Nike, Inc.

views updated Jun 11 2018

Nike, Inc.

9,000 SHOTS CAMPAIGN
HELLO WORLD AND "I AM TIGER WOODS" CAMPAIGNS
MEET THE LEBRONS CAMPAIGN
MOVE CAMPAIGN
PLAY CAMPAIGN
PRODUCT ASSAULT CAMPAIGN
WHAT IF WE TREATED ALL ATHLETES THE WAY WE TREAT SKATEBOARDERS? CAMPAIGN
WOMEN'S CAMPAIGN

1 Bowerman Drive
Beaverton, Oregon 97005
USA
Telephone: (800) 344-6453
Fax: (503) 671-6300
Web site: www.nike.com

9,000 SHOTS CAMPAIGN

OVERVIEW

Of all of the commercials Michael Jordan had done for Nike, Inc., he was most proud of the 1997 spot that took a glimpse at his humanness. The commercial, filmed in a nine-hour shoot at Soldier Field in Chicago, showed a well-dressed Jordan exiting his limousine and strolling past banks of fans, humbly acknowledging the custodians and security workers along the way. Amid these outward signs of success, Jordan's voice-over revealed his inner thoughts: "I've missed more than 9,000 shots in my career. I've lost almost 300 games. Twenty-six times I've been trusted to take the game-winning shot—and missed. I've failed over and over and over again in my life." Such self-doubt seemed unthinkable from perhaps the greatest basketball player ever, until the camera showed Jordan heading into the locker room and the voice-over added one last thought: "And that is why I succeed."

Jordan began his relationship with Nike in 1985, his rookie season with the Chicago Bulls in the National Basketball Association. He carried with him extraordinary fame dating to "the shot," his game winner as a freshman when the University of North Carolina captured the 1982 National Collegiate Athletic Association (NCAA) title against Georgetown. David Falk, Jordan's agent, invited shoe companies to court his client. Nike was struggling at the time, but Jordan fit the strategy on which Philip Knight had founded his company—to market products in the glow of the limelight surrounding maverick sports stars. Nike offered the 22-year-old Jordan the largest basketball endorsement to that time, $2.5 million plus royalties over five years. In a compromise over the brand name, Nike fused the company's new technology with the player's high-flying reputation, resulting in Air Jordan. The investment proved to be a wise one, as the Air Jordan line of athletic shoes and apparel garnered $130 million in revenues within its first year, stabilizing Nike and in fact turning the company around to take back the lead from Reebok in the sporting shoes market by 1990.

Nike's marketing of Jordan became legendary and transformed the mechanics of advertising. The creative directors and writers at Wieden & Kennedy in Portland, Oregon, redefined advertising techniques with several risky but ultimately successful strategies. They experimented with black-and-white commercials; they diverted attention from the product itself, focusing instead on the image the product could create for its owner; and they employed renowned and expensive directors like Spike Lee. They even created such widespread brand recognition that they eventually removed the company name from the ads, replacing it with one of their trademarks—the Nike swoosh, an air-bound silhouette of Jordan, or the Nike credo "Just Do It."

Jordan's inaugural commercial for Nike featured a slow-motion shot of a jump from the foul line for a dunk, accompanied by a sound track of a jet taking off. Nike also advertised in this heroic vein with its "Frozen Moment" spot, which shifted back and forth between stills of Jordan in flight toward the basket and stills of faces in the crowd, their jaws agape in awe at his apparently superhuman skill. Jordan admired the "9,000 Shots" spot because it humanized him, sending the message that his fallibility was an inherent component of his success. Air Jordans could not endow their wearers with Jordan's abilities, but "9,000 Shots" pointed out that anyone could achieve success by accepting failure.

HISTORICAL CONTEXT

Knight had founded Nike on the vision of a Michael Jordan. In a 1998 speech Knight traced the company's genesis to the trunk of his Plymouth Valiant, from which he had distributed imported track shoes made by the Onitsuka Company of Kobe, Japan, for a $254 profit in 1964. Even then, Knight imagined that the magical aura surrounding star athletes could be transferred to the equipment they wore. Of the factors that made athletes great—talent, skill, timing, dedication, hard work—equipment alone was a commodity. Consumers could access sports greatness by outfitting themselves as their heroes did.

Knight had hit upon a version of what psychologists called "spontaneous trait transference." When a speaker discussed the traits of a thing or a person, in an act of transference the listener attributed the traits to the speaker. Knight shifted this equation, relying on the transference of the spokesperson's traits onto what was being described, namely, Nike shoes. University of Oregon track star Steve Prefontaine acted as Nike's first sports star spokesperson, handing the torch to other Jordan precursors, including tennis stars John McEnroe and Andre Agassi and basketball star Charles Barkley.

In Jordan, Knight discovered the embodiment of his dreams. He was a sports icon who combined exemplary play with extraordinary character, who established his individualism without resorting to radicalism—an "outlaw with morals," to quote the formula that consultant Watts Wacker helped Knight to hone. By 1990 Jordan's unbelievable abilities, including a penchant for flight and a quick wit, helped catapult Nike, with revenues of $2.24 billion, over Reebok, with revenues of $2.16 billion. At the same time, Nike spent several million dollars promoting Air Jordan within the first years of the line's existence, creating unlimited exposure for Jordan. The situation created a positive feedback loop, what economist Tyler Cowen called the "mutualism of endorsements," whereby the more Nike promoted Jordan, the more famous he became, enabling him to sell ever more products while simultaneously enhancing his own image, visibility, and worth.

TARGET MARKET

Males under 18 years of age accounted for a quarter of all athletic footwear sales in the United States, and the "9,000 Shots" campaign involved the effect on young people's self-esteem of advertising Jordan's inimitable success. Jordan explained the concept of the commercial to Henry Louis Gates, Jr., for a profile published in the June 1, 1998, New Yorker: "The idea [was] to tell young kids, 'Don't be afraid to fail, because a lot of people have to fail to be successful—these are the many times that I've failed but yet I've been successful.'" Wieden & Kennedy's Jamie Barrett wrote the commercial without a specific target market in mind. He trusted his gut instinct instead of allowing demographics to determine his angle. The idea he hit on happened to resonate particularly with teens, those in the throes of defining themselves and their personal definitions of success and failure.

STATS

Wieden & Kennedy's Jamie Barrett wrote the script for "9,000 Shots" from his personal knowledge of Michael Jordan's career. Off the top of his head he knew Jordan's career points and his approximate shooting percentage, and, applying simple math, he estimated about 8,000-9,000 shots missed. When he later researched the numbers, his guesstimate turned out to be on target. He took more liberty with the number of times Jordan had missed game-winning shots, since such statistics were not recorded. Barrett had to choose between watching every game in Jordan's 13-year career or simply surmising that Jordan had failed to shoot the game winner about twice a season. He opted for the latter. In a press conference a few days after "9,000 Shots" first aired, a reporter pressed Jordan on the statistic. Jordan admitted that he could not be sure, but in typical fashion he confidently responded, "It sounds about right to me."

Nike avoided targeting specific markets, preferring to broaden its appeal across boundaries of age and social status. In this instance Nike realized that insecurity over success continued past the age of 18. Most adults considered their lives less successful than Jordan's, and so this commercial spoke to them too. Jordan specifically wanted the commercial to turn introspective, revealing his motivations and moods. Barrett responded by comparing Jordan's accomplishments to his defeats, thus urging viewers not to compare their failures to Jordan's successes but rather to consider their failures in light of their own successes.

While "9,000 Shots" implicitly targeted the adult market, its companion commercial, "Challenge Me," targeted adults more directly. This spot also humanized Jordan, addressing aging, an issue absent from his commercials but foremost in the minds of the majority of his audience. "Challenge me. Doubt me. Disrespect me. Tell me I'm older. Tell me I'm slower. Tell me I can no longer fly. Go ahead, I want you to," Jordan narrated. Although the audience varied slightly between these two spots, the message was consistent. Jordan was indeed human. What made him seem superhuman was his determination.

COMPETITION

Nike's late 1970s climb to control the U.S. market in athletic shoes was fueled by the jogging craze, which slowed in the mid-1980s. Reebok, a British line of white leather women's shoes, took advantage of the next craze in athletics—women's aerobics. By 1987, with $1.4 billion in revenue, Reebok had catapulted past Nike. Nike rebounded by diversifying into new markets, specifically confronting Reebok in the women's market. At the same time, Reebok diversified into Nike's traditional markets of men's sports. By the 1990s the two companies competed head-to-head for control of the market in sports shoes. In 1994 Nike earned $299 million on $3.79 billion in revenue as compared to Reebok's $254 million on $3.28 billion in revenue. That year the two companies combined controlled 50 percent of the U.S. market and 40 percent of the global market, with Adidas having 10 percent.

In an attempt to regain market dominance in the early 1990s, Reebok duplicated Knight's marketing strategy by assembling a team of superstars to endorse its products: Michael Chang in tennis, Frank Thomas of the Chicago White Sox in baseball, and Emmitt Smith of the Dallas Cowboys in football, to name a few. It was not until 1992, however, that Reebok entered the endorsement competition in earnest, signing Jordan's counterpart, the Orlando Magic's seven-foot rookie Shaquille O'Neal, to a five-year, $15 million contract. "It was the signing of Shaq, really, that marked the start of the war between Nike and Reebok for the hearts, minds, and feet of the American public," commented Kenneth Labich in the September 15, 1995, issue of Fortune.

Both Jordan and O'Neal were called "human billboards," in part because of the excessive number of endorsements each maintained but also because their every action carried the potential to support (or mar) their endorsements. In this highest level of corporate endorsements, competition entered every imaginable arena. The actions of the so-called dream team, the U.S. basketball squad in the 1992 Olympics, illustrated this point well. Reebok sponsored the team, supplying warm-up suits for the medal ceremony. As the team climbed the podium to receive their gold medals, Nike endorsers obscured their Reebok logos, with Jordan and Barkley going so far as to wrap themselves in American flags in allegiance to their country and their brand.

MARKETING STRATEGY

Wieden & Kennedy originally conceived the "9,000 Shots" commercial as a follow-up to the Air Jordan commercials directed by Lee, and for it they planned to use another famous Hollywood director, Oliver Stone. Jordan balked. "I had to fight the agency about it, because they had wanted to have me work with Oliver Stone," Jordan revealed to Gates in the New Yorker, "… and Oliver Stone was going to go through that process of trying to figure out why my game is my game. And I said, 'Oliver Stone don't know shit about basketball. Why don't you just show the actual situation? Let the people see exactly what's happened over the twelve years of my career.'" Jordan retained this degree of creative control over the marketing of his image. Just as Nike and Jordan mutually bolstered each other's success, so, too, Jordan had put Wieden & Kennedy on the map of ad agencies. Jim Riswold, Wieden & Kennedy's creative director, respected Jordan's input and responded by streamlining the campaign.

In an interview with Elliot Harris of the Chicago Sun-Times, Erin Patton, Nike's director of product marketing for Jordan basketball, revealed the intentions of the "9,000 Shots" commercial. "I think the objective was to take an introspective look at Jordan's passion for the game of basketball and how he prepares himself emotionally and physically to continue to raise his level of performance…. It's almost like we wanted to peel down all the layers and just give you Michael and get inside of his mentality. You turn on the TV and you see Michael score 55 points against the Washington Bullets, but the part that you don't see is what we're trying to deliver in this ad." "A glimpse into Jordan's soul?" Harris asked. Patton replied, "It's a soul that thrives on challenges and constantly challenges himself to get better."

Rarely did commercials attempt to examine the soul, but Jordan's persona belonged to the public domain in that so much of his life was devoted to public performance. The subject of his commercials was not so much Air Jordan as Michael Jordan. His personage earned so much revenue for corporations that the value of his image increased exponentially. Strangely, this became its own kind of endorsement. Simply combining Jordan with a product suggested to the consumer that such a vast expenditure on the manufacturer's part must mean that the product was worth such an investment. In this sense Nike marketed its marketing in order to sell its products.

OUTCOME

Others besides Jordan appreciated the "9,000 Shots" commercial. USA Today voted it, along with ads for HBO and Altoids, the best campaign of 1997. "No marketer spins perspiration into ad inspiration like Nike," judge Dottie Enrico explained. The campaign also gained international attention as the first foreign-produced commercial to win the grand prize in the All Japan CM Festival, which was sponsored by the All Japan Radio & Television Commercial Council.

The ad, however, also coincided with further accusations of human rights abuses in Nike's international labor practices. Because much of Jordan's value derived from the unfathomably high wages he was paid and from his integrity, he became the lightning rod for criticism of Nike. Both Frederick L. McKissack, Jr., of Progressive Media Project and Kevin Clarke of U.S. Catholic magazine wrote scathing critiques. Ironically, Jordan found his least likely defender in Jesse Jackson, whose Operation PUSH had been boycotting Nike since 1990. Jackson supported Jordan's apolitical stance and lent it credence. "Why is it expected of a ballplayer or a boxer to be an astute sociopolitical analyst?" Jackson asked. "The issue of trading with Indonesia without regard to human rights or child labor is fundamentally a matter that United States trade policy must address. It isn't right to shift the burden to him because he's a high-profile salesman."

Chris Zimmerman, Nike's U.S. director of advertising, confirmed this division of responsibility, with the role of Nike's marketing being to develop advertisements that promoted products in the most creative ways possible. While some in the media placed blame on Jordan for Nike's reported dehumanization of its overseas workers, the commercial itself represented a maturation in the marketing of Jordan's image, humanizing him and grounding his myth in the realities of sweat and disappointment. The controversy and praise surrounding the "9,000 Shots" campaign demonstrated the influence Jordan wielded in his culture.

HELLO WORLD AND "I AM TIGER WOODS" CAMPAIGNS

OVERVIEW

Tiger Woods was one of the most acclaimed golfers in the world before he ever took a single swing as a professional. Nike, Inc., the footwear and apparel giant known for its industry-defining advertising campaigns featuring superstar athletes, bet the future of its golf product lines on this emerging star in 1996, signing the young phenom to a five-year, $40 million endorsement deal just after he announced that he would be turning pro. Woods's appeal to advertisers was manifold: he was said to be the most gifted golfer in the sport's history, he was handsome and articulate, he was young, and he was multiracial. The initial Woods-centered campaign and its immediate successor, both developed by ad agency Wieden+Kennedy, proved to be among the most noteworthy Nike advertising efforts in recent memory.

"Hello World," released to coincide with Woods's turning professional, combined a three-page spread in the Wall Street Journal with a commercial aired on ABC's Monday Night Football as well as on other networks. The TV spot offered a provocative message contrasting Woods's unprecedented accomplishments as an amateur golfer with the fact that there were still golf courses in the United States where he would not be allowed to play because of his skin color. This introductory campaign was immediately followed up by a more affirmative nod to Woods's ethnicity, the "I Am Tiger Woods" campaign. TV spots showed people from a wide range of ethnic backgrounds saying, "I Am Tiger Woods," a statement that, thus repeated, suggested the inspirational nature of Woods's entry into a sport previously assumed closed to nonwhite Americans.

Woods attracted legions of new fans to golf, and the grandstands at tournaments in which he competed began to appear more youthful and ethnically diverse. This, of course, created vast new markets for a sport that had traditionally appealed to a select audience, and Nike benefited greatly from its association with Woods. Sales of Nike golf shoes and apparel skyrocketed, and Woods quickly became the most sought-after product endorser in the world.

