twenty four hours a day seven
days a week, his image got a nice little boost, both as an athlete and as a pitchman for
products. He had put up very impressive numbers in the NBA but so had a lot of other
guys. What really separated Michael Jordan was his ability to dominate the corporate
world as well as the basketball world.
Nike did help out Michael Jordan’s career quite a bit but it is not as if Jordan hurt
Nike’s. With Jordan showcasing their products Nike now had a whole new market to get
their products to. Kids that had absolutely no interest in running now had to have Nike
shoes since they saw Jordan with them on. Clearly this was a very successful advertising
relationship for all parties involved.
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
famous film director Spike Lee. These ads were aired during prime time television hours
and were solely targeted for young school children. These ads not only displayed Nike
sneakers but they also 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.
Jordan was a figure that children adored, looked up to and tried to the best of their ability
to emulate. Nike used this to display a great positive image for their company and to sell
their products. Nike wanted to be a bold marketer; they aimed for the top promotional
sports and developed a pioneering strategy for their industry. Nike continued to promote
Michael Jordan through their ads and Jordan continued to promote their products.
The introduction of the Air Jordan line helped to create new lines of basketball
shoes, including the Air Force and Air Flight lines of basketball shoes and apparel. Also,
a new innovative technology was a layer of air cushioning located on the bottom of their
shoes. This was really a differential factor for Nike when compared with other shoe
companies. Nike's sales jumped to over $3 Billion in total. Their Air Jordan shoe was the
best selling and most popular basketball shoe on the market. Nike then wanted to use
Jordan’s appeal to market their products to people of all ages. They began to produce
sneaker sizes from infant on up. Nike created commercials that glorified Jordan and
displayed his humbleness. In these commercials, Jordan was shown doing things that
would appeal to young and old people alike. In one commercial, Jordan was playing
basketball against Looney Tunes Characters such as Bugs Bunny, Daffy Duck, and the
Tasmanian Devil. This commercial appealed to the younger generations because of their
interest in cartoons. For an older generation, Nike created a commercial where Jordan is
shooting on a dimmed basketball court and a booming voice comes in and says, "What if
my name weren't in lights? Can you imagine that? I can?" This commercial was meant to
market Jordan as an average human being and not the untouchable person that he is
sometimes projected to be. This was aimed to interest the average person in Nike’s
basketball sneakers.
As much as Nike markets Michael Jordan, Michael Jordan markets himself and
the products that he represents. Jordan is always a well-dressed, well-mannered, good
natured and respectable person. It is a welcomed change from the tattoo covered "bad
boys" that other companies have for their spokesman. All of these things draw people to
Michael Jordan as a person. In addition to that, his remarkable talent level makes him a
worldwide icon. Michael Jordan plays at a competitive level of professional athletics that
has almost never been matched in any professional sport. This talent alone sells, but when
the talent is selling a product, the product is going to sell even better. The more Jordan
played on national television (which was very often) the more Nike was marketed. He
was and still is a walking, talking billboard that just happens to be endorsing Nike
products. Jordan can get as much air time and publicity as he desires just due to the sheer
fact that the demand for him and his products is so great. Everyone wants to see what
Jordan is wearing and doing at all times. To the target market, Jordan is everything they
hope to be and by buying the product he endorses the consumer feels that they can come
that much closer to their hero.
