Nike- The Rise And Rise of Sportswear Giant

Nike took the world of sportswear by storm by an ad campaign “Just Do it” in 1988. The slogan, inspired by the notorious last words of death row convict Gary Gilmore, resonated with athletes around the world. The objective of the campaign was to target everyone, irrespective of age, gender, and fitness level. Sportswear was no longer meant only for sportspersons. They were meant for one and all. The campaign was a huge success. Nike’s share in the North American sports shoe business rose from 18% to 43%. Its worldwide sales rose from $877 million to $9.2 billion from 1988 to 1998. Nike thus became the largest sportswear brand in the world.

How it all started

The company was started in 1964 by Bill Bowerman and Phil Knight as the Blue Ribbon Sports company. The name was officially changed to Nike (which meant the Greek goddess of victory) on May 30, 1971. The company was initially well known for selling running shoes. It later entered into various segments of sportswear, apparel and sports equipment. Its iconic “Swoosh” logo is one of the most recognizable brand logos in the world. It is also one of the most valuable brand logos having a worth of $26 billion. 

Mergers & Acquisitions

Nike made many strategic acquisitions. It acquired and sold several apparel and footwear companies. Its first acquisition was Cole Hann in 1988. Then Nike went on to acquire Bauer Hockey in 1994. Bauer Hockey is a manufacturer of ice hockey equipment and fitness apparel. The acquisition enabled Nike to enter that market. Nike entered the surfing apparel business with the acquisition of Hurley International in 2002. The biggest acquisition of Nike was Converse, the sneaker company, in 2003. This enabled Nike to buy out its competitor in the sneaker business.

Over time Nike’s portfolio grew too big, and the management thought that it was necessary to focus on Nike’s core business. So it started divesting some of its subsidiaries. Today Converse Inc is the only subsidiary that Nike owns.

Nike Business Segments

Nike deals in Footwear, Sports Apparel, and Sports Equipment. Footwear forms 66% by revenue, Sports Apparel forms 30%, and Sports Equipment constitutes 4% of the revenue.

Nike also sells shoes under the name of its subsidiary Converse. Apart from this, Nike also has a Corporate segment under which it sells to its various Corporate clients.

Flying with the Air Jordan

Nike signed on Michael Jordan in 1984. It turned out to be by far the most lucrative deal that Nike had signed. At that time, Nike was mostly a track shoe company and had track and field athletes and tennis players as its brand ambassadors. However, Nike saw the immense potential in Michael Jordan, who was still a rookie then. He went on to become one of the greatest basketball players in history, and Nike profited immensely from it.

Michael Jordan was paid $500,000 a year for five years, almost 2.5 times of what a regular athlete got paid, for signing the contract with Nike. Nike had come out with a new technology called air soles. That, combined with Michael Jordan’s aerial acrobatics on the basketball courts gave birth to the famous Air Jordan line of shoes. After signing the deal, Nike hoped to sell $3 million worth of Air Jordans. They ended up selling $126 million worth in Year 1 itself. The Jordans came in different styles and adapted itself according to the latest designs every year. Other shoe lines at that time didn’t change much. Due to the Air Jordans, sneakers now became a fashion statement. It also helped Nike begin its association with the NBA. Nike went on to become a marketing partner of the NBA in 1992 and became the official supplier of NBA apparel in 2015.

The Sweatshop Controversy

Third-party contractors prepared Nike’s products. These contracts usually went to countries that provided the cheapest rates. The factories were located in countries like China, Indonesia, Vietnam, etc. where the labor rates were minimal. The wages paid to the laborers were very low, and their working conditions were poor. Jeff Ballinger exposed this in 1991. He documented the poor working conditions in the Nike factories of Indonesia.

The outrage against Nike grew momentum after a popular article was published in Harper’s magazine. There were widespread protests against Nike with many boycotting the company. Athletes and players boycotted the shoe giant in the 1992 Olympics. Nike tried to do away with these claims stating that it was not their responsibility as third-party contractors employed these laborers. This infuriated the masses even further.

To bring the situation under control, Nike decided to take the bull by the horn and turned the situation on its head. It publicly announced that it would make strategic changes in its policies and will include sustainability and the environment in its every decision. The Fair Labour Association was established in 1999 to take care of the labor conditions in the various factories of the company. It claimed that it had started making its shoes from eco-friendly materials and produced less waste in its factories. It also created a special line of shoes for its Olympic athletes made from recycled plastic.

Although Nike heavily advertised its policies, the ground reality on how much the conditions of the workers and the factories improved remains a question. But from a marketing point of view, Nike brilliantly turned its weakness into its strength.

Marketing Strategy

Nike’s ads have always been among the best advertisements there is. The concepts of Nike’s campaigns changed, but Nike was always trying to send a message through its ads that were bigger than its brand. It has changed its focus from the utilitarian aspect to its more aspirational aspects.

Nike’s commercial titled “Beautiful” in 2000 featured people with sports injuries showing the grit, aggression and determination of the athletes as well as the brand. The “Find your greatness” commercial showed how greatness is present in everyone who is willing to go out of their comfort zone. The “unlimited courage” commercial showcases extraordinary individuals who have overcome various odds. All these advertisements appealed to the self-actualization needs of people. This catapulted Nike to become an iconic brand for the people.

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