HISTORICAL CONTEXT

Nike entered the golf market in 1983, four years before that market exploded, with a line of footwear (it later added a line of shirts). The move took Nike outside its traditional realm of running and beyond the sports of basketball, baseball, and football. Nike maintained consistency, however, with its core marketing strategy being to sign well-known athletes to endorsement contracts that would raise the visibility of the company name within the sport as well as with a more general audience. Among golfers Nike first signed Peter Jacobson, and it then gained marketing strength with the names of Curtis Strange and Nick Price. In 1994 Nike's "Golf Is an Invitation" campaign with Price won numerous ad-industry awards, helping to solidify the brand's positioning amid a category boom. According to the National Sporting Goods Association, consumer expenditures on golf equipment rose by 113 percent between 1987 and 1997, from $1.8 billion to $3.9 billion.

In August 1996 Tiger Woods won his third straight U.S. Amateur Championship at Pumpkin Ridge Golf Club in Cornelius, Oregon, just 15 miles away from Nike headquarters. Three days later Woods announced that he was turning professional. Three days after that he signed a $40 million, five-year agreement with Nike to endorse its Nike Golf line of footwear and apparel. Neither Nike nor Woods's agent, Hughes Norton of Cleveland-based International Management Group (IMG), had ever heard of an athlete landing such a lucrative contract, much less a 20-year-old who had yet to earn a single dollar in his sport. Woods represented a unique marketing opportunity, however, because the visibility of his extraordinary talent was compounded by his appearance, for he was a young, handsome multiracial man breaking into the ranks of a nearly all-white sport. Woods called himself Cablinasian, an acronym he had invented to describe his Caucasian, black, American-Indian, and Asian heritages.

TARGET MARKET

Chris Zimmerman, Nike's director of U.S. advertising, explained the highly effective marketing style developed by the company. Traditionally, demographics determined target markets, with advertisements created to appeal to specific age and social brackets. Nike altered this formula by determining its target markets by what Zimmerman called psychographics. The company developed a psychological profile of consumers who appreciated Nike's philosophy, thus targeting a mind-set rather than a certain age or social status. Furthermore, according to Zimmerman, Nike's advertising promoted gender and racial equity within the world of sports. Woods's image fit perfectly into this psychographic formula, while simultaneously taking advantage of demographic shifts that were occurring in golf in response to his popularity.

Nike's existing classic line of golf apparel and footwear catered to a traditional market, those in their mid-20s to mid-40s. The "Hello World" and "I Am Tiger Woods" campaigns introduced a new line geared toward a younger consumer, with less conservative styling and bolder colors, such as Woods's signature black and red. This younger orientation coincided with one of the fastest-growing demographic groups in golf, those under 18 years of age. Nike thus retained its traditional positioning while actively attracting this new, growing market.

Just as Woods developed an affinity for golf because of his early exposure to the game (Earl, his father, had placed a putter in his hands at 10 months), so, too, did children develop brand loyalty. Nike was not blind to this trend. One spot featured kids chanting "I Am Tiger Woods," and children who saw the commercial in Saint Louis, for example, responded by swamping a local chain specializing in children's athletic footwear with requests for Woods's shoes. Nike also was not blind to the appeal of Wood's multiculturalism, and the company targeted specific markets on this basis. "In Asia, the next great sports market, he is thought of as one of their own," observed James F. Sweeney in the Cleveland Plain Dealer. In response to his popularity, Nike ran a subtitled version of the "I Am Tiger Woods" campaign in Thailand, homeland of his mother Kultida. In the same vein, to grace Woods's own official line of clothing, Nike designed a multicolored jewel symbol as a logo representing his ethnic blending.

COMPETITION

Nike's foremost competitor was Reebok, a company that emulated Nike's strategy of signing highly visible sports stars to endorse its products. In golf the charismatic Australian player Greg Norman had signed a lifetime agreement with Reebok, a commitment that was rare in endorsements. The company was so confident of Norman's value that it had deleted the Reebok logo from his line of clothing, thus highlighting Norman's shark logo. When Nike dedicated a line of golf clothing to Woods in 1998, it thus competed directly with Reebok and Norman's Shark brand.

Although endorsements remained a key to success, the golf market differed significantly from other markets. Robin Carr-Locke, Nike Golf's director of marketing, explained that competition varied according to the sales venue. Sales of golf clothing and equipment occurred in four distinct places: at department stores, in sporting-goods stores, in off-course golf stores, and on the grass at golf courses. The main difficulty in determining the competition in this market was that, depending on the venue, Nike competed with different brands. On the course, for example, Nike footwear competed against Etonic and Foot-Joy golfing shoes, whereas in department stores Nike apparel competed with brands like Ralph Lauren's Polo collection.

This diversity of competition made it almost impossible to develop specific competitive strategies. Historically, however, Nike had focused less on keeping up with the competition and more on developing its own strategies in anticipation of market shifts. Nike sought to define its markets, not react to the competition. In 1992, for example, Nike had recognized the vast potential of the golf market it had yet to tap, but at the time there were no rising golf stars who fit the mold of maverick Nike endorsers, the formula that had created such success for the company in other sports. Hence, Nike diverted its strategy from endorsements by individual golfers to a tour endorsement, buying out the flagging Ben Hogan Tour and renaming it the Nike Tour. This kind of ingenuity had become a trademark of Nike.

MARKETING STRATEGY

When Jim Riswold, creative director and partner at Wieden+Kennedy, first conceived the Woods campaigns, he immediately decided against focusing on what he called "shoeness." He decided instead to use the advertising as an opportunity to expose and crystallize what was on everyone's mind—the issue of color. Woods was a sensation regardless of his race, but the very color of his skin called into question the degree of racial prejudice that persisted in golf and, by extension, in American society in general. Rather than divert attention away from this issue, Riswold harnessed its power to Nike's advantage.

"GOLF'S NOT HARD, WITH TIGER WOODS"

With its subsequent campaign, "Golf's Not Hard, with Tiger Woods," Nike lightened up on the player's image. In all four spots Woods offered seemingly simple advice, with the punch line hinging on the impossibility of even the best golfer re-creating his feats. In "Golf Swing" Woods first gave three easy-to-follow tips but then added a barrage of technical jargon accompanied by sophisticated computer graphics. In "Bunker Shot" he told golfers to hit the ball 300 yards, no more and no less, from a sand trap and then demonstrated with ease: "Next week, basic tips on difficult shots." In "Slice" Woods demonstrated his practice technique of lining the gallery with spectators, preferably women and children, leaving only a narrow strip of daylight through which to tee off, but when Joe, the less-than-average golfer, attempted the technique, he overcompensated for his slice and hooked the ball into the cardboard heads of an old lady and man. Finally, in "The Drive/Revised," Woods revealed his secret for long drives; he teed the ball just above the head of his driver, swung, and then waited the remaining 25 seconds of the spot for the ball to land. Simple as that!

"We obviously had to tell [Woods] what we were thinking," Riswold said, "and he felt it was time to talk about that issue." Contrary to suggestions that Nike exploited him, Woods had creative input. "Golf has shied away from [racism] for too long," said Woods. "Some clubs have brought in tokens, but nothing has really changed. I hope what I'm doing can change that." Woods envisioned himself as an "ambassador of change" for golf, opening the way for minorities and young people. His father went further, suggesting that Woods would "transcend the boundaries of golf [by] using golf as a vehicle to do that," in the same way that Muhammad Ali had transcended boxing and Michael Jordan basketball.

The TV spot that headlined the effort accordingly featured captions alongside retrospective clips from Woods's career as an amateur: "I shot in the 70s when I was 8. / I shot in the 60s when I was 12. / I won the U.S. Junior Amateur when I was 15. / I played in the Nissan Open when I was 16. / I won the U.S. Amateur when I was 18. / I played in the Masters when I was 19. / I am the only man to win three consecutive U.S. Amateur titles." The last captions read, "There are still courses in the U.S. I am not allowed to play—because of the color of my skin," and "I've heard I'm not ready for you. Are you ready for me?" The print ads used the same provocative concept.

Critics pointed out that earlier athletes who had been civil rights activists, such as Jackie Robinson and Arthur Ashe, had become agents of change through their achievements, not through campaigns to change their sports. Further, they had to maintain their integrity and conviction in the face of intense opposition. Nike's Merle Marting responded by pointing out that Woods already had significant achievements, thus qualifying him to comment on issues that concerned him. "If you look at the ad, it's basically a celebration of what Tiger has accomplished and what he's about," said Marting. Woods also stood in a different position than Robinson or Ashe, partly because they and others had already made significant progress toward racial equity that Woods could build on and also because society had changed in the intervening years.

The "I Am Tiger Woods" campaign replaced the "Hello World" campaign after its initial weekend run. This second campaign broadened Nike's message to celebrate multiculturalism with commercials depicting people of all races and ages declaring, "I Am Tiger Woods." Whereas "Hello World" focused on Woods's personal achievements and challenges, "I Am Tiger Woods" focused on how others related to him, both through his diverse racial background and through the quality of his character and play. In conjunction with the spots Nike sold T-shirts emblazoned with the words "I Am Tiger Woods." In April 1997 Nike relaunched the "I Am Tiger Woods" campaign on the momentum he had created with his Masters victory, and in June Charlie Sifford and Lee Elder joined Woods to pay homage to African-American golfers in a commercial titled "I Won't Forget."

OUTCOME

The "Hello World" and "I Am Tiger Woods" campaigns created sales increases in almost every section of the golf market. Carr-Locke's expectation of a 60 percent increase in Nike Golf sales was exceeded, as sales of the clothing line doubled after Woods signed on. In fact, because of the backlog of orders, some stores could not get Woods's official line of clothing when it came out in the spring of 1998, while others could not restock the line on their quickly depleted shelves. As it turned out, the genius of the "I Am Tiger Woods" campaign was that everyone wanted to be Woods. He quickly became the most successful Nike representative, proving the wisdom of the company's formula of advertising successful sports stars in a way that made consumers want to own a piece of the person.

Comparative statistics provided a sense of the phenomenon created by Woods. Nike Golf generated $43 million in 1994; in 1996, when Woods joined Nike two-thirds of the way through the year, sales increased to $120 million. Sales for 1997 rose to $210 million. Woods also created spikes in sales. In response to Woods's Masters victory, for example, sales of Nike footwear jumped 80 percent in the second quarter of 1997 as compared to the second quarter of 1996. Woods's successes—winning four tournaments, including the Masters, in his first year as a pro, being named Sports Illustrated's Sportsman of the Year for 1996 and the Rookie of the Year and Player of the Year on the PGA Tour in 1997, and being selected as one of Time magazine's 25 most influential Americans in 1997—further bolstered Nike's success, with sales increasing 177 percent in the U.S. market, 67 percent in Asia, and 25 percent in Europe after his signing.

In the first year that the National Academy of Television Arts and Sciences gave an Emmy for the best commercial, the "Hello World" spot was nominated. The success of the campaigns helped draw attention to the Tiger Woods Foundation, an initiative to help inner-city kids to learn golf as a means of opening up their lives to broader opportunities. Nike's PLAY (Participate in the Lives of America's Youth) foundation cosponsored Woods's workshops, in part to advance a worthy cause but also to develop brand loyalty in this growing market.

Woods became the advertising world's most sought-after brand endorser. In subsequent years his endorsement deals included, among many others, contracts with Buick, Rolex, American Express, Wheaties, Tag Heuer, Titleist golf equipment, Golf Digest magazine, and Electronic Arts video games. Nike, however, remained the brand most closely associated with Woods, thanks to his initial connection to the brand as well as his ongoing appearances in Nike advertising. One of the most talked-about TV commercials of 1999, for instance, was a Nike spot in which Woods was shown effortlessly bouncing a golf ball on the face of his club, keeping it aloft for a full 28 seconds—sending it behind his back and between his legs, and even catching it on his club twice—before striking it, while it was still in the air, with the calm confidence of an ordinary golf shot.

In late 2000 Woods extended his endorsement deal with Nike for another five years, effective in September 2001. A possible measure of Woods's value to Nike was that the company more than doubled the record-breaking amount it had paid him for his first five-year deal, agreeing to a compensation package worth $85 million. As the New York Times noted, however, each of the companies then paying Woods to endorse their products was getting a bargain: "He's now … the most recognizable sports figure on the planet. And when it's time to renegotiate the contracts, all those companies will find, as Nike did, that he'll be more expensive next time. Much more expensive."

MEET THE LEBRONS CAMPAIGN

OVERVIEW

In 2002, before ever playing an NBA game, basketball prodigy LeBron James had secured a $90 million endorsement deal with the world's largest athletic company, Nike, Inc. The Zoom LeBron basketball shoe was born at Nike's Beaverton, Oregon, headquarters in the hope that LeBron could pick up the marketing mantle of retired superstar Michael Jordan and his industry-changing Nike Air Jordan shoes. By 2005 James had been named Rookie of the Year, thus living up to expectations. Nike featured him in introductory print and TV advertisements that played off the nickname "King James" that was often used in the press. James as a personality still had not broken through to the greater public. With that goal in mind Nike released a new TV-centered campaign called "Meet the LeBrons" in late 2005.

Using a portion of Nike's $170 million that was allotted for advertising that year, Portland, Oregon, agency Wieden + Kennedy was responsible for the offbeat television commercials that depicted James as four different versions of himself, all living in the same upscale household. Each spot was meant to be a spontaneous look at the family. Wise LeBron, an old-timer, bickered with the slick All Business LeBron. Kid LeBron bounced around with earphones on, while Athlete LeBron practiced his athletic moves. A tag at the end of each spot directed viewers to www.nikebasketball.com, an elaborate "Meet the LeBrons" section of the Nike website.

The "Meet the LeBrons" campaign generated plenty of buzz in the press and online, even spawning action figures of the four characters. In 2005 Nike footwear sales were up a healthy 11 percent over the previous year, and the company's annual report for 2005 stated that it had been a record year for sales and profits. James flourished on the court, being named to the All-Star team for that season, and off the court endorsement money from a variety of companies continued to flow in his direction.

HISTORICAL CONTEXT

Nike, Inc., began as Blue Ribbon Sports, a modest joint venture by accounting student Phil Knight and his former University of Oregon running coach, Bill Bowerman. In 1962 Knight had the idea to bring low-priced, high-quality Japanese athletic shoes to the U.S. market to compete against an industry dominated by German footwear. He and Bowerman became partners that year and began importing Onitsuka Tiger shoes from Japan. Soon Knight and Bowerman started producing their own shoe under the Nike moniker. Within 30 years Nike developed into the largest sports and fitness company in the world.

Nike initially set itself apart through innovation. In 1979, for instance, former NASA employee Frank Rudy invented the air cushioning that would rock the world of athletic shoes. Technical innovation came first, but athlete endorsements and savvy advertising promotion ultimately set Nike up to conquer the world. The record-setting runner Steve Prefontaine was the first world-class athlete to wear Nikes and consult on their design. Nike joined forces with Michael Jordan in the mid-1980s. The promising Chicago Bulls basketball rookie endorsed a line of shoes and apparel called Air Jordan, consulting on shoe design and ultimately catapulting Nike into dominance in basketball. Other apparel collections followed, including a John McEnroe line for tennis and a Bo Jackson line for football. Nike built campaigns around the personalities of athletes. In 1987 its groundbreaking "Revolution" television spot broke in support of the Air Max shoe. The black-and-white commercial, set to the Beatles' song "Revolution," showed quick cuts of regular athletes interspersed with the likes of Michael Jordan and John McEnroe in play. There was an outcry from rock purists, and the Beatles band members themselves sued. The spot was a huge attention-getter for Nike and put it on the cutting edge of advertising.