Here is a recent sample of Nike’s Quarterly Income Statement:
Quarter
Ending
Aug 07
Quarter
Ending
May 07
Quarter
Ending
Feb 07
Quarter
Ending
Nov 06
Quarter
Ending
Aug 06
Revenue
4,655.1
4,383.2
3,926.9
3,821.7
4,194.1
Cost of Goods Sold
2,568.1
2,464.2
2,191.7
2,164.6
2,344.9
Gross Profit
2,087.0
1,919.0
1,735.2
1,657.1
1,849.2
Gross Profit
Margin
44.8%
43.8%
44.2%
43.4%
44.1%
SG&A Expense
1,363.1
1,191.0
1,196.4
1,155.4
1,215.7
Depreciation &
Amortization
71.6
81.0
46.9
68.3
74.0
Operating Income
652.3
647.0
491.9
433.4
559.5
Operating Margin
14.0%
14.8%
12.5%
11.3%
13.3%
18.0
11.8
26.1
13.9
16.3
Nonoperating
Income
--
--
--
--
--
Income Before
Taxes
670.3
658.8
518.0
447.3
575.8
Income Taxes
100.6
220.9
167.2
121.7
198.6
Net Income After
Taxes
569.7
437.9
350.8
325.6
377.2
Continuing
Operations
569.7
437.9
350.8
325.6
377.2
--
--
--
--
--
Total Operations
569.7
437.9
350.8
325.6
377.2
Total Net Income
569.7
437.9
350.8
325.6
377.2
Net Profit Margin
12.2%
10.0%
8.9%
8.5%
9.0%
Diluted EPS from
Total Net Income
($)
1.12
0.86
0.69
0.64
0.74
Dividends per
Share
0.19
0.19
0.19
0.16
0.16
Nonoperating
Expenses
Discontinued
Operations
Here is a recent sample of Nike’s Annual Income Statement:
May 07
May 06
May 05
16,325.9
14,954.9
13,739.7
Cost of Goods Sold
9,165.4
8,367.9
7,624.3
Gross Profit
7,160.5
6,587.0
6,115.4
43.9%
44.0%
44.5%
4,758.5
4,186.9
3,934.0
270.2
290.9
287.7
Operating Income
2,131.8
2,109.2
1,893.7
Operating Margin
13.1%
14.1%
13.8%
Revenue
Gross Profit Margin
SG&A Expense
Depreciation & Amortization
68.1
32.4
(29.1)
--
--
4.8
2,199.9
2,141.6
1,859.8
708.4
749.6
648.2
Net Income After Taxes
1,491.5
1,392.0
1,211.6
Continuing Operations
1,491.5
1,392.0
1,211.6
--
--
--
Total Operations
1,491.5
1,392.0
1,211.6
Total Net Income
1,491.5
1,392.0
1,211.6
Net Profit Margin
9.1%
9.3%
8.8%
Diluted EPS from Total Net Income ($)
2.93
2.64
2.24
Dividends per Share
0.68
0.56
0.45
Nonoperating Income
Nonoperating Expenses
Income Before Taxes
Income Taxes
Discontinued Operations
Here’s a sample of Nike’s Income Statement from 1997-98. Using the previous
samples you can compare Nike’s earnings from what it is now and what is was like ten
years ago.
NIKE, Inc.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
Three Months Ended
Nine Months Ended
February 28,
February 28,
__________________
__________________
1998
1997
____
____
1998
1997
____
____
(in thousands, except per
share data)
Revenues
$2,223,995
$2,423,648
$7,245,366
$6,812,608
_________
_________
Costs and expenses:
Costs of sales
4,503,836
4,075,174
Selling and administrative
1,903,338
1,637,569
Interest expense
47,222
38,687
Other (income)/expense, net
27,473
16,210
_________
_________
6,481,869
5,767,640
_________
_________
_________
_________
1,428,849
1,435,427
651,378
577,579
13,167
15,793
7,983
7,716
_________
_________
2,101,377
2,036,515
_________
_________
122,618
387,133
49,500
150,000
_________
_________
Income before income taxes
763,497
1,044,968
Income taxes
296,200
404,900
_________
_________
Net income
467,297 $
640,068
=========
=========
$
73,118
=========
Earnings per share of common stock
1.61 $
2.22
Earnings per share of common stockassuming dilution
1.58 $
2.16
Dividends declared per common share
0.34 $
0.28
$
237,133
$
=========
$
0.25
$
0.82
$
$
0.25
$
0.80
$
$
0.12
$
0.10
$
The Nike swoosh is one of the most famous and easily recognized logos in
advertising history. You could also say the same for Nike’s slogan, “Just Do It.” This
slogan was coined at a 1988 meeting of Nike’s ad agency. Dan Weiden, the head of
Nike’s ad campaign, held a meeting with a group of Nike employees. Weiden, speaking
admiringly of Nike’s can-do attitude, reportedly said, “You Nike guys, you just do it.”
The rest, as they say, is advertising history.
Because Nike creates goods for such a wide range of sports, they have
competition from every sport and sports fashion brand including Adidas, Puma, and
Reebok. After surpassing Adidas in the 1970s, Nike had no direct competitors because
there was no single brand which could compete directly with Nike’s range of sports and
non-sports oriented gear until Reebok came along in the 1980s. Nike’s first big move was
when they cashed in on the jogging and fitness craze of the mid 1980s. During this
period, Nike’s “Just Do It” campaign expanded to attract the female and teenage
consumer in addition to the 18-40 year old male consumer. At this time, Nike was losing
ground to Reebok thanks to the explosion of aerobics. Reebok was sweeping the aerobics
race and gaining huge market share in the sneaker business. Nike responded to this by
releasing a tough, take no prisoners ad campaign that practically shamed people into
exercising, and more importantly, exercising in Nikes. No longer content to be the choice
running shoe of a few thousand marathoners and exercise nuts, Nike wanted to expand its
operation to target every American, regardless of age, gender, or physical fitness level.
