Nike: Born Running and Raised on Marketing

Adidas, the juggernaut that ruled the sports apparel and athletic shoe business in the 1960s, never imagined that a Stanford Business School graduate and fervent runner would challenge it in a battle for the future of sports marketing.  In the midst of a war over market share that it started and was (and always will be) determined to win on its own terms, Nike also led a revolution in advertising, endorsements and how they are solicited, and marketing that changed the way athletic apparel companies did business.  Nike’s story has its fair share of rises and falls, but in the long run, their trend has been upward and consistent.  It can be argued that Beaverton, Oregon is the sports marketing world’s Mount Olympus; buildings bearing the names of athletes whose endorsements helped carry Phil Knight’s vision to the industry’s summit dot the landscape and open fields and winding tracks are but a few of the myriad manifestations of his definition of corporate culture.  Life on “the berm” (jargon for “Nike Campus,” the megalopolis that broke through blue ribbons that decorated a small business run by Knight and a handful of fellow runners) is unlike the work experience at any other company.  Employees can take 2-hour lunch breaks and workout at the Bo Jackson Fitness Center.  Nike even pays its staff extra if they opt to ride their bikes to work over burning fuel on the trek to the office.  All in all, Nike offers a unique experience to the consumer and employee and asserts this in one of its classic ads: “WE ARE WHAT WE BELIEVE.  We founded and built an entire company on that idea… We believe in making mistakes and learning from them… We believe THERE IS NO FINISH LINE.  We believe in you.  Just do it.  RUN.”  And truth be told Nike has not stopped running.

Donald Katz wrote an excellent piece on Nike titled Triumph of the Swoosh in which he details the history of Nike, its epic battles against giants Reebok, Adidas, and others, and how it has successfully (and sometimes unsuccessfully) marketed its products around the world.  Today’s discussion depends solely on Katz’ thorough and well-written work.  Professor Jeff Bail of Northwestern University’s Master of Sports Administration program has my gratitude for taking the time to share this article with the class.  I sincerely recommend that you read Donald Katz’ piece from start to finish.

If you were employed by Nike and worked in Beaverton, you would find a fountain encircled by 48 flags representing all of the countries that experience Nike’s corporate presence and are affected by it both socially and economically.  With its fitness and day care centers, dry-cleaners, hair stylists and even masseurs, life working for Nike simply could not betray the company’s roots as Blue Ribbon Sports.  If we could lace-up a pair of running shoes that would take us back a few years to 1971, we would find the same Phil Knight who today pilots an Acura NSX through winding Oregon roads manning a tiny and wholly unremarkable shop that specialized in selling Tiger brand running shoes manufactured in Japan.  Nelson Farris, one of Knight’s first employees at Blue Ribbon Sports, said “it was true geekdom… all kinds of people work [for Nike] now – assuming, of course, that you love sports – but back then we were all running geeks who didn’t fit in.”  According to Katz, Adidas representatives were known to walk by and laugh at the flimsy display tables Knight would setup on the sidewalk to attract business before track meets.  He was committed to selling shoes to runners and felt that “it was a way to continue a life-style and still make a living.”  That commitment was rewarded by eventual victory and supremacy over Knight’s great German foe, Adidas.  Therefore, it is not difficult to understand what would drive him to craft Nike’s image as a brand that recognizes and celebrates the perseverance of the willing and the spirit of champions.

During the company’s halcyon days that lasted through the twilight of the 1970s, Nike bore an antiestablishment image and only wore a runner’s shoe.  The 1980s, however, saw the company go public and attract its first big endorsements.  After a slow start and massive layoffs, Nike found new life on the wings of the first man to defy Isaac Newton’s laws of physics and truly fly: Michael Jordan.  It could not have happened at a better time, for as Katz writes, “the running boom was fading fast, the NBA was becoming increasingly marketable, and consumers tended to wear their court shoes on the street.”  Without delay, Nike moved to create a new “segment” and connected the Air Jordan shoes to colors, a clothing line, and an artistically crafted ad campaign that formed the company’s marketing engine and propelled it past the likes of their arch-nemeses Reebok and Adidas.  From the Air Jordan design, their marketing department invented cross-trainers and brought a new technology and style to consumers who were not necessarily ardent basketball fans.  In the end, if you ask Knight if he balked at making the transition from a running shoe company to an athletic-apparel-and-shoe-designing-marketing-colossus, he would probably say no… that he in fact thought, “just do it.”

Nike’s marketing department created entertaining exhibitions of sports heroes that wore their products.  The shows they produced were enjoyed by millions around the world who could see Michael Jordan fly in slow-motion across the screen in black-and-white and hear “Mars Blackmon” asking scientists how he does it.  The audience was treated to Andre Agassi volleying and backhanding a TV set along a warehouse floor and Deion Sanders amazing kids on a baseball diamond with big band jazz playing in the background.  Soccer fans around the world even watched Nike’s soccer players (i.e. Mexico’s Campos, Brazil’s Romario, and England’s Wright, among others) pass and kick a soccer ball around the world.  Essentially, the past two decades saw Nike turn the television set into a virtual hall-of-fame of the world’s greatest athletes, but the turn of the century heralded a new era for the sports apparel giant.  Nike Town, the company’s own chain of stores that wraps around the world, is both store and museum at once and even became Chicago’s most popular tourist attraction in the late 1990s.  This is the power of marketing.

They have deflected scandals and overcome negative press.  The company’s management team has embodied its philosophy of never seeing a finish line and believing in its athletes and customers.  They have remained true to their beliefs and treat their employees like no other company in the world.  Nike will never stop running because business, though living in cycles, exists on a number line without end.  Reebok and Adidas recently joined forces to catch Nike; however, though Phil Knight has passed the baton to new management, Mt. Olympus still belongs to the team that was born running.

Cam Suarez-Bitar.

For this article’s contents I must thank Professor Bail for providing me with this outstanding article.  I truly cannot say enough about the quality of Donald Katz’ work on that project.  It is my most educated guess that this article appeared in an issue of Sports Business Journal.  However, I will go through the appropriate channels to verify the accuracy of my inference before Tuesday’s final minute.  If there is no update by tomorrow night, you can rest assured that my presupposition was correct.  Lastly, as usual, thank you for your readership and for taking the time to read my article.  Your feedback is always welcome and most appreciated.  After all, this “blog” is meant to help us learn from each other.

p.s, By the way, in the early 1980s when Nike was struggling, its stock barely traded at $7 per share.  Today, Nike’s stock price closed at $64.39.

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