In 1988 Nike made a lasting impression on American culture with the first "Just Do It" commercial, created by Portland agency Wieden + Kennedy. The slogan spoke to personal as well as athletic goals. In a huge television and print blitz consumers were encouraged to disregard their excuses for not exercising and "Just Do It." The slogan worked its way thoroughly into the national lexicon. Air Jordan's "Jumpman" logo and the Nike "swoosh" logo also became apparel must-haves in the urban and youth markets as well as essential wear among the growing hip-hop music scene.

By the year 2000 Nike was nearing its 30-year anniversary. The legendary Michael Jordan line continued on after his retirement, but Nike was on the lookout for a next-generation athlete. In 2003 the company gave high-school phenom LeBron James, frequently referred to as just LeBron, a $90 million shoe contract before he had stepped on an NBA court. Nike was banking on James to replace Jordan as the next great professional-basketball juggernaut. His first television commercial was understated, showing him nervous under the pressure of expectations before his first NBA game and then smiling as he blended into the rhythm of the game. A later TV spot included comedian Bernie Mac turning the court into a church revival meeting of sorts. The spot played on the idea of James as the "chosen one," or "King James," as he was sometimes called in the press, but then asserted that the young rookie just wanted to be a team player. Posters and billboards were less humble in nature: one image showed James seated on a throne with lions at his feet. In 2004 a campaign titled "The Chamber of Fear" made James the star of a highly stylized commercial spoofing kung fu movies. In battling multiple enemies with names like "Complacency," "Self-Doubt," and "Haters," his only weapons were his athletic ability and his new Nike shoes. The spot, banned in China because censors deemed it offensive to the state, was memorable, but it still did not do enough to advance the LeBron persona in the United States. A new campaign, "Meet the LeBrons," followed in 2005.

TARGET MARKET

In the late 1980s and 1990s sports attire became increasingly acceptable among Americans as casual wear. At the same time NBA basketball was reaching an all-time high in popularity. Also during this period urban hip-hop music culture was growing fast, and recording artists wore basketball apparel in their videos and during other appearances. These influences combined to make Nike athletic gear, especially shoes, the thing to wear for the trend-conscious city-dwelling consumer. Teenage boys and men in their early 20s, who made up the vast majority of recreational and amateur basketball players, were a particular focus for shoes. These young men tended to be loyal consumers, aligning themselves with a player and sportswear brand. Sports attire had become a status symbol in youth culture. LeBron James himself was barely out of his teen years. An all-around player who was able to execute from any position on court, he was living up to the pre-NBA hype, which would ensure that the Zoom LeBron shoe series would appeal to the coveted market of young males from high-population centers.

In addition to courting the core male youth audience, Nike was looking to be more inclusive with its "Meet the LeBrons" commercials, which showed four versions of the athlete at different stages of life. Peter Stern of Strategic, a sports and entertainment consulting firm, evaluated the spots in the January 10, 2006, edition of the Wall Street Journal, saying that Nike was "showing the athlete in a different light that might appeal to someone who's more fashion-conscious or image-conscious versus someone who wants to wear the shoe to jump higher or score more."

COMPETITION

Founders Knight and Bowerman created their shoe company in response to a German stronghold on the athletic-shoe market. Within 30 years of its inception Nike had surpassed German company adidas as the largest athletic-shoe maker in the world. Still, Nike continued to take adidas very seriously. In 2003 Nike spent $153 million on advertising, compared to adidas's $34.3 million. Much of that ad money was directed toward Nike's new star, LeBron James. Ironically, adidas had a relationship with James first and was considered the likely sponsor for the NBA-bound high schooler before Nike swooped in with a $90 million, seven-year deal.

Adidas won a few battles in the ensuing years. The German company beat out Nike for sponsorship of the 2008 Olympics in Beijing, China. This was a particularly harsh blow given the LeBron James "Chamber of Fear" commercial debacle, which had weakened Nike's position in the immense Chinese market. The spot depicted James vanquishing a dragon, a traditional symbol of the Chinese state, and it was banned by the government. Nike lost NBA player Yao Ming, also hugely popular in China, to Reebok, which was soon acquired by adidas for nearly $4 billion. The sale of Reebok to adidas prompted Nike to spend more time looking over its shoulder. Once combined, adidas and Reebok captured about 20 percent of the U.S. market, making inroads to Nike's enviable 36 percent. As 2005 came to a close, adidas released a campaign featuring basketball star Kevin Garnett of the Minnesota Timberwolves that was remarkably similar in tone and purpose to "Meet the LeBrons." It centered on a television spot that depicted Garnett in a five vignettes to represent the many sides of his personality: a general on a battlefield, a superhero, a kid playing tag, a gladiator, and even a comic.

KNIGHT HANDS OVER NIKE REIGNS

In 2005 Phil Knight, the visionary leader and cofounder of Nike, Inc., stepped down as CEO but retained his position as chairman of the board. Knight handpicked William Perez, president and CEO of consumer-products company S.C. Johnson, to be his successor. Perez was viewed as a surprising choice. He had overseen S.C. Johnson's $6.5 billion stable of worldwide brands, but aside from an enthusiasm for running, he had no footwear experience. Perez immediately slashed the Nike advertising budget, a move that clashed irrevocably with Knight's marketing philosophy, and in January 2006 Perez resigned.

MARKETING STRATEGY

By the time LeBron James was signed as a Nike spokesman, Wieden + Kennedy had been creating advertising for Nike for many years. James was an unknown quantity when his first Nike advertisements appeared in 2003. He won NBA Rookie of the Year his first season, and in two short years the Cleveland Cavaliers player had proven himself a major force in basketball. Nevertheless, by 2005 the public at large was just getting to know James, and Nike needed to help that process along. Its agency devised a campaign called "Meet the Lebrons," which included television commercials, cinema spots, and online banners as well as an extensive website, all introduced in December 2005. The cornerstone of the campaign was composed of four quirky TV spots featuring James as different characterizations of himself. The four characters were Wise LeBron, the cranky old-timer; All Business LeBron, slick and self-absorbed; Kid LeBron, a headphone-wearing, basketball-obsessed youth; and finally the serious but good-natured Athlete LeBron, who barely spoke. This oddly constructed family inhabited a sleek and expansive modern residence, with Wise LeBron's tiny, ancient-looking TV set occasionally featured in the background showing on-court footage of LeBron James. In one commercial the LeBrons danced to Rick James's funk anthem "Superfreak." In two others they bickered at the dinner table, and in the one called "New Shoes" they finally referred to the actual product when Wise LeBron told All Business LeBron, "It's not about you. It's about the shoes." The spots had no tag-line except a modest "nikebasketball.com" at the bottom of the screen.

The website destination listed in the spots was an interactive trip to the LeBrons' house, where visitors could explore their home to get a better view of the pineapple on the kitchen counter or zoom in on the luxury car in the driveway. There were bios for each character, ads to view, wallpaper to download, and Zoom LeBron shoes for sale. Nike wanted to make fans comfortable in the LeBron James pseudoworld. Ralph Green, the U.S. basketball brand director for Nike, described the purpose of the campaign to the Wall Street Journal. "We were aware of elements of LeBron's personality that had not been seen by most of our consumers…. So our goal was to give consumers a peek at these varied elements of the LeBron persona but to do so in a subtle, figurative, and humorous manner." The actual budget for the costly campaign was not revealed, but according to research firm TNS Media Intelligence, it probably took up a significant portion of the $170 million that Nike spent on advertising from January through November 2005.

OUTCOME

The "Meet the LeBrons" campaign resonated with consumers. As a result of the popularity of the campaign, action figures of the characters were created for sale by Upper Deck, a sports-memorabilia company. Nike, ever confident in James, planned a special edition Zoom LeBron shoe specifically for the 2006 NBA All-Star Game. More importantly Nike's annual report for 2005 reflected healthy footwear sales, with revenues up by 11 percent over the previous year, making fiscal 2005 a record year for sales and profits. Wieden + Kennedy's reputation was enhanced as well, perhaps contributing to its growing client list in 2005 that included new accounts from mega-advertisers Coca-Cola Company and Procter & Gamble. James himself continued to reap the rewards of widening positive exposure; by the end of 2005 he had five corporate sponsorships in addition to Nike, including Powerade and Sprite.

MOVE CAMPAIGN

OVERVIEW

Nike Inc., based in Beaverton, Oregon, and the world's leading manufacturer of athletic footwear, premiered its "Move" television spot in early 2002 during the Winter Olympics in Salt Lake City, Utah. A lyrical homage to physical activity, the 90-second sequence featured athletes and nonathletes alike, all engaged in the actions of their sports. From swimming to skateboarding, to video golf and gymnastics, each person's movements were coordinated with the next person's, creating a seamless paean to physical activity. Though passing images of Nike's famous "swoosh" logo appeared in the spot, the commercial did not promote a specific product. Instead, it capitalized on the emotional nature of the Olympic Games and equated the Nike brand with the same feeling of goodwill.

The "Move" commercial was created by Nike's longtime advertising agency, Wieden+Kennedy (W+K), and directed by filmmaker Jake Scott. Although the 90-second spot had its premiere during NBC's coverage of the Olympics, 60-second and 30-second versions later ran briefly on other television networks. The games, with their huge ratings over a two-week period, offered advertisers a rare opportunity every two years to launch new products or to redefine brands by creating commercials that capitalized on the games. In the case of "Move," the tie-in was represented by cameo shots of famous Olympic athletes, including skier Picabo Street and speed skater Apolo Anton Ohno. Shots of these stars were intercut with shots of "ordinary" people, beginning with a boy running down a suburban street and ranging from the simple (a toddler playing on a bed) to the thrill seeking (a BASE jumper leaping from a bridge). The commercial's message was clear: No matter how you do it, just move.

Nike did not make the cost of the commercial public, and by the spring of 2002 the company had moved on to other, more product-focused campaigns. "Move" continued to attract notice, however, and it won the 2002 Emmy Award as the outstanding commercial from the Academy of Television Arts and Sciences and a Gold Lion at the 2003 Clio Awards.

HISTORICAL CONTEXT

At the time of the 2002 Winter Olympics, Nike's annual revenues totaled well over $9 billion, more than triple that of its nearest competitor, Reebok. The company's advertising prowess, guided for years by W+K, was legendary. Nike's swoosh logo and its indelible motto, "Just Do It," had long since joined the pantheon of advertising's greatest campaigns. In 1993 Nike became one of the first three companies, along with Coca-Cola and Absolute Vodka, inducted into the American Marketing Association Hall of Fame.

Over the years many individual Nike television commercials, including the Michael Jordan spots directed by Spike Lee and the "Bo Knows" campaign featuring Bo Jackson, had garnered attention, spawned catchphrases, and won awards. "Move" continued in that tradition. But with such fame came an equal amount of notoriety. Partly because of the company's position as the industry leader, by the 1990s Nike had become embroiled in controversies regarding its overseas labor practices and its marketing tactics in the United States. The company was accused of underpaying foreign workers and of indulging in "ambush" marketing, whereby it co-opted publicity during sporting events it did not sponsor.

Nike's so-called ambush marketing tactics had angered sponsors of previous Olympic Games, who had each paid a hefty sum for the privilege of using the Olympic logo in its advertising and of associating itself with the games. Nike had never paid such a sponsorship fee but had circumvented the official rules so effectively that polls showed many people erroneously identifying Nike as an Olympic sponsor. Most famously, in 1992 Nike pitchman and "Dream Team" member Jordan accepted the gold medal for basketball in Barcelona, Spain, after covering up the Reebok logo on his uniform. In the 2002 Boston Marathon, sponsored by adidas, Nike stole its rival's thunder by blanketing area subway stops with advertisements and by spray painting swooshes on the pavement at the finish line. Nike defended its tactics, however. Simon Pestridge, Nike's brand manager, told a reporter for MSNBC that "Nike likes to come at things from a different angle … We play inside the rules and we bring a different point of view that's true and authentic to sport."

Nike always retained its high advertising profile no matter what public relations fiasco might be playing out at the time. Running spots that aimed to increase brand identification rather than promote specific products had been part of that strategy for years. With "Move," Nike sought to improve its global image by identifying itself with the type of international fellowship featured at the Olympics, even though the company was not an official sponsor.

TARGET MARKET

The 2002 Winter Olympics were broadcast on NBC, which struggled to attract the 18- to 45-year-old demographic that was coveted by advertisers. Prior to 2002, the Olympics had tended to attract older audiences, but the introduction of newer sports, such as snowboarding and the skeleton, helped NBC reverse the trend by appealing to younger viewers, such as those who had made ESPN's X Games so popular. Nike even aided in the endeavor by producing a 30-minute promotional show that aired on January 26 and that featured lesser-known Olympic athletes teaching NBA star Charles Barkley and Olympic champion runner Marion Jones about winter sports. This cross-pollination effort sought to attract Nike's customer base—both Barkley and Jones had recently been featured in high-profile Nike cam-paigns—in addition to the Olympics' traditional audience, which included hefty numbers of viewers who were more interested in the athletes' personal stories than in the sports themselves. The "Move" spot also catered to this demographic by concentrating on everyday people "just doing something" as well as featuring professional athletes who epitomized the "Just Do It" ethos.

The Winter Olympics aired a week after Super Bowl XXXVI, the year's other high-profile television advertising event. The Super Bowl had the distinction of offering the most expensive airtime of the television year, roughly $2 million for a 30-second commercial. The Winter Games were less expensive, about $600,000 per 30 seconds, and had the advantage of airing over a two-week period. Nike elected not to advertise during the Super Bowl, instead concentrating its efforts on the Olympics. Ironically, Nike had no major competition. As with the Super Bowl, the biggest advertisers at the Olympics tended to have nothing to do with sports or sporting goods. Xerox, Bank of America, and AT&T all had a sizable presence, with Nike being the only sports-related advertiser to air commercials.

One explanation for this was that Nike was primarily a retail company, and the Olympics often catered to business-to-business advertisers. "Advertisers believe that the size of the audience, the global exposure and the duration of the event combine to provide a powerful opportunity to reach their target audience," wrote Kate Maddox in B to B magazine. In this light Nike's "Move" commercial was nontraditional in that it was aimed squarely at the consumer. Yet in terms of not promoting a specific product, Nike was right in line with the trend. "Twenty to 30 years ago, it would have been branding advertising. Advertising today has probably become more strategic in use," Rick Burton, the executive director of the Warsaw Sports Marketing Center, told Jane L. Levere of Salt Lake City's Deseret News.

