Based on the article “Nike's new marketing mojo”

PREPARED FOR

Ms. Aditi Mahmud (AMD), Faculty Member, School of Business, North South University

Introduction

This paper intends to analyze the article titled “Nike's new marketing mojo”1 in order to

understand the shifts in Nike’s years-old cognitive schema regarding the marketing

objectives and tactics, the reasons behind it, and to remark whether the changes have

been beneficial for Nike or not.

Nike’s Background

Nike, Inc. is a globally acclaimed clothing, footwear, sportswear, and equipment supplier

based in the United States. The company is headquartered near Beaverton, Oregon, in

the Portland metropolitan area. It is the world's leading supplier of athletic shoes and

apparel and a major manufacturer of sports equipment.

The company was founded on January 25, 1964 as Blue Ribbon Sports by Bill

Bowerman and Phil Knight, and officially became Nike, Inc. on May 30, 1978. The

company takes its name from Nike, the Greek goddess of victory. The sports

merchandising giant markets its products under its own brand, as well as Nike Golf,

Nike Pro, Nike+, Air Jordan, Nike Skateboarding, and subsidiaries including Cole Haan,

Hurley International, Umbro and Converse.

The article “Nike's new marketing mojo” describes how Nike has been changing its

priorities in terms of core target customers and marketing strategy alternatives, more

specifically the diversification strategies.

1 Published on the February 27, 2012 issue of Fortune.

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Nike’s Digital Revolution: Its Quiet Entrance into the Era of Social Media

Nike, the world’s largest sports company, in fact 30 percent larger than nearest rival

Adidas, has been successfully communicating and selling its products through the

conventional, above-the-line, high-profile marketing tactics including celebrity

endorsement and intensive mass media exposures. Nike’s earlier marketing efforts used

to feature stars like Tiger Woods, signature shoes like the Air Force 1, or send-ups like

Bo Jackson's 'Bo Knows' commercials. Nevertheless, in recent days, Nike has clearly

shifted its broader marketing objectives and tactics to a whole new trajectory of

innovation and specificity, through its latest initiatives including (i) Redefining the

priority between traditional and nontraditional marketing schemes, (ii) Emphasizing on

the Digital Marketing tools, and (iii) Introducing the “Nike +” platform etc.

The core target customer base of Nike, the 17-year-olds reportedly spend 20 percent

more on shoes than the adult customers. This customer group has become less

accessible through the mass media lately with the upsurge of the internet-based

communication tools i.e. social networking, search engines, resource sharing platforms,

web portals, blogs, RSS feeds and so on. Nike’s meticulous edging towards the digital

sports gadgets is less of a mere diversification of the product portfolio, rather it is more

about overhauling the entire corporate marketing scheme.

The changes brought into Nike’s marketing endeavors are discussed below.

Redefining the traditional-nontraditional marketing blend: The most notable

change in Mike’s marketing efforts is its moving away from the traditional

communication options and focusing more on the below-the-line, niche outreach tools.

Evidently this is supported by the expenditure on TV and print coming down by 40

percent. However, the company’s total marketing budget hit a record $2.4 billion in

2010, of which nearly $800 million was spent on ‘nontraditional’ advertising. Clearly,

the reliance on big budget top-down brand campaigns celebrating a single hit is

becoming obsolete in Nike’s book. Hence, their Marketing & Advertising campaigns are

increasingly split between Wieden + Kennedy and a host of other agencies that

specialize in social media and new technologies. In this regard, the Nike CEO Mark

Parker explains that connecting used to be – “Here’s some product, and here’s some

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advertising. We hope you like it.” But connecting in these days have become more of a

dialogue between the innovator, seller and consumer. In order to oblige this very

Cognitive Schema, Nike now spends generously on social media such as Facebook,

Twitter, Sports sites and what not. Now Nike communicates directly with its consumers,

through performance-tracking wristbands, 30-story billboard in Johannesburg that

posts fan headlines from Twitter, or major commercials shot by an Oscar-nominated

director that makes its debut not on primetime television but on Facebook. As a result,

while the biggest audience Nike had on any given day was when 200 million tuned into

the Super Bowl; now, essentially across all its sites and social media communities, it can

hit that figure any day.

Introducing the “Nike +” platform: In 2006, to meet the changing demands of

customers in the mobile era, Nike created the Nike+ platform, a multi-channel, multi-

sensory marriage of Apple and Nike technologies that allows individuals track

performance. This platform allows Nike to have a personal conversation with

customers. It also acts as a laboratory that lets Nike study its customers’ behaviors and

patterns.

Emphasizing on the Digital Marketing tools: The prime concern of the business

analysts regarding Nike’s paradigm shift is that, for the first time in its history, Nike isn’t

wholly reliant on a handful of superstars to move merchandise. Having perfected itself

in the art of big branding, it is now slowly moving on to a world where the consumers

want to be told less and just do more, which is perfectly aligned with its tagline “Just Do

It!” The new division titled Digital Sport, was launched in 2010, consisting scores of new

engineers scientists with pedigrees from MIT and Apple to make technology for digital

communities.

The best-known product developed by this new division is the Nike+ running sensor,

the blockbuster performance-tracking tool developed with Apple. Some 5 million

runners now log on to Nike to check their performance. Digital Sport has also released

its first major follow-up product, a wristband that tracks energy output called the

FuelBand.

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Nike’s Marketing Scheme Moves to a New Paradigm: Change Ignites Progress, Change is Good

All these efforts of Nike to edge away from its existing marketing practices is not just

another Product Diversification campaign, as remarked earlier. Nike’s Digital Sport is

not about creating must-have sports gadgets, rather about getting closer to its

consumers' information, which gives Nike a sustainable competitive advantage over the

competitors that enables it to –

(i) follow the consumers,

(ii) build an online community for them, and

(iii) forge a tighter relationship with them than ever before.

The entire work is in fact a part of a bigger, broader effort to shift the bulk of Nike's

marketing efforts into the digital realm, and it steps towards the biggest change since

the inception of the company.

In my opinion, Nike’s initiatives to introduce the Digital Sport division, the “Nike +”

brand and redefining the marketing tactics will help the management bring about a

positive change in the company’s corporate existence. Rationales behind this conclusion

would be twofold.

First, Nike’s target customers have moved away from the practice of accepting and

perceiving facts from the mass media and have taken up the internet-based means. So

basically Nike is going where its customer is. And, its unconventional approaches have

won accolades from insiders. "They have their finger on the pulse of what their

customer is looking for," as mentions David Carter, Executive Director of USC's Sports

Business Institute. Institutional investors who follow Nike's subtlest moves have voted

in favor of the changes: The company's stock has returned 120 percent over the past

five years as the S&P 500 index has returned just 2.5 percent.

Secondly, in this era, information provides us with the ultimate edge. The digital

revolution that Nike has embarked on will give the firm an understanding of the market

better than ever. This market intelligence may be utilized to develop future products or

services and retain the customer base besides outreaching newer customer segments.

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