They did this by convincing Americans that wearing Nikes for every part of your life was
both smart and cool. It was smart because the shoes are designed for comfort and cool
because everyone else is wearing them. Nike took its own advice and “Just Did It” by
directly attacking Reebok in the sport shoe market.
Nike sells a huge assortment of products, including shoes and apparel for sports
activities including hockey, basketball, combat sports, tennis, soccer, football, golf, cross
training, tennis, skateboarding, baseball, bicycling, volleyball, wrestling, cheer leading,
aquatic activities, auto racing and other athletic and recreational uses. Nike is also well
known in Hip Hop culture as they supply urban fashion clothing. Nike recently teamed
up with Apple Inc. to produce the Nike+ product which monitors a runner's performance
via radio device in the shoe which links to the iPod Nano. Nike produces a wide range of
sports equipment. Their first products were track running shoes, tennis, soccer, wrestling
and basketball shoes. They currently also make jerseys for a wide range of sports
including track & field, football, baseball, tennis, soccer, lacrosse, basketball and cricket.
The most recent additions to their line are the Nike 6.0 and Nike SB shoes, designed for
skateboarding. Nike has also recently introduced cricket shoes, called Air Zoom Yorker,
designed to be 30% lighter than their competitors.
Nike’s products range in price from deals with Wal-Mart for inexpensive, more
affordable sneakers, to very expensive sneakers and other products in various locations.
Right now, the most expensive sneaker you can buy from Nike is the Air Jordan 22’s
which cost $175 compared to the cheapest sneaker, the Air Tiempo Rival which costs
$35. Nike mainly bases its pricing on exclusivity, style, and customization. Studies show
that consumers are willing to pay more for brands that they judge to be superior in
quality, style, and reliability.
Nike owns facilities in Oregon, Tennessee, North Carolina and The Netherlands.
It also operates leased facilities for Niketown and Nike Women retail stores, as well as
over 200 Nike Factory Stores and over 100 sales and administrative offices. This includes
locations in the United States, Europe, the Middle East, Africa, and the Asia Pacific
region. Nike sells its product to more than 25,000 retailers in the U.S., including Nike
outlets and Niketown stores and in about 140 countries in the world. Nike also sells its
products online at Nike.com which allows customers to design shoes and directly deliver
them from the manufacturer to your house. Nike sells its products in international
markets through independent distributors, licensees, and subsidiaries.
Nike’s ads rarely focused on the product itself, but on the person wearing the
product while incorporating jokes, explicit and implicit, to make their point. Nike does
not just sponsor professional athletes. Nike also sponsors events like Hoop It Up (high
school basketball) and The Golden West Invitational (high school track and field),
focusing attention on its products. Nike uses web sites as a promotional tool to cover
these events. Nike also has several websites for individual sports, including
nikebasketball.com, nikefootball.com, and nikegolf.com. The preceding is how Nike uses
the 4 P’s of marketing during their advertising campaigns.
Nike’s campaign has been successful because the timing could not have been
better. Americans were buying exercise equipment at a record pace in the mid 1980s, and
body appeal as well as style, was at an all time high. The ads were often comical,
appealing to the sense of humor in all of us, while imploring consumers to take charge of
their physical fitness. The ads made starting an exercise regime seem like a necessity, and
the way to start exercising was to buy Nike merchandise. More importantly, by owning
Nikes you were instantly a member of a desirable group. The campaign was easily
identifiable. It got to the point that Nike eventually did not even bother to display the
word “Nike” in commercials, the swoosh was enough for everyone to be able to identify
that it was a Nike product.
In conclusion, a strong brand and advertising campaign allows a business to
expand market share, command higher prices and generate more revenue than its
competitors, thus achieving ultimate success. Nike has done this and will continue to do
this by endorsing the next great athlete and continue to come out with the hottest new
products to appeal to all age groups, both male and female. But more importantly, Nike
will take their own advice and “Just Do It.”