COMPETITION

The Olympics were "a bellwether for advertisers," wrote Michael Dumiak of Financial Services Marketing. Toward that end many advertisers created special campaigns that capitalized on the emotions the games engendered in their viewers. Bank of America, McDonald's, and Visa all produced spots specifically for the games. "The Olympics represent what is pure and good about sports," Mark Vogel, executive vice president of brand management for the Osborn & Barr consulting firm, told Thomas Lee of the St. Louis Post-Dispatch, "and these companies want their brands associated with that." Nike was the only major sporting goods company to buy substantial airtime. Though the company did not release budget figures for the commercial, Monster.com, another major Olympic Games advertiser, spent more than $10 million on nearly 200 spots for the games, and Samsung spent more than $15 million. Nike's nearest competitor, Reebok, did not advertise during the games but did garner publicity for its Reebok Human Rights Award, which was given in a ceremony in conjunction with the Olympic festivities.

A 10-DAY SHOOT FOR 90 SECONDS OF FILM

Nike's Emmy-winning "Move" spot was shot over a period of 10 days by director Jake Scott, the son of Oscar-nominated film director Ridley Scott. Finding a skateboarder to launch himself off the roof of a building onto a ramp proved difficult. The first two candidates refused to attempt the stunt, and the task finally fell to a young local volunteer. The most harrowing part of the shoot took place in Auburn, California, where professional BASE jumper Lottie Aston and a cameraman repeatedly hurled themselves off the Foresthill Bridge. Despite the inherent danger in the jump, Nike spokesman Scott Reames said, "It's young, it's edgy … You can't deny the coolness factor."

MARKETING STRATEGY

"Move" opened with a long shot of a boy running down a suburban street. As he looked over his shoulder, the scene cut to a matching shot of a hockey player. In turn others were shown moving as well—a man rotated his legs around a pommel horse, a basketball player shot to score, a jogger ran in place at a red light, a tennis player swung a backhand. Shots of professional athletes Street, Vince Carter, Lindsay Davenport, and Landon Donovan were intercut with shots of everyday athletes engaged in their pursuits. The sports varied in intensity, from the speed of the hockey player and the long-distance jumper to the more languorous underwater splash of the high diver and the gentle descent of the parachuting BASE jumper, resulting in a rhythm that rose and fell with the music and the pace of the editing. Three-quarters through, the words "just do it" were superimposed on an underwater shot of a high-diver plunging into the blue swimming pool. The commercial eventually ended with a continuation of the scene of the boy running down the street, and it concluded with an understated swoosh in the center of the screen. All of the action was presented in real time, "lovingly choreographed," according to Advertising Age, without the slow-motion effect so common in sports advertising.

The spot proved inspiring, both visually and musically. With the variety of people and activities—from children to seniors, basketball players, swimmers, golfers, and skiers—chances were that every viewer found an image with which he or she could identify. Nike even reached beyond its own interests in athletic footwear to include athletes in bare feet and ice skates. As W+K's Hal Curtis explained to the Web-based Boards magazine, "Nike is perceived as a core sport brand for football, basketball, baseball and soccer. Showing other sports and stretching that is a good thing strategically."

Critics applauded the understated elegance of the spot. "'Move' quietly breaks through the clutter due to its refreshing realness," wrote Christine Champagne in Shoot, and a writer for Creative Review called it a "luscious" expression of "how movement can translate from one sport to the next." Adam Bonislawski of Shoot praised the way in which "each detail flows naturally from the ones that precede it."

Many people singled out the music as a major factor in the spot's appeal. While Nike commercials often included rap or techno music with a strong, fast beat, "Move" was different. A gentle piano score composed by Jonathan Elias especially for the spot accompanied the real-time images, creating an uplifting, inspiring mood as opposed to a hard-driving, competitive feel.

OUTCOME

Curtis told Champagne that with "Move," "we wanted to show that sport is a shared experience, whether you're a kid on a skateboard or a pro like Vince Carter playing an NBA game." It worked, Champagne declared. "The mix of professional and amateur athletes, the real and natural production, and the music combined helped to create an ad that would appeal to anyone who watched the Winter Olympics—not just to hard-core athletes and thrill-seeking teens," she wrote.

"Move" won several awards, including a Gold Lion at the annual Clio Awards in South Beach, Miami, Florida, and a 2002 Emmy Award from the Academy of Television Arts and Sciences for outstanding commercial. Apart from the recognition of the advertising industry, the spot also pleased filmmakers. "The commercial attains that great aesthetic Holy Grail," wrote Adam Bonislawski in Shoot, "the seamless integration of form and content." A writer for Adweek called it a "visual and aural masterpiece."

PLAY CAMPAIGN

OVERVIEW

"Just Do It" became one of the most recognizable catch-phrases in advertising. It belonged to Nike Inc., the Oregon-based company that dominated the athletic footwear and sports apparel industry beginning in the 1980s. Long known for its television and print ads featuring superstar athletes who personified the "just do it" ethos, Nike conceived its "Play" campaign to appeal to the opposite demographic—those who preferred a more lighthearted, less strenuous approach to fitness. Toward this end the advertising agency Wieden + Kennedy, based in Portland, Oregon, created a series of television spots to promote Nike shoes as being ideal for everyday life. The soft-sell strategy focused on the brand rather than a specific product, as witnessed by the subtle placement of the Nike "swoosh" logo above the word "Play" at the end of the spots.

Consisting of a series of three television spots, the $25 million "Play" campaign was launched in August 2001 with "Tag," "Shade Running," and "Tailgating." In "Tag," for example, a man dressed for work emerged from a subway staircase, coffee in hand, and was tapped on the shoulder by a stranger. With a slight sigh the man understood that he had just been tagged "it." People on the street scattered in all directions as he looked around for someone to pursue. Everyone abandoned their commute in favor of playing the game.

The "Play" campaign was a success on all fronts. "Tag" won the Grand Prix for television commercials at the 49th International Advertising Festival in Cannes, France, in 2002, with "Shade Running" taking a Gold Lion and "Tailgating" a Bronze Lion. Nike's profits for the quarter following the campaign rose 8.3 percent, despite the fact that sales in the United States fell 2 percent, likely because of the economic fallout following the terrorist attacks of September 11, 2001. Because the campaign was not product specific, however, and because Nike ran many campaigns simultaneously, it was hard to pinpoint exactly how the "Play" ads affected sales. The short-lived campaign ran through Labor Day 2001.

HISTORICAL CONTEXT

With sales figures in 2001 more than triple that of Reebok, its nearest competitor, the biggest hurdle Nike had to overcome was its own reputation. The success of "Just Do It," a phrase dreamed up by Dan Wieden, founder of Wieden + Kennedy, in the early 1980s, represented a "tough love" approach to fitness and sports. Recognizing that not everyone appreciated the no-excuses sentiment, however, Nike officials decided to soften its image by portraying working people dispensing with obligation in order to enjoy a moment of frivolity. " 'Just Do It' is supremely motivating, no question about that," wrote Bob Garfield in Advertising Age, "because it brooks no excuse for sitting on your fat ass a moment longer. But that campaign is also a bit on the, um … harsh side. A little grim, you know?" Focusing on a more lighthearted nature of play, which harked back to the school playground, Nike wanted to reach out to potential customers who were not athletic in the traditional sense.

Previous legendary Nike advertising campaigns had featured the biggest sports celebrities of the day, from Jimmy Connors to Michael Jordan to Lance Armstrong, a tactic that usually lured young people, teenagers in particular, to the brand. With the "Play" campaign the focus was on the urban world of work and the fantasy of escaping from it for a moment. The strategy seemed to signify an attempt to attract slightly older consumers and those who had not been previously influenced by Nike's strong alliance with world-class athletes.

TARGET MARKET

Historically most Nike commercials were fairly transparent when it came to their target audiences. Ads featuring star athletes attracted fans of that athlete, particularly young people. The bigger the star—Tiger Woods or Lance Armstrong, for example—the bigger the target. The "Play" campaign, however, strayed from that strategy, instead focusing on "everyday" people going about their business. The message was clear: Nike shoes were not just for the basketball court or the track or any other sport. They were perfect for the street or for the office. A person did not even have to like sports; he or she just had to like a good challenge.

PLAYING TAG IN TORONTO

The Nike "Tag" commercial, which featured an urban rush-hour crowd spontaneously breaking into a childlike game of tag, was filmed in Toronto, Ontario, with 400 extras. The city's locations were available only during weekend mornings. Director Frank Budgen's careful planning fell by the wayside when the weather failed to cooperate, forcing crews to shoot in three locations simultaneously. The award-winning result relied as much on happenstance as on the script. For instance, the man chased in the subway by the person designated "it," after everyone else had safely escaped onto a train, was recruited off the street right before shooting began.

Nike coyly denied, however, that it targeted a specific demographic with the "Play" campaign or, for that matter, with any of its other campaigns. Andy Mooney, Nike's vice president of global brand management, told Dick Silverman of Footwear News that "people … get way too focused on age and demographic segmentation. Sports fans are sports fans, no matter what." Tom Clarke, president of Nike, agreed with Mooney. "If we were trying to sell computers or something else, I think maybe a more fine-tuned demographic focus would be in play," he told Silverman. "But I think sports as an inspiration point gives you a lot of access into individuals and a pretty broad array of ages." Dave Larson, Nike's director of brand initiatives, told Sarah J. Heim of Adweek, however, that the "Play" campaign targeted teens but that it also aimed "to reach a psychodemo-graphic: anyone who is youthful in attitude and spirit." The idea worked. "Nike has shown a softer, more engaging side," wrote the editors of Campaign magazine in a review of the ads.

COMPETITION

Nike's nearest rival was Reebok, based in the United Kingdom, whose annual sales in 2001 were dwarfed by Nike's. Nike also outspent Reebok on marketing efforts, however, dedicating $130 million for the year as opposed to Reebok's $52 million. But in the summer of 2001, after years of taking a beating from Nike, Reebok announced the launch of its RBK line of shoes and sportswear with two aggressive marketing campaigns. In an effort to reach women, Reebok advertised heavily during the reality show Survivor, the year's top-rated program among female viewers of all age groups. The commercials featured notable female athletes, such as Venus Williams, as well as several Survivor cast members. Concurrently RBK's urban credentials were established with a series of ads featuring NBA star Alan Iverson; musicians Jadakiss, R. Kelly, and Missy Elliott; and street basketball players from Harlem, the likes of which Nike had just featured in its "Freestyle" campaign. Richard Linnett of Advertising Age called Reebok's new RBK campaign "a bold move onto Nike's turf."

Nike lost further ground to Reebok when the British company signed a 10-year deal to provide uniforms and warm-up apparel for the NBA, a commission Nike had held for years. The turnabout attracted much media attention. "For one thing," wrote Ron Stodghill II in Time magazine, "it means that if Michael Jordan returns to the game, no matter what he wears on his feet, he'll be wearing a Reebok logo on his back." Adam Helfant, Nike's director of global sports marketing, was not concerned. Reebok's $50 million NBA deal, he told Stodghill, amounted to "two months' worth of Jordan business for us." Stodghill concurred with Helfant. "Nike's path to the future has shifted from building brand awareness … to gaining a stronger foothold in growth markets like soccer and golf," he wrote.

Adidas, the number three athletic-shoe manufacturer in 2001, was never much of a threat to Nike but vowed to increase its share of the U.S. market from 10 to 20 percent, according to David Goetzl of Advertising Age. New Balance, a company that specialized in running shoes, showed substantial market growth during the year, however, up more than two 2 percentage points, to 9.6 percent. Also encroaching on the athletic-shoe market were makers of "brown shoes," such as Timberland hiking boots, which continued to increase in popularity in the early years of the decade.

MARKETING STRATEGY

Along with the "Tag" spot, the "Play" campaign featured two other commercials, "Shade Running" and "Tailgating." In "Shade Running" a woman went for a run through the streets of Manhattan, making sure to stay in the shade at all times. Viewers saw her cross the street in the shadow of a moving crane and use the shade of other moving targets, such as a truck, to guard her path through the crowded city. "Tailgating" showed a businessman with a briefcase being followed down the street by a man dressed for a game of basketball. He dribbled the ball ominously close to the businessman, who tried to ignore him. Finally the businessman flung his briefcase aside and pivoted to confront his "tailgater." The pair faced off in a game of one-on-one in a city alley. What all three spots had in common was a distinctly urban feel, with crowded city streets and acres of pavement that were transformed from infrastructure into a playing field. In essence the world became a playground.

Though the campaign was a departure from Nike's heralded "Just Do It" slogan, "Play" was not a rejection of it. As Larson told Heim of Adweek, "play" was just a different aspect of "doing it." "Play emphasized why you should just do it," he told her. Coincidently the campaign tapped into an idea that other companies were exploring for themselves. Jennifer Carofano of Footwear News noted that the "Play" campaign, along with the "Champagne" spot for Microsoft's Xbox, which featured the tagline "Life is short. Play more," represented a new trend in advertising. "The newest batch of print and television ads promote childhood games and pre-adolescent innocence as the ultimate goal for consumers of all ages," she wrote.

According to Monica Rigali, a Nike spokesperson, the campaign was a matter of art imitating life. "We are seeing people, especially young people, doing sports in a totally new way, just kids hanging out in their neighborhood playing games," she told Carofano. Mike Byrne, copywriter for Wieden + Kennedy told a writer for Adweek that "play is the mother of all sports … A kid gets interested because he falls in love with the movement: throwing, running, catching." In addition, Hal Curtis, creative director for Wieden + Kennedy, told Adweek that "it doesn't matter if a person's big or small" when playing tag. Such was the message imparted to viewers. As Curtis said, "We wanted to … bring people back to their youth and garner an emotional reaction."

Emotions aside, the campaign was convincing in its message that Nike made shoes for everyone. Jeff Goodby, the Cannes jury president, told Eleftheria Parpis of Adweek that "Tag" was subtly persuasive in conveying the point that Nike shoes "weren't just [an] athlete's shoes, but something you can use in everyday life." It was meant to convey this idea even if a person's morning commute did not break out into a four-block game of tag.

OUTCOME

The "Play" campaign was launched on August 1, 2001, with "Summer of Play," a star-studded party held at the Niketown store in Beverly Hills, California. The party was essentially a promotional event for a promotional campaign, an illustration of the synergy between Hollywood and Nike. The attendance list, which included Snoop Dogg, Leonardo di Caprio, and Tobey Maguire, helped Nike maintain its image as the go-to company for footwear for the rich and famous. Even though the commercials aired for less than a month, as had been the plan, they were yet another stellar addition to Nike's considerable repertoire of advertising, one that had made it the overwhelming industry leader for years. While most U.S. retailers saw their profits suffer after September 11, 2001, Nike's sales slumped only 2 percent, and the company ended the fiscal year with sales up by 5.5 percent.

"Play" was deemed one of the most creative and successful campaigns of the year by leaders in the advertising industry. In addition to winning the top awards at Cannes, Nike was named Advertiser of the Year at the 2002 Clio Awards, based on Wieden + Kennedy's work for the company. As for peer reviews of the spots, Laurel Wentz and Stefano Hatfield, writing in Advertising Age, called the "Tag" spot "a beautifully directed TV commercial with perfect timing." Garfield was similarly impressed. He called the "Tag" commercial "breathtaking in its conception, its choreography, its wry sensibility, and—beneath its exceedingly complex production—its sheer simplicity."

