A story of success NIKE

http://www.fb3.unisiegen.de/anglistik/projects/ENA/nike.htm

The most important product of market economy is the consumer, Werner Mitsch,
a German aphorist, once said. Early in 1962, two men implemented this idea and
built the base for a company which has eliminated its competitors with the help of
an amazing marketing concept. Today this company is known as the biggest sports
article manufacturer of the world NIKE.
Due to the definition of the American Marketing Association, marketing is an
organizational function and a set of processes for creating, communicating, and
delivering value to customers and for managing customer relationships in ways
that benefit the organization and its stakeholders." In other words, marketing is
about the process of planning and executing the pricing, promotion, and
distribution of goods, ideas, and services to create exchanges that satisfy individual
and organizational goals." By taking a closer look at NIKEs beginnings we will
try to find out in how far this abstract definition has changed into a clear and
practical profile.
The story of success started at the University of Oregon in the USA in 1962, where
Bill Bowerman, a coach specialized on competitive sports, and one of his students,
Phil Knight as a middle-distance runner, realized a risky idea about bringing lowpriced, high-tech athletic shoes from Japan to the USA in order to sell them under
their own brand. The goal was clear: dislodging German domination of the US
athletic footwear industry and improving the athletes individual performance.

After Phil Knight earned his MBA at Stanford University, he travelled to Japan,
and succeeded in negotiating with executives from Onitsuka Tiger, a footwear
manufacturer. As a result, Knight's company, Blue Ribbon Sports, became
the distributor of Tiger brand footwear for the western United States. In 1964
samples of Tiger footwear were sent to Knights former coach Bowerman who
suggested a partnership with him to provide endorsement clout as well as footwear
design ideas. With a pledge of $500 each the two gave birth to Blue Ribbon Sports
and built the foundations of NIKE. So far so good - but which strategy did the two
sports and business men follow, so that they did not end up as simple footwear
distributors?
The most crucial consideration was to develop a tactical marketing based on the
four components of the marketing mix. As the centre of their business was and still
is the product itself, the two men had to collect information about their possible
target market and the consumers special desires. This consumer-orientated market
was and still is marked by constant communication between the ultimate buyer and
the manufacturer. That is why they drove to high schools and universities talking
with the athletes about their needs in order to create them prototypes and help them
win. For hours they sat in coaches' offices and locker rooms and talked about
running, listening to reports about the races, the training, the injuries and what
exactly runners wanted in a product. This individual consumercaressing culminated in the 70s with Bowerman experimenting with rubber spikes
by pouring a liquid rubber compound into his wife's waffle iron, which led to the
creation of the successful and patented waffle sole.5 So the communication with
athletes changed into a key role regarding NIKE's product design and marketing
strategy. Even today, the company still depends on this interaction and feedback
from athletes of all levels. Because of the individuality of their sneakers, NIKE
products always changed so that an increasing product range was developed.
Apart from the product itself the place and availability played a decisive role in the
story of NIKEs success. In 1965, Blue Ribbon Sports called Jeff Johnson, a former
track rival of Knight's at Stanford University, the company's first full-time
salesman selling shoes out of the back of his van to high school students at track

meets. In 1966 Johnson opened the company's first retail outlet in a narrow
building in Santa Monica, California.4 Today Nike owns facilities in Oregon,
Tennessee, North Carolina and The Netherlands. It operates leased facilities for 14
NIKE towns, over 200 NIKE Factory Stores, a dozen NIKE Women stores and
over 100 sales and administrative offices. But next to NIKEs direct distribution it
offers sportswear with the help of a huge amount of other specialised and
department stores, so-called channel participants.
As far as the price is concerned, NIKE has much scope for setting the price for a
special product. In fact, the whole idea of NIKE was based on a strategy in which
the production costs were low and the products prices competitive but profitable.
Even today NIKEs production industry is located in the free trade zones, like
Mexico, Indonesia and the Dominican Republic where the low-production costs
serve the companys price formation and consequently its sales increase.5
Generally, the production-costs are 10 percent or less of the price for which the
good can be bought; the other 90 percent are due to the success of a perfect brandmarketing.
And here arises the question of brand-caring, namely why do so many people buy
an expensive pair of sneakers from NIKE if they can get one for half of the price
from an unknown manufacturer? The answer is hidden in the last component of the
marketing-mix instrument the promotion.

As NIKE does not produce its goods by itself, the company focuses on its brandcaring. After the incorporation of Blue Ribbon Sports in 1967 and annual sales
approaching $300,000, Phil Knight began to develop a new athletic footwear brand
with the help of a graphic design student. In 1971 they presented the new logo
referred to as a Swoosh. The brands name was completed when Jeff Johnson when
NIKEs first salesman dreamed of the Greek goddess Nike and gave the
company its new face.5
Just one year later after defining NIKEs corporate identity and design Knight and
Bowerman made use of a special promotion tool to come out, namely the sales
force. They simply delivered the first NIKE products marked with the new brand to
athletes competing in Eugene, Oregon for the US Olympic Track & Field trials.
One of them was the American record-holder Steve Prefontaine, a University of

Oregon middle-distance runner under Bowerman, who became the first major track
athlete to wear NIKE shoes.4
Four years after experimenting with a waffle iron Bowermans self-designed
Waffle Trainers were introduced and became the best-selling training shoe in the
U.S.
NIKE was definitely growing which caused the two business men to invest more
money into advertising. That is why in 1977 their first print ad with the slogan
"There is no finish line" was presented showing the first sign of NIKEs later
provocative and to some extent philosophical tags.5
Shortly after that, NIKE underlined its rebellious and powerful image by signing
Tennis bad boy John McEnroe to an endorsement contract. But the company did
not get tired of development.
In the early 80s its first national television advertisement was shown during the
New York Marathon. Moreover, the patented invention of NIKE's air technology
lead to the creation of the Air Force 1 basketball shoe which made use of the new
technology for the first time. Again, NIKE bet its former success on the sales forcetactic when Michael Jordan, the most famous basketball player at the time, was
signed to an endorsement contract, too. Sure enough, it worked out: Jordan
presented his own shoe the Air Jordan, which was banned by the NBA because of
too much publicity. This shoe caused so much reaction on the market and of course
in the media that it changed into a public relations tool by itself a key moment for
NIKE. No surprise that the corporate turnover broke through the financial border
of $1 billion.5
The following years NIKE developed its tactic focussing on sales representatives
into a successful strategy by signing popular sportsmen and women at the
beginning of their career like the famous baseball and football player Bo Jackson,
the Brazilian national soccer team, Tiger Woods and many others. Next to that,
NIKE drew public attention with the help of terse slogans like Just do it from
1988 and controversial campaigns like "You Don't Win Silver You Lose Gold.",
which was criticised and discussed during the Summer Olympics in Atlanta in
1996.5
Today NIKE can call itself undoubtedly the biggest sportswear manufacturer of the
world. As a role model for efficient brand-marketing, the company still focuses on
the consumer desires and never stops improving the process of planning and
executing [] to create exchanges that satisfy individual and organizational
goals.3
Links http://www.nike.com/nikebiz http://www.marketingpower.com