PRODUCT ASSAULT CAMPAIGN

OVERVIEW

Going into the summer of 1997, Nike gave its advertising firm, Portland, Oregon-based Wieden & Kennedy, an "emergency assignment," according to Jimmy Smith, a copywriter for the agency. The "Product Assault" campaign "wasn't even budgeted for the summer, and we had to turn it around quickly," explained Smith in Kathy DeSalvo's August 1997 Shoot article. "Nike wanted to do something to let people know that these cool shoes are out there. After we received all the background information on them, we looked at them and [decided] that they're really cool-looking shoes, so why not just show them?" Nike advertising director for North America Chris Zimmerman expounded further on the strategy behind the campaign: "These ads are really about showing that the product speaks for itself," Zimmerman explained after asserting in Andrew Ross Sorkin's July 1997 Portland Oregonian article that "every shoe has a story to tell."

The resulting print and outdoor advertisements focused visually on the sneakers themselves, but the ads also included minimal copy that promised more to the story. For example, the ad for the Air Foamposit I featured what most people would recognize as an E-mail address—in this instance, [email protected]. Sports-savvy consumers could decipher the references embedded in the address: "penny" referred to the guard for basketball's Orlando Magic, Anfernee "Penny" Hardaway, and "breakudown" referred to his speed in wearing out his opponents.

By suggestion, the ads prompted Internet users to send E-mail messages to the given address; Nike's computer server then bounced automated responses back to the sender. For an E-mail sent to [email protected], the response read, "Hey, thanks for the email. So you've seen the new Air Foamposit I, also known as Penny's new space boot. Pretty cool, huh? You probably haven't had a chance to really study 'em cuz Penny's always moving so fast, so check out http://www.breakudown.com." This address led Internet surfers to the World Wide Web, where Nike had devoted a website to telling the more complete story of the new shoe. "We don't think of them as Web sites so much as we think of them as 'sitelets,' all linking back to Nike" through the corporate home page, http://www.nike.com, explained Nike's Zimmerman in Sorkin's article. "This is really the first time we have ever done anything like this," continued Zimmerman, summarizing the overall strategy of this integrated campaign.

HISTORICAL CONTEXT

Outdoor advertising, since it was an oversized medium that amplified the visual spectacle of the new shoes, served as the centerpiece of the campaign that also included print advertising as well as television and radio spots, though these latter two media were lacking the E-mail component of the campaign. Besides directing the television spots, photographer Dan Winters of bicoastal X-Ray Productions also shot the pictures for the campaign, ensuring that the photos would retain their quality when enlarged. At the time, outdoor advertising, which included billboards, phone kiosks, and bus shelters, was experiencing a resurgence in popularity. For example, the billboard company Outdoor Systems Inc. went public on the New York Stock Exchange at about the same time Nike launched this campaign, in 1997. Over the next two years the price of this stock rose about 1,500 percent, putting its growth on par with rapid-growth Internet stocks such as Yahoo! and Amazon.com and enticing Infinity Broadcasting, a subsidiary of media giant CBS Corp., to buy out Outdoor Systems for $8.3 billion in stock and assumed debt. "We seem to be in a golden age with the world's oldest medium, even in the Internet age," said Brian McLean, president and chief executive of Canadian-based Mediacom Inc., a subsidiary of Outdoor Systems, in John Mahler's Toronto Star article on billboard advertising.

Doug Linton of the Toronto-based ad agency Ambrose Carr Linton & Carroll sang the praises of outdoor advertising in the same article: "It's the ultimate precis. You have to have it down in eight words or less … It's like working without a net. You're not surrounded by editorial copy or competing with a TV program. You're out there on your own." Whereas McLean and Linton suggested that outdoor advertising gained its strength as a medium isolated from other media, Nike sought to enhance this singular strength by integrating other media into the mix. In essence, Nike walked the high wire of outdoor advertising while also unfurling a net—specifically, the Internet.

Nike had used a similar interactive strategy in a campaign dating back two years, except instead of featuring E-mail addresses superimposed over the photographs focusing on the sneakers, the shoe-centered ads listed toll-free telephone numbers. Those who called simply listened to prerecorded conversations between celebrity athlete endorsers and Nike employees talking about that particular shoe model. This strategy relegated the caller to a passive role in that, after dialing, the caller merely listened. The new campaign forced more active interaction, though the Internet user remained essentially a recipient of information as opposed to engaging in a dialogue about the shoe. A fully interactive campaign would require more human intervention—this campaign utilized technology to draw the consumer into as much of an interactive experience as possible.

TARGET MARKET

Mediacom's McLean continued to discuss in Mahler's article how outdoor advertising reached target audiences more efficiently than other media did: "People aren't home all night on the Internet, despite what some might think. They're driving, shopping, going to arenas, travelling on subways, waiting for buses … And we want to catch them when they're out and about, when they're making the choice to purchase." Instead of separating these targeting techniques, Nike combined them to target consumers on the go while simultaneously enticing computer-proficient consumers to extend their interaction with the advertising on the Internet. Nike's youth-oriented targeting dovetailed perfectly with this strategy, as the younger generation grew up with computer technology. If anything, Nike used the print advertising as a gateway to reach this core target market of youths. "The cool thing is when grownups look at the ads, and don't know what it means," explained Wieden & Kennedy's Smith. "They aren't supposed to know. If they were getting it, then we'd be in trouble."

COMPETITION

In May 1998 a print advertisement appeared on the back cover of ESPN Magazine featuring a picture of an athlete in running gear replicated 6,000 times. The advertiser went unidentified except for what appeared to be the address for a website, http://www.97005.com. Most consumers would not recognize the number as the zip code of Nike's corporate campus in Beaverton, Oregon. The website itself featured the same picture as the print ad, accompanied by a window containing the message "Learn," in addition to a box prompting viewers to enter their own E-mail addresses. Seemingly, this integrated ad extended Nike's existing campaign. But as it turned out, this was a teaser ad created for Nike's archrival, Reebok International, by Mindseye Technology. The campaign launched in earnest by sending announcements revealing the identity of the advertiser as Reebok to all of the E-mail addresses gathered by the teaser ad. The teaser website then transformed into a full-fledged ad for Reebok urging runners to "break out" of the mold that had become generic through overproliferation, a swipe at Nike's ubiquitous marketing, and instead to express individuality by wearing Reebok gear.

Nike's other main competitor, Fila USA, which doubled its sales between 1993 and 1997 to enter third place in the athletic shoe category behind Nike and Reebok, consolidated its $20 million advertising account under Arnell Group Brand Consultancy, New York, which had held $7 million of Fila's account. Despite award-winning creative work from Foote, Cone & Belding, New York, Fila awarded the entire account to Arnell for its expertise in building "corporate identity, branding and image development," according to Fila's vice president for advertising Howe Burch in Jeff Jensen's August 1997 Advertising Age article. Specifically, Fila was attempting to reposition itself as more of a performance brand without losing its identity as a fashion brand. Arnell's first assignment involved the November 1, 1997, launch of the Hill IV, a basketball sneaker named after professional player Grant Hill, which would retail for $90 after the previous model, the $100 Hill III, underperformed sales-wise. The campaign would appear in print, outdoor, and television advertising, as well as being pushed at the point of purchase, and ran into 1998.

MARKETING STRATEGY

Besides Hardaway, Nike's "Product Assault" campaign featured numerous other prominent athlete-celebrities with self-descriptive E-mail addresses endorsing specific shoe models: Alonzo Mourning of the Miami Heat ([email protected]) endorsed the Air Metal Force; boxer Roy Jones, Jr. (rjones ringyobell.com), cross-trained in @ the Air Ubiquitous Max; Seattle Supersonic Gary Payton ([email protected]) flew in the Air Hawk Flight; Green Bay Packer Reggie White (rwhite@goodgawd) posed for the Air Cover Max; Detroit Lion Barry Sanders ([email protected]) endorsed the Air Super Zoom; Olympic decathlete Dan O'Brien ([email protected]) ran in the Air Max; and Indiana Pacer Reggie Miller ([email protected]) jumped in the Air Total Max. E-mail sent to these addresses received messages back from the address [email protected].

Copywriter Tina Hall, in conjunction with the rest of the Wieden & Kennedy team—art director Gary Koepke, creative directors John Jay and Dan Wieden, and management supervisor Karen Brown—used spoken language in the reply messages, employing sports slang and everyday vernacular to make the messages sound authentic. For example, messages sent to O'Brien received the reply "Bet you were out running and you saw the new Air Max, right? Probably didn't get a real good look at it, though, because you just whizzed right by it, clipping off those sub-five-minute miles, huh? That's what we thought, so take your time checking out Dan O'Brien's new Air Max at http://www.trynkeepup.com." A message sent to Miller's address received the reply "So you've seen Reggie Miller's new Air Total Max, huh? Now when you finish practicing your jumpers, go check out http://www.makeitrain.com and witness the ultimate ride for sinkin' threes."

LIKE THOSE RAVE UNDERGROUND PARTIES

When asked why Nike's "Product Assault" campaign forced consumers to take the extra step of sending Email to receive the World Wide Web addresses for each shoe model instead of simply including those URLs in the ads, Nike advertising director for North America Chris Zimmerman explained that this more involved process was "more interactive." Wieden & Kennedy copywriter Jimmy Smith expounded further on this strategy in Kathy DeSalvo's Shoot article. "As far as the e-mail addresses, we just wanted a fully integrated campaign," Smith said. "We kind of thought of it as being like those rave underground parties, where you have a number that you call and then that takes you somewhere else. So you send e-mail to these addresses, and then it sends you back a message where to go to get to these other Nike web pages."

While the print ads ran on billboards as well as in consumer magazines such as Sports Illustrated and Rolling Stone, the campaign also included radio and television spots that ran on ESPN and MTV. In one television commercial the camera centered on a Nike Air Hawk Flight basketball sneaker resting on the dashboard of a car passing through a tollbooth while a radio broadcast of a Seattle Supersonics basketball game featuring the shoe's endorser Payton played on the car radio. Director Winters synchronized the play-by-play announcements to correspond with the car's progress through the tollbooth. As Payton "drives down the lane" of the basketball court, so too did the car with the shoe ornament drive down the tollbooth lane; when the car driver tossed the coin into the hopper to open the tollgate, the radio announced excitedly, "He's got it! Nothing but the bottom of the cup!" as if announcing the driver's coin toss instead of Payton's layup.

OUTCOME

Sorkin reported in his Portland Oregonian article that "interacting with the ads can be tedious." Indeed, the ads required much more patience than consumers were accustomed to in an age of instant gratification. Nike and Wieden & Kennedy, a team that had defined many of the marketing trends of the 1990s, trusted that consumers were oversaturated with advertising that did all the work for them and instead yearned for interactive advertising, especially as consumers became more and more adept at traversing the Internet. In fact, the technical knowledge required by the ads amounted to the most simple of Internet activities—sending E-mail and accessing websites. Furthermore, most advertising did not require any commitment from consumers, as they remained passive recipients of stimuli urging them to purchase the advertised products. This traditional form of advertising left a gap between the viewing of the ad and the purchasing of the product. Nike and Wieden & Kennedy sought to fill in this gap with interaction. If potential buyers entered the gateway of sending the E-mail message, then they had started the process of interaction with the product. This kind of commitment was more likely to lead to a purchase than passive viewing of the product.

Nike's Zimmerman summed up the campaign's strategy with his assessment in DeSalvo's Shoot article: "We're always looking for new and interesting ways to present our product … I think that as much as anything else, we thought that this was a very simple, honest and hopefully intriguing approach. In our marketing, we're passionate about a lot of things—sports, athletes." Zimmerman continued, "We want to show consumers how passionate we are about our products. I think [the 'Product Assault' campaign] was a fairly arresting approach visually."

WHAT IF WE TREATED ALL ATHLETES THE WAY WE TREAT SKATEBOARDERS? CAMPAIGN

OVERVIEW

Nike, Inc. launched its first national advertising campaign portraying skateboarders in 1997. The three television ads that made up the effort used a pseudo-documentary style to depict the tribulations skateboarders suffered when they tried to practice their sport. "Running," "Golf," and "Tennis" showed participants in these three mainstream sports being derided and harassed simply for engaging in their chosen activities. Each spot closed with the tag line that served as the campaign's title: "What if we treated all athletes the way we treat skateboarders?" Created by San Francisco-based advertising agency Goodby, Silverstein & Partners, the campaign sought to "develop a relationship between the brand and the skaters, and change how [skaters] view[ed] Nike in skateboarding," a Goodby representative told Adweek.

Revamping its image among skateboarders would be no easy task for Nike. Nor was it an unimportant one. Nike's sales were falling, and the brand had lost some of its popularity with teenage consumers—the most profitable segment of the market for athletic footwear and apparel. Once the paragon of hip in youth footwear, the company had fallen into the ranks of the hopelessly uncool and could only watch as smaller rivals captured an ever greater share of the market. Nike had introduced a line of skateboarding shoes and clothing, but consumer reaction had been tepid. Nike hoped "Skateboarders" would boost the popularity of its offerings and drive sales, but the underlying purpose of the campaign was to change perceptions of the company within the youth market. Therefore, "Skateboarders" was conceived less to push a specific product than to gain the respect of the trendy skateboarding community and with it the loyalty of a new generation of consumers.

HISTORICAL CONTEXT

When former track athlete Phillip Knight founded Blue Ribbon Sports in 1964 and began selling shoes out of his car, few would have believed he was laying the foundation for the rise of one of the world's great mega-brands. But in 1972 Knight rechristened his company Nike, after the Greek goddess of victory, and set out to take the athletic shoe industry by storm. Before that time most firms just offered simple and inexpensive sneakers designed for multipurpose use. Nike, by contrast, began to make shoes for specific athletic endeavors and heavily touted the technological advances of its products. This strategy, coupled with Nike's development of a stable of superstar athlete endorsers, catapulted the Oregon-based firm to the top of the industry. In the 1990s alone athletes ranging from Michael Jordan to Tiger Woods donned the Nike swoosh and helped reinforce its association with elite athleticism and excellence. Despite the fact that market research showed that the vast majority of Nike consumers were more likely to hit the mall than the playing field in their new shoes, the brand's advertising drenched itself in sweat and athletic prowess and the company thrived. "We're in the sports business, not the shoe business," a Nike vice president told Time magazine. Between 1995 and 1998 Nike's average annual growth rate was 39 percent, and by 1998 it had seized nearly half the U.S. athletic shoe market.

By the late 1990s, however, cracks began to show in the seemingly impregnable Nike facade. Its footwear sales had dropped 18 percent in 1998, forcing the company to lay off 250 employees at its Beaverton, Oregon, headquarters. Most troubling for Nike was its poor image. While it had once cultivated an outsider image, Nike was increasingly lambasted in the media as a corporate marauder. Critics cited its labor practices in Asia as especially galling. In an effort to change these negative opinions, Nike dropped its famous "Just Do It" campaign in January 1998 in favor of the gentler "I Can," which celebrated everyday athletes more than the superstar professionals. The company also diversified into sports equipment, designing products ranging from baseball cleats to snowboards. As Time explained, "Nike is reassessing everything, from the way it sells to retailers to the number of times the famous swoosh appears in products and in advertising."

TARGET MARKET

Nike's efforts to shake its slump were hindered by a generational changing of the guard. While its athletic shoes had captivated both baby boomer and Generation X consumers, Nike proved to be less popular with the so-called Generation Y, or "echo-boom," generation—those consumers born between 1979 and 1994. It was this demographic group that Nike courted with the "Skateboarders" campaign. Generation Y was an essential market for Nike to reach. These children of the baby boomers numbered 60 million, three times the size of Generation X. They commanded an estimated total annual disposable income of between $82.1 and $108 billion, according to the New York Daily News, and exerted considerable influence over family purchases ranging from electronics to groceries. Since "Nike's best customers" were teens, as Time explained, the brand's sinking image was an obstacle to the company's continued success. Business Week confirmed that "Nike's sneaker sales are tumbling as the brand sinks in teen popularity polls."

In its effort to shore up its status among young people, Nike turned to skateboarding. According to the Wall Street Journal, 6.5 million skateboarders rolled across America's streets in 1998 alone. That number was expected to triple by 2001. Even more important was the fact that skateboarding was a tremendously popular sport among teens. As the Journal noted, extreme sports—which included snowboarding, skateboarding, and street luge, among others—"appeal to Generation Y … because they aren't the [sports] their parents grew up playing." Moreover, "boarding tend[ed] to have a dangerous edge parents view as rebellious, which is just fine by teenagers."

This was not the first time Nike had tried to get out on the cutting edge of youth fashion. In its basketball shoe advertising of the early 1990s, the company had stylishly portrayed the gritty culture of inner-city basketball and featured spokespeople such as outspoken bad boy Charles Barkley. These ads were designed to appeal particularly to the urban youths who acted as trendsetters for the rest of the teen and 20-something market. The strategy worked, as the popularity of Nikes among urban youth quickly translated to suburban success for the company. In the late 1990s skateboarders—much maligned by authority figures for their clothes, hair and piercing styles, and perceived rebelliousness—had partially taken over this fashion-setting role and played a large part in shaping the shoe buying patterns of the youth market. Nike hoped to repeat its earlier success by improving its cachet among this group.

Nike had some heavy baggage to overcome, however, before skateboard aficionados would accept the company. Nike's traditional formula of slick national advertising laden with superstar athletes was ineffective with echo-boomers, who were less prone to worship basketball, football, and baseball icons than previous generations. Although skateboarding was an Olympic exhibition sport in 1996, many potential participants—the heroes of Generation Y—spurned the competition because of the Games' burgeoning corporatism. Moreover, as a gigantic global conglomerate, Nike was loathed by many professional skateboarders who "regard[ed] corporations and organized communications as evils," explained the San Francisco Examiner. While the flashiness of a Jordan spot might not win over a teen consumer, that group did respond to "humor, irony, and the (apparently) unvarnished truth," reported Business Week. Nike made sure that its "Skateboarders" spots were imbued with these attributes.

COMPETITION

As Nike's popularity was waning among teens, niche brands were becoming trendy. Since skateboarding was becoming the activity of choice for many Generation Y consumers, companies that produced hip skateboarding apparel and shoes saw their market share rise. Athletic footwear companies who designed products for skaters enjoyed annual sales gains ranging from 20 to 50 percent, even though the total U.S. sneaker market was growing at a paltry 2 percent a year in 1996 and 1997. According to the Wall Street Journal, hitherto inconsequential brands captured 7.3 percent of the market in 1997. Foremost among these was Vans. Launched in 1966, Vans had spent most of its history struggling vainly against Nike in the basketball and running shoe realms. But the company radically changed its approach in 1995. After noticing that its clothes and shoes were popular street wear—especially among skaters—Vans committed to focusing on this segment of the market. In addition to sponsoring alternative sports events such as the Vans World Championships of Snowboarding and the Vans Triple Crown of Surfing and Skating, the company signed a roster of endorsers that truly resonated with teens. Daniel Franck, an elite snowboarder, was only one of 236 athletes who further enhanced Vans' credibility among the extreme sport-crazed echo-boomers. Vans' efforts were rewarded when its 1997 sales increased 26 percent to reach $159 million. "The fastest-growing sports are in extreme sports, and our target market, some 78 million strong, plays them," Vans' vice president of marketing told Advertising Age.

Another hip skating brand was Airwalk, which tripled its television ad budget in 1998 when it launched the "Airwalk: The Musical" campaign. With ad agency Lambesis, Airwalk created two commercials that ran on MTV and ESPN, as well as during Comedy Central's popular animated show South Park. The spots spoofed The Sound of Music in their portrayal of extreme athletes engaged in daring stunts. Airwalk also attempted to make its products more mainstream. To reach a broader audience, it expanded its print campaign to include general interest magazines, along with more youth-oriented mountain biking, snowboarding, and skateboarding publications.

THEY DID IT

The resistance Nike initially faced in the skateboarding community was quite strong. Prior to the campaign many skaters had taken to wearing "Don't Do It" buttons, an unflattering reference to Nike's long-running "Just Do It" campaign.

Nike's effort to reinvigorate its brand image also confronted more familiar challengers, as Nike was not the only established athletic shoe company to covet the Generation Y market. Adidas, Nike's German rival, met with great success in 1998, when its sales increased 94 percent, making it the third best-selling brand in the United States. Perhaps because Adidas was viewed as less of a behemoth than Nike, it found greater acceptance in the youth segment of the market. In 1999 Adidas introduced its "Forever Sport" campaign, which presented both elite and everyday athletes. In one commercial 18-year-old tennis phenomenon Anna Kournikova hit a tennis ball as the words "Take Control of the Stadium" appeared on the screen. In another "Take Control of the Streets" flashed across the screen while a skateboarder jumped over various obstacles. Adidas also signed on as an official sponsor of the X Games, an annual extreme sport competition that was tremendously popular with echo-boomers.

MARKETING STRATEGY

As predominantly an image-rather than a product-driven campaign, the component ads of "Skateboarders" did not need to focus particularly on the actual business of buying and selling. Nike, therefore, was able to avoid the pitfalls of other youth-oriented campaigns that tried (and generally failed) to portray images of Generation Yers to themselves in a way that would actually resonate with those consumers. Instead, Nike strove to connect with its audience emotionally. Mindful that echo-boomers were highly skeptical of glossy marketing efforts, Nike sought to instill "Skateboarders" with as much authenticity as possible.

Goodby, which employed two veteran skateboarders on the campaign's creative team, used firsthand interviews with skaters to map its strategy. They discovered that skaters were often harassed by passersby, hounded by the police, and derided as being nonathletic. Goodby opted to turn "skaters' experience inside out" and use this concept as the campaign's foundation, an agency spokesperson told Adweek. Through a clever inversion, the three commercials vividly refracted the experiences of skaters. In "Running" two joggers were abused in the street. A women screamed at them, and an elderly man denounced them as crazy while drivers hurled garbage at the hapless pair. In "Golf " two players were arrested on the green simply for trying to play, while "Tennis" depicted the obstacles tennis players might encounter: after meeting stealthily for a midnight game, a security guard interrupted them and chased them away. In all these ads the implications of Nike's message were clear: skaters should be taken as seriously as other athletes, rather than treated as loitering delinquents.

Goodby realized that the spots' visuals would be as important as their message in reaching echo-boomers. Therefore, the spots were shot to look grainy and "low-budget." "[A] lot of skateboarders film themselves," Shoot noted, so the homemade feel contributed to the aura of authenticity Nike hoped to project. Moreover, the popularity of television programs featuring home videos had skyrocketed, especially among Nike's target audience. Shows ranging from When Animals Attack to Scariest Police Chases garnered a considerable audience on network television. Movie directors even adopted the faux-realist technique. "Kids," a bleak tale of alienation and despair among Generation Yers, used this same style to powerful effect. Nike designed its spots to be at home in this milieu.

Nike ran the campaign on a broad array of programs in order to connect with as wide a swath of its target audience as possible. But a cornerstone of the media strategy was the campaign's heavy rotation on ESPN and ESPN 2 during those networks' coverage of the X Games, which captured the exact demographic group Nike sought to reach. "The X Games has done a virtual full court press around males aged 12-to-34," the Washington Post reported. "According to ESPN, the Summer X Games delivered more viewers in that age group than any other sporting event, including the Super Bowl."

OUTCOME

Nike declared that "Skateboarders" succeeded in its attempt to reach younger consumers. The company told the San Francisco Examiner that it received scores of favorable letters, one of which praised Nike in the language of Generation Y: "Right on, dude." A Goodby spokesperson explained to Adweek a more subtle positive outcome of the campaign. Prior to the debut of the three commercials, Nike's massive size was its chief liability in the eyes of skating culture. They "viewed Nike as the ultimate big company—a corporation that, they suspected, didn't know anything about skateboarding." The "Skateboarders" ads made Nike's size seem beneficial. The spots "actually became a PR campaign for skateboarders with the general public, rendering Nike's 'bigness' a good thing," the Goodby spokesperson noted. Skateboarders played the ads in court as a defense against anti-skateboarding tickets. One skating magazine told the story of a cop who told skaters, "I agree with the Nike ads," and decided not to fine them. A skater wrote to the company that "Nike brought skateboarding something no one else could."

The campaign also won critical acclaim. "Skateboarders" was awarded the Grand Prix (the top prize) at the renowned International Advertising Festival in Cannes, France. Agency head Jeff Goodby expressed his theory about the campaign's true achievement to the San Francisco Examiner: "It was about something that is true. The best advertising, like the best of anything, resonates as something that is true."

WOMEN'S CAMPAIGN

OVERVIEW

Nike, Inc., the sports-shoe manufacturer whose use of celebrity athletes as endorsers had helped it become the dominant American brand in its category, began focusing an increasing amount of its marketing resources on women in the 1990s. By the mid-1990s Nike's women's shoes and apparel accounted for over a quarter of its total U.S. sales, and in 1995 the company released its highest-profile women's commercials to date. These early spots were among the first examples of what became known as "empowerment advertising." Nike experimented with other approaches in its women's-products advertising, and at times the brand's paeans to female athleticism were greeted with skepticism, but regardless of Nike's motives, in these campaigns the company consistently sought to address issues that were important to American women.

Among the early empowerment spots—created by longtime Nike advertising agency Wieden+Kennedy of Portland, Oregon—was one that pointed out the dramatic social, health, and psychological benefits that girls derived from participation in sports. Another equated a girls' sports team with a pack of wolves. In 1997–98 Nike, with spots created by San Francisco's Goodby, Silverstein & Partners, moved away from the empowerment message to focus on the emotional drama of a fictional high-school girls' basketball team during a championship season. Spots featuring female Olympic athletes also ran in 1998, and a similar focus on the U.S. women's soccer team prevailed in 1999, before Goodby was relieved of its duties.

Nike lost market share during this period, but it effectively laid the groundwork for a sustained emphasis on women's products, which promised more possibilities for future growth than any of its other lines. Wieden+Kennedy's work for Nike at the start of the new century included a return to empowerment-themed advertising.

HISTORICAL CONTEXT

As early as the 1980s Nike began to extend its marketing specifically to women, but these efforts were not especially effective since most of the company's energy was directed to its high-profile men's advertising. By 1990, however, the company, under prodding from some of its own women executives, woke up to the potential of the women's market and began to address it seriously in its advertising. By 1992 Nike was seeing substantial sales gains in the category. Having started by redesigning the shoes for women's different bodies and patterns of use, the company recognized that its advertising, too, might need to take a different approach if it was to have a positive impact on women. Following a series of women-centered campaigns created largely by women at Wieden+Kennedy, Nike was widely praised for its progressive, proactive stance.

The changes in Nike's marketing of women's sports products came after 20 years of changes in the way U.S. educational institutions treated girls' sports programs in general. The passage of Title IX in 1972—the same year Nike was founded—marked a turning point for women's athletics because it barred sex discrimination by any institution receiving federal funding. Furthermore, the new law required schools to offer sports programs for males and females based on their proportional enrollment numbers. The result was a steady increase in the number of girls participating in school sports, from 1 in 27 at the high-school level in 1972 to 1 in 3 in the 1990s, according to the Women's Sports Foundation. Nike spokeswoman Kathryn Reith saw the changes that had overtaken the category of women's athletic footwear as cumulative. "From my perspective," she observed, "there's been evolution, not revolution. Most of the greatest growth probably occurred in the '70s."

During the 1980s Nike stuck to building its reputation as the premier maker of high-performance men's shoes and apparel. The bulk of the women's market was left to Reebok, L.A. Gear, Avia, and others, all of whom tended to downplay technical features in favor of the more traditional appeal of fashion. It was not until the 1990s that Nike began to see women as a vast, largely untapped market for high-tech, high-performance footwear and apparel. Many pointed to the generation that came of age under Title IX as the most significant factor in this development. Suddenly girls who had grown up playing team sports like basketball, volleyball, and soccer were reaching the national stage. Nowhere was this more apparent than at the 1996 Olympic Games in Atlanta, Georgia, where many of the biggest winners for Team U.S.A. were women. Nike signed basketball player Lisa Leslie and soccer player Mia Hamm to endorsement contracts. With more than a quarter of its sales coming from women's products, the company was now convinced of the financial wisdom of marketing to women.

TARGET MARKET

Nike's natural demographic profile for the campaign was young women ages 18 to 34 who had an interest in athletics. This was the Title IX generation, those who had grown up participating in team sports at their schools and who found athletic activity a natural part of their lives. It was also an age group that was actively concerned with brands in defining its identity and that had disposable income to spend on premium-priced athletic shoes. In Nike's early print advertising to women, the messages spoke directly to women living on their own for the first time and addressed the issue of separating their own identity from that of their families. One headline typical of the campaign said, "You do not have to be your mother," with the ad going on to address its audience in the intimate, conversational manner of a close friend. As a corollary, the market also included teenage girls who would be entering the primary group within five years, the girls specifically featured in Nike's "If You Let Me Play" commercial. Yet the spot spoke to their parents as much as to the girls themselves. Empowerment in this case had to include the financial decision makers. In 1996 Nike sponsored Sports Illustrated's special Sports Illustrated for Kids editions as a way of getting in front of this important demographic segment during the years when children were first forming brand loyalties.

COMPETITION

Nike had long dominated the athletic-shoe industry it had helped to shape. In 1996 Sporting Goods Intelligence estimated Nike's share of the market at 37 percent, with second-place Reebok trailing at 21 percent. Nike was three times as big as number three Fila and number four adidas combined. Yet in the women's segment of the market the situation was quite different. Nike had long seemed locked into its male-oriented market position and even appeared uncomfortable when attempting to reach out to women. One ad during the late 1980s sounded as if Nike's agency, Wieden+Kennedy, were trying to talk to women in the same way it talked to men. "It wouldn't hurt to stop eating like a pig, either," accused a copy line. During the 1980s Nike had been beaten by rival Reebok in the marketing of women's aerobic shoes. Misjudging the potential size of the market for comfortable exercise footwear for women, Nike had stayed out, allowing Reebok to gain a dominant share. Other rivals, including Keds, L.A. Gear, and Avia, also took advantage of Nike's absence to establish their own sizable market shares. Therefore, when Nike began to take the women's market seriously in the 1990s, it faced the prospect of competing against companies that had been talking to women for years. As it launched its first serious campaigns aimed at women, most of the company's competitors immediately stepped up their own marketing efforts as well.

MARKETING STRATEGY

The empowerment advertising exemplified by "If You Let Me Play" and the other spots in Wieden+Kennedy's 1995 television work for Nike's women's division was addressed at least as much to parents as to the girls themselves. It recognized that the parents of Title IX girls were themselves of a generation that had grown up accepting social change. Now they were the parent coaches, the school-board members, and the teachers who were making many of the key decisions concerning girls' sports programs. Nike spokeswoman Vizhier Corpus noted, "Our message, which is directed to parents, is that sports [are] no less valuable to girls than to boys. If you are a parent interested in raising a girl who is physically and emotionally strong, then look to sports as a means to that end."

NIKE ACCUSED OF EXPLOITING WOMEN

In 1997 Nike's positive reputation as a leader in advertising to women was undermined by the revelation that it used cheap labor—most of it women and young girls—in the Asian factories it contracted with to make many of the company's products. A coalition of women that included Congresswoman Maxine Waters of California, author Alice Walker, and the National Organization of Women (NOW) wrote to Nike's CEO, Phil Knight, to say, "While the women who wear Nike shoes in the U.S. are encouraged to perform their best, the Indonesian, Vietnamese and Chinese women making the shoes often suffer from inadequate wages, corporal punishment, forced overtime and/or sexual harassment." Ironically, the message and tone of the company's earlier commercials seemed to inflame the situation even more. Elizabeth Toledo, vice president of NOW, commented, "when companies try to make their products into a feminist statement, they had better back it up by corporate policies."

One often-noted spot presented young girls speaking over a montage of powerful women athletes. In somber yet unsentimental tones, they spoke of the advantages to their physical and psychological health of being allowed to play sports: "If you let me play I will be 60 percent less likely to get breast cancer"; "I will suffer less depression if you let me play sports"; "I will be more likely to leave a man who beats me." Such statements were typical of the messages. Although some critics thought that the spot did not empower girls so much as put them back into the supplicant's role, the commercial was received mostly positively by its target market, the parents of young girls as well as the girls themselves. Another spot in the series compared a girls' sports team to a pack of wolves ready to pounce, breaking with the stereotype of girls as less aggressive athletes.

Despite mostly positive response to the spots, Nike reassigned its women's advertising early in 1997 to the San Francisco agency Goodby, Silverstein & Partners, which changed the tone of the advertising from empowerment to a more performance-oriented message. (Nike retained its long-term affiliation with Wieden+Kennedy, its marketing partner since 1982, but announced that the agency had been reduced to equal status with Goodby.) Goodby, a more research-friendly agency than Wieden+Kennedy, discovered that the empowerment message was beginning to wear thin with the market, and Nike, in the midst of corporate soul-searching brought on by public criticism of its labor practices as well as by falling profits, decided that it was time to address the market directly. The result was a documentary-style series of nine spots focusing on a fictitious high-school girls' basketball team, the Charleston Cougars. Called "A Championship Season," the campaign was introduced in late 1997 and ran through the first half of 1998. Individual spots captured specific moments in the Cougars' march toward their championship, and as a whole the series was meant to transmit an insider's sense of the ups and downs, anguish, joy, and drama inherent in school sports. Avoiding even a tagline or logo, much less a direct sales pitch, the commercials lingered only long enough on the girls' shoes to identify the Nike brand. A company representative noted, "The Wieden spot was aimed more at parents, while this work talks to the girls themselves." Goodby also crafted a series of Nike commercials that aired during the 1998 Winter Olympics; they featured poems written at Nike's request to celebrate female U.S. Olympic athletes.

In 1999 Goodby focused on the U.S. national women's soccer team, favorites to win that summer's Women's World Cup. The campaign, tagged "We Will Take On the World as a Team," used humorous exaggeration of the superstar players' devotion to their teammates. For instance, one spot showed a young man arriving for a date with one of the team's players, Tisha Venturini, only to find that her teammates Mia Hamm, Brandi Chastain, Briana Scurry, and Tiffney Milbrett would be joining them for the evening. Another spot showed a group of uniformed players in a dentist's office, kicking a ball around aimlessly to the off-camera sound of a dentist's drill. Brandi Chastain then emerged into the waiting room and told her teammates that she had just gotten two fillings. Mia Hamm stood and requested two fillings. "But Mia," the dentist said. "I just examined your teeth. They're perfect." Hamm insisted on submitting to the same treatment as her teammate, and the rest of the players followed her lead, each insisting that she would have two fillings as well. The spirit of teamwork proved so potent and contagious that the dentist's receptionist stood and announced that she, too, wanted two fillings.

Chastain went on to provide Nike with an unexpected boost when, upon kicking the penalty shot that gave the U.S. team the World Cup championship, she celebrated by removing her shirt on live TV. Underneath her uniform Chastain was wearing a Nike Inner Actives sports bra, a product that the company was then readying for launch. Though presumably unrelated to Chastain's act, the Inner Actives print campaign mounted soon after the World Cup similarly tweaked societal conventions regarding the female body. One noteworthy ad featured a frontal view of a woman's bare upper body with text reading, "Exercise and tone every muscle in your body, except the one in your breast."

OUTCOME

The print campaign for the Inner Actives line would be Goodby's last for Nike; in late 1999 the company consolidated its entire advertising account once again with Wieden+Kennedy. "We were hired during hard times for the client in order to offer a different perspective and shake things up," Goodby creative director and cochair-man Rich Silverstein told Adweek. "I think we did our job." Similarly, Nike maintained that the move had more to do with streamlining its brand advertising than any dissatisfaction with the Goodby work.

Ironically, Nike's past successes made it vulnerable to a backlash from those who saw the company's very dominance as reason to choose other brands that spoke more directly to a woman's individuality. In that case, the company would have to look beyond marketing to its own corporate philosophy. An Adweek editorial in January 1998 questioned, "Has the brand become so big that sporting a baseball cap with a swoosh now says more about the power of Nike than it does about the person wearing it? If so, Nike is vulnerable…. Cutting-edge advertising may not be enough to keep Nike on the cutting edge." Even as the company consolidated its advertising at Wieden+Kennedy again, it remained unclear how the megabrand would deal with this challenge in the years to come.

Wieden+Kennedy's first women's effort after resuming responsibility for this portion of the Nike account came during the 2000 Summer Olympics, and it did not resonate in the way the agency had hoped it would. The spot showed Olympic runner Suzy Hamilton being pursued through her house and into a forest by a masked, chainsaw-wielding man. Hamilton's speed and endurance were too much for the villain, who was shown dropping his chainsaw and walking away, as onscreen text appeared, reading, "Why sport? Because you'll live longer." Although the commercial was meant to spoof horror-film conventions, many felt that it made light of violence against women, and NBC, the network broadcasting the Olympics, pulled it from the programming schedule after the first few days of its intended run.

In 2001 Wieden+Kennedy changed tactics in its work for Nike's women's lines, relying on depictions of ordinary women for whom fitness was a way of life, rather than using celebrity athletes with whom female athletes were expected to identify. This shift marked a partial return to the focus on empowerment that had initially raised Nike's profile among women. Nike increasingly pinned its hopes for future growth on the women's market for sports apparel and footwear, which was then growing much more rapidly than the men's market for such products.

NIKE, Inc.

views updated May 18 2018

NIKE, Inc.

One Bowerman Drive
Beaverton, Oregon 97005-6453
U.S.A.
Telephone: (503) 671-6453
Toll Free: (800) 344-6453
Fax: (503) 671-6300
Web site: http://www.nike.com

Public Company
Incorporated: 1968 as BRS, Inc.
Employees: 26,000
Sales: $13.74 billion (2005)
Stock Exchanges: New York Pacific
Ticker Symbol: NKE
NAIC: 316219 Other Footwear Manufacturing; 339920
Sporting and Athletic Goods Manufacturing; 422340 Footwear Wholesalers; 448190 Other Clothing Stores; 448210 Shoe Stores

Founded as an importer of Japanese shoes, NIKE, Inc. (Nike) has grown to be the world's largest marketer of athletic footwear, holding a global market share of approximately 37 percent. In the United States, Nike products are sold through about 22,000 retail accounts; worldwide, the company's products are sold in more than 160 countries. Both domestically and overseas Nike operates retail stores, including NikeTowns and factory outlets. Nearly all of the items are manufactured by independent contractors, primarily located overseas, with Nike involved in the design, development, and marketing. In addition to its wide range of core athletic shoes and apparel marketed under the flagship Nike brand, the company also sells footwear under the Converse, Chuck Taylor, All Star, and Jack Purcell brands through wholly owned subsidiary Converse Inc. and sells under the brands Starter, Shaq, and Asphalt in the discount retailer channel through another subsidiary, Exeter Brands Group LLC. The firm also sells Nike and Bauer brand athletic equipment; Hurley surfing, skateboarding, and snowboarding apparel and footwear; and Cole Haan brand dress and casual footwear. Nike has relied on consistent innovation in the design of its products and heavy promotion to fuel its growth in both U.S. and foreign markets. The ubiquitous presence of the Nike brand and its Swoosh trademark led to a backlash against the company by the late 20th century, particularly in relation to allegations of low wages and poor working conditions at the company's Asian contract manufacturers.

BRS Beginnings: 1960s

Nike's precursor originated in 1962, a product of the imagination of Philip H. Knight, a Stanford University business graduate who had been a member of the track team as an undergraduate at the University of Oregon. Traveling in Japan after finishing business school, Knight got in touch with a Japanese firm that made athletic shoes, the Onitsuka Tiger Co., and arranged to import some of its products to the United States on a small scale. Knight was convinced that Japanese running shoes could become significant competitors for the German products that then dominated the American market. In the course of setting up his agreement with Onitsuka Tiger, Knight invented Blue Ribbon Sports to satisfy his Japanese partner's expectations that he represented an actual company, and this hypothetical firm eventually grew to become Nike, Inc.

At the end of 1963, Knight's arrangements in Japan came to fruition when he took delivery of 200 pairs of Tiger athletic shoes, which he stored in his father's basement and peddled at various track meets in the area. Knight's one-man venture became a partnership in the following year, when his former track coach, William Bowerman, chipped in $500 to equal Knight's investment. Bowerman had long been experimenting with modified running shoes for his team, and he worked with runners to improve the designs of prototype Blue Ribbon Sports (BRS) shoes. Innovation in running shoe design eventually would become a cornerstone of the company's continued expansion and success. Bowerman's efforts first paid off in 1968, when a shoe known as the Cortez, which he had designed, became a big seller.

BRS sold 1,300 pairs of Japanese running shoes in 1964, its first year, to gross $8,000. By 1965 the fledgling company had acquired a full-time employee and sales had reached $20,000. The following year, the company rented its first retail space, next to a beauty salon in Santa Monica, California, so that its few employees could stop selling shoes out of their cars. In 1967 with fast-growing sales, BRS expanded operations to the East Coast, opening a distribution office in Wellesley, Massachusetts.

Bowerman's innovations in running shoe technology continued throughout this time. A shoe with the upper portion made of nylon went into development in 1967, and the following year Bowerman and another employee came up with the Boston shoe, which incorporated the first cushioned midsole throughout the entire length of an athletic shoe. Also in 1968 the company was incorporated as BRS, Inc.

Emergence of Nike: 1970s

By the end of the decade, Knight's venture had expanded to include several stores and 20 employees and sales were nearing $300,000. The company was poised for greater growth, but Knight was frustrated by a lack of capital to pay for expansion. In 1971, using financing from the Japanese trading company Nissho Iwai Corporation, BRS was able to manufacture its own line of products overseas, through independent contractors, for import to the United States. At this time, the company introduced its Swoosh trademark and the brand name Nike, the Greek goddess of victory. These new symbols were initially affixed to a soccer shoe, the first Nike product to be sold.

A year later, BRS broke with its old Japanese partner, Onitsuka Tiger, after a disagreement over distribution, and kicked off promotion of its own products at the 1972 U.S. Olympic Trials, the first of many marketing campaigns that would seek to attach Nike's name and fortunes to the careers of well-known athletes. Nike shoes were geared to the serious athlete, and their high performance carried with it a high price.

In their first year of distribution, the company's new products grossed $1.96 million and the corporate staff swelled to 45. In addition, operations were expanded to Canada, the company's first foreign market, which would be followed by Australia, in 1974.

Bowerman continued his innovations in running-shoe design with the introduction of the Moon shoe in 1972, which had a waffle-like sole that had first been formed by molding rubber on a household waffle iron. This sole increased the traction of the shoe without adding weight.

In 1974 BRS opened its first U.S. plant, in Exeter, New Hampshire. The company's payroll swelled to 250, and world-wide sales neared $5 million by the end of 1974. This growth was fueled in part by aggressive promotion of the Nike brand name. The company sought to expand its visibility by having its shoes worn by prominent athletes, including tennis players Ilie Nastase and Jimmy Connors. At the 1976 Olympic Trials these efforts began to pay off as Nike shoes were worn by rising athletic stars.

The company's growth had truly begun to take off by this time, riding the boom in popularity of jogging that took place in the United States in the late 1970s. BRS revenues tripled in two years to $14 million in 1976, and then doubled in just one year to $28 million in 1977. To keep up with demand, the company opened new factories, adding a stitching plant in Maine and additional overseas production facilities in Taiwan and Korea. International sales were expanded when markets in Asia were opened in 1977 and in South America the following year. European distributorships were lined up in 1978.

Nike continued its promotional activities with the opening of Athletics West, a training club for Olympic hopefuls in track and field, and by signing tennis player John McEnroe to an endorsement contract. In 1978 the company changed its name to Nike, Inc. The company expanded its line of products that year, adding athletic shoes for children.

By 1979 Nike sold almost half the running shoes bought in the United States, and the company moved into a new world headquarters building in Beaverton, Oregon. In addition to its shoe business, the company began to make and market a line of sports clothing, and the Nike Air shoe cushioning device was introduced.

1980s Growth Through International Expansion and Aggressive Marketing

By the start of the 1980s, Nike's combination of ground-breaking design and savvy and aggressive marketing had allowed it to surpass the German athletic shoe company adidas AG, formerly the leader in U.S. sales. In December 1980, Nike went public, offering two million shares of stock. With the revenues generated by the stock sale, the company planned continued expansion, particularly in the European market. In the United States, plans for a new headquarters on a large, rural campus were inaugurated, and an East Coast distribution center in Greenland, New Hampshire, was brought on line. In addition, the company bought a large plant in Exeter, New Hampshire, to house the Nike Sport Research and Development Lab and also to provide for more domestic manufacturing capacity. The company had shifted its overseas production away from Japan at this point, manufacturing nearly four-fifths of its shoes in South Korea and Taiwan. It established factories in mainland China in 1981.

By the following year, when the jogging craze in the United States had started to wane, half of the running shoes bought in the United States bore the Nike trademark. The company was well insulated from the effects of a stagnating demand for running shoes, however, because it gained a substantial share of its sales from other types of athletic shoes, notably basketball shoes and tennis shoes. In addition, Nike benefited from strong sales of its other product lines, which included apparel, work and leisure shoes, and children's shoes.

Company Perspectives:

The Nike Mission: "To bring inspiration and innovation to every athlete∗ in the world."

∗If you have a body, you are an athlete.

Given slowing growth in the U.S. market, however, the company turned its attention to foreign markets, inaugurating Nike International, Ltd. in 1981 to spearhead the company's push into Europe and Japan, as well as into Asia, Latin America, and Africa. In Europe, Nike faced stiff competition from adidas and Puma, which had a stronghold on the soccer market, Europe's largest athletic shoe category. The company opened a factory in Ireland to enable it to distribute its shoes without paying high import tariffs, and in 1981 bought out its distributors in England and Austria, to strengthen its control over marketing and distribution of its products. In 1982 the company outfitted Aston Villa, the winning team in the English and European Cup soccer championships, giving a boost to promotion of its new soccer shoe.

In Japan, Nike allied itself with Nissho Iwai, the sixth largest Japanese trading company, to form Nike-Japan Corporation. Because Nike already held a part of the low-priced athletic shoe market, the company set its sights on the high-priced end of the scale in Japan.

By 1982 the company's line of products included more than 200 different kinds of shoes, including the Air Force I, a basketball shoe, and its companion shoe for racquet sports, the Air Ace, the latest models in the long line of innovative shoe designs that had pushed Nike's earnings to an average annual increase of almost 100 percent. In addition, the company marketed more than 200 different items of clothing. By 1983, when the company posted its first ever quarterly drop in earnings as the running boom peaked and went into a decline, Nike's leaders were looking to the apparel division, as well as overseas markets, for further expansion. In foreign sales, the company had mixed results. Its operations in Japan were almost immediately profitable, and the company quickly jumped to second place in the Japanese market, but in Europe, Nike fared less well, losing money on its five European subsidiaries.

Faced with an 11.5 percent drop in domestic sales of its shoes in the 1984 fiscal year, Nike moved away from its traditional marketing strategy of support for sporting events and athlete endorsements to a wider-reaching approach, investing more than $10 million in its first national television and magazine advertising campaign. This followed the "Cities Campaign," which used billboards and murals in nine American cities to publicize Nike products in the period before the 1984 Olympics. Despite the strong showing of athletes wearing Nike shoes in the 1984 Los Angeles Olympic games, Nike profits were down almost 30 percent for the fiscal year ending in May 1984, although international sales were robust and overall sales rose slightly. This decline was a result of aggressive price discounting on Nike products and the increased costs associated with the company's push into foreign markets and attempts to build up its sales of apparel.

Earnings continued to fall in the next three quarters as the company lost market share, posting profits of only $7.8 million at the end of August 1984, a loss of $2.2 million three months later, and another loss of $2.1 million at the end of February 1985. In response, Nike adopted a series of measures to change its sliding course. The company cut back on the number of shoes it had sitting in warehouses and also attempted to fine-tune its corporate mission by cutting back on the number of products it marketed. It made plans to reduce the line of Nike shoes by 30 percent within a year and a half. In addition, leadership at the top of the company was streamlined, as founder Knight resumed the post of president, which he had relinquished in 1983, in addition to his duties as chairman and chief executive officer. Overall administrative costs were also reduced. As part of this effort, Nike also consolidated its research and marketing branches, closing its facility in Exeter, New Hampshire, and cutting 75 of the plant's 125 employees. Overall, the company laid off about 400 workers during 1984.

Key Dates:

1962:: Philip H. Knight founds Blue Ribbon Sports (BRS) to import Japanese running shoes.
1963:: BRS takes its first delivery of 200 shoes from Onitsuka Tiger Co.
1964:: BRS becomes partnership between Knight and William Bowerman.
1966:: The company's first retail outlet opens.
1968:: Company is incorporated as BRS, Inc.; the Bowerman-designed Cortez shoe becomes a big seller.
1971:: BRS begins manufacturing its own products overseas, through subcontractors; the Swoosh trademark and the Nike brand are introduced.
1972:: At the U.S. Olympic Trials, the Nike brand is promoted for the first time; company enters its first foreign market, Canada.
1978:: Company changes its name to Nike, Inc.
1979:: First line of clothing is launched and the Nike Air shoe cushioning device debuts.
1980:: Nike goes public.
1981:: Nike International, Ltd. is created to spearhead overseas push.
1985:: Company signs Michael Jordan to endorse a version of its Air shoe, the "Air Jordan."
1988:: Cole Haan, maker of casual and dress shoes, is acquired; "Just Do It" slogan debuts.
1990:: First NikeTown retail outlet opens in Portland, Oregon.
1994:: Company acquires Canstar Sports Inc., the leading maker of skates and hockey equipment in the world, later renamed Bauer Nike Hockey Inc.
1995:: Company signs golfer Tiger Woods to a $40 million endorsement deal.
1996:: The Nike equipment division is created.
1999:: Company begins selling its products directly to consumers via its web site.
2003:: Converse Inc. is acquired for $305 million.

Faced with shifting consumer interests (i.e., the U.S. market move from jogging to aerobics), the company created a new products division in 1985 to help keep pace. In addition, Nike purchased Pro-form, a small maker of weightlifting equipment, as part of its plan to profit from all aspects of the fitness movement. The company was restructured further at the end of 1985 when its last two U.S. factories were closed and its previous divisions of apparel and athletic shoes were rearranged by sport. In a move that would prove to be the key to the company's recovery, in 1985 the company signed basketball player Michael Jordan to endorse a new version of its Air shoe, introduced four years earlier. The new basketball shoes bore the name "Air Jordan."

In early 1986 Nike announced expansion into a number of new lines, including casual apparel for women, a less expensive line of athletic shoes called Street Socks, golf shoes, and tennis gear marketed under the name "Wimbledon." By mid-1986 Nike was reporting that its earnings had begun to increase again, with sales topping $1 billion for the first time. At that point, the company sold its 51 percent stake in Nike-Japan to its Japanese partner; six months later, Nike laid off 10 percent of its U.S. employees at all levels in a major cost-cutting strategy.

Following these moves, Nike announced a drop in revenues and earnings in 1987, and another round of restructuring and budget cuts ensued, as the company attempted to come to grips with the continuing evolution of the U.S. fitness market. Only Nike's innovative Air athletic shoes provided a bright spot in the company's otherwise erratic progress, allowing the company to regain market share from rival Reebok International Ltd. in several areas, including basketball and cross-training.

The following year, Nike branched out from athletic shoes, purchasing Cole Haan, a maker of casual and dress shoes, for $80 million. Advertising heavily, the company took a commanding lead in sales to young people to claim 23 percent of the overall athletic shoe market. Profits rebounded to reach $100 million in 1988, as sales rose 37 percent to $1.2 billion. Later that year, Nike launched a $10 million television campaign around the theme "Just Do It" and announced that its 1989 advertising budget would reach $45 million.

In 1989 Nike unveiled several new lines of shoes and led its market with $1.7 billion in sales, yielding profits of $167 million. The company's product innovation continued, including the introduction of a basketball shoe with an inflatable collar around the ankle, sold under the brand name Air Pressure. In addition, Nike continued its aggressive marketing, using ads featuring Michael Jordan and actor-director Spike Lee, the ongoing "Just Do It" campaign, and the "Bo Knows" television spots featuring athlete Bo Jackson. At the end of 1989, the company began relocation to its newly constructed headquarters campus in Beaverton, Oregon.

Market Dominance in the Early to Mid-1990s

In 1990 the company sued two competitors for copying the patented designs of its shoes and found itself engaged in a dispute with the U.S. Customs Service over import duties on its Air Jordan basketball shoes. In 1990 the company's revenues hit $2 billion. The company acquired Tetra Plastics Inc., producers of plastic film for shoe soles. That year, the company opened NikeTown, a prototype store selling the full range of Nike products, in Portland, Oregon.

By 1991 Nike's Visible Air shoes had enabled it to surpass its rival Reebok in the U.S. market. In the fiscal year ending May 31, 1991, Nike sales surpassed the $3 billion mark, fueled by record sales of 41 million pairs of Nike Air shoes and a booming international market. Its efforts to conquer Europe had begun to bear fruit; business there grew by 100 percent that year, producing more than $1 billion in sales and gaining the second place market share behind Adidas. Nike's U.S. shoe market had, in large part, matured, slowing to 5 percent annual growth, down from 15 percent annual growth from 1980 and 1988. The company began eyeing overseas markets and predicted ample room to grow in Europe. Nike's U.S. rival Reebok, however, also saw potential for growth in Europe, and by 1992 European MTV was glutted with athletic shoe advertisements as the battle for the youth market heated up between Nike, Reebok, and their European competitors, Adidas and Puma.

Nike also saw growth potential in its women's shoe and sports apparel division. In February 1992 Nike began a $13 million print and television advertising pitch for its women's segment, built upon its "Dialogue" print campaign, which had been slowly wooing 18- to 34-year-old women since 1990. Sales of Nike women's apparel lines Fitness Essentials, Elite Aerobics, Physical Elements, and All Condition Gear increased by 25 percent in both 1990 and 1991 and jumped by 68 percent in 1992.

In July 1992 Nike opened its second NikeTown retail store in Chicago. Like its predecessor in Portland, the Chicago NikeTown was designed to "combine the fun and excitement of FAO Schwartz, the Smithsonian Institute and Disneyland in a space that will entertain sports and fitness fans from around the world" as well as provide a high-profile retail outlet for Nike's rapidly expanding lines of footwear and clothing.

Nike celebrated its 20th anniversary in 1992, virtually debt free and with company revenues of $3.4 billion. Gross profits jumped $100 million in that year, fueled by soaring sales in its retail division, which expanded to include 30 Nike-owned discount outlets and the two NikeTowns. To celebrate its anniversary, Nike brought out its old slogan "There is no finish line." As if to underscore that sentiment, Nike Chairman Philip Knight announced massive plans to remake the company with the goal of being "the best sports and fitness company in the world." To fulfill that goal, the company set the ground plans for a complicated yet innovative marketing structure seeking to make the Nike brand into a worldwide megabrand along the lines of Coca-Cola, Pepsi, Sony, and Disney.

Nike continued expansion of its high-profile NikeTown chain, opening outlets in Atlanta, Georgia, in the spring of 1993 and Costa Mesa, California, later that year. Also in 1993, as part of its long-term marketing strategy, Nike began an ambitious venture with Mike Ovitz's Creative Artists Agency to organize and package sports events under the Nike name, a move that potentially led the company into competition with sports management giants such as ProServ, IMG, and Advantage International.

Nike also began a more controversial venture into the arena of sports agents, negotiating contracts for basketball's Scottie Pippin, Alonzo Mourning, and others in addition to retaining athletes such as Michael Jordan and Charles Barkley as company spokespersons. Nike's influence in the world of sports grew to such a degree that in 1993 Sporting News dubbed Knight the most powerful man in sports.

Critics contended that Nike's influence ran too deep, having its hand in negotiating everything in an athlete's life from investments to the choice of an apartment. But Nike's marketing executives saw it as part of a campaign to create an image of Nike not just as a product line but as a lifestyle, a "Nike attitude."

Nearly everyone agreed, however, that Nike was the dominant force in athletic footwear in the early to mid-1990s. The company held about 30 percent of the U.S. market by 1995, far outdistancing the 20 percent of its nearest rival, Reebok. Overseas revenues continued their steady rise, reaching nearly $2 billion by 1995, about 40 percent of the overall total. Not content with its leading position in athletic shoes and its growing sales of athletic apparel, which accounted for more than 30 percent of revenues in 1996, Nike branched out into sports equipment in the mid-1990s. In 1994 the company acquired Canstar Sports Inc., the leading maker of skates and hockey equipment in the world, for $400 million. Canstar was renamed Bauer Nike Hockey Inc., Bauer being Canstar's brand name for its equipment. Two years later Bauer Nike became part of the newly formed Nike equipment division, which aimed to extend the company into the marketing of sport balls, protective gear, eyewear, and watches. Also during this period, Nike signed its next superstar spokesperson, Tiger Woods. In 1995, at the age of 20, Woods agreed to a 20-year, $40 million endorsement contract. The golf phenom went on to win an inordinate number of tournaments, often shattering course records, and was on pace to eclipse golf legend Jack Nicklaus's illustrious lifetime record of winning 18 majors, more than validating the blockbuster contract.

Late 1990s Slippage

For the fiscal year ending in May 1997, Nike earned a record $795.8 million on record revenues of $9.19 billion. Overseas sales played a large role in the 42 percent increase in revenues from 1996 to 1997. Sales in Asia increased by more than $500 million (to $1.24 billion), while European sales surged ahead by $450 million. Back home, Nike's share of the U.S. athletic shoe market neared 50 percent. The picture at Nike soon turned sour, however, as the Asian financial crisis that erupted in the summer of 1997 sent sneaker sales in that region plunging. By 1999, sales in Asia had dropped to $844.5 million. Compounding the company's troubles was a concurrent stagnation of sales in its domestic market, where the fickle tastes of teenagers began turning away from athletic shoes to hiking boots and other casual "brown shoes." As a result, overall sales for 1999 fell to $8.78 billion. Profits were falling as well, including a net loss of $67.7 million for the fourth quarter of 1998, the company's first reported loss in more than 13 years. The decline in net income led to a cost-cutting drive that included the layoff of 5 percent of the work-force, or 1,200 people, in 1998, and the slashing of its budget for sports star endorsements by $100 million that same year.

Nike was also dogged throughout the late 1990s by protests and boycotts over allegations regarding the treatment of workers at the contract factories in Asia that employed nearly 400,000 people and that made the bulk of Nike shoes and much of its apparel. Charges included abuse of workers, poor working conditions, low wages, and use of child labor. Nike's initial reaction, which was highlighted by Knight's insistence that the company had little control over its suppliers, resulted in waves of negative publicity. Protesters included church groups, students at universities that had apparel and footwear contracts with Nike, and socially conscious investment funds. Nike finally announced in mid-1998 a series of changes affecting its contract workforce in Asia, including an increase in the minimum age, a tightening of air quality standards, and a pledge to allow independent inspections of factories. Nike nonetheless remained under pressure from activists into the 21st century. Nike, along with McDonald's Corporation, the Coca-Cola Company, and Starbucks Corporation, among others, also became an object of protest from those who were attacking multinational companies that pushed global brands. This undercurrent of hostility burst into the spotlight in late 1999 when some of the more aggressive protesters against a World Trade Organization meeting in Seattle attempted to storm a NikeTown outlet.

Seeking to recapture the growth of the early to mid-1990s, Nike pursued a number of new initiatives in the late 1990s. Having initially missed out on the trend toward extreme sports (such as skateboarding, mountain biking, and snowboarding), Nike attempted to rectify this miscue by establishing a unit called ACG, short for "all-conditions gear," in 1998. Two years later, the company created a new division called Techlab to market a line of sports-technology accessories, such as a digital audio player, a high-altitude wrist compass, and a portable heart-rate monitor. Both of these initiatives were aimed at capturing sales from the emerging Generation Y demographic group. In early 1999 Nike began selling its shoes and other products directly to consumers via the company web site. The company finally earned some good publicity in 1999 when it sponsored the U.S. national women's soccer team that won the Women's World Cup. In December 1999 Nike cofounder Bowerman died, and the company later introduced a line of running shoes in his honor.

Early 21st-Century Comeback

Nike's struggles continued into the early 2000s, but by 2002 the company appeared to have turned a corner. Surprisingly, the turnaround stemmed in large part not from clever marketing or new high-tech sneakers but from concentrating more attention on the more mundane aspects of running a business, such as investing in start-of-the-art information systems, logistics, and supply-chain management. Equally important was Knight's willingness to cede more control of the company to a number of underlings, some recruited from the outside. Donald W. Blair was brought onboard from PepsiCo, Inc. to become chief financial officer in 1999 after Nike inexplicably had been without a CFO for two years. In 2001 Knight named two longtime company insiders, Mark G. Parker and Charles D. Denson, as copresidents with responsibility for day-to-day operations. On the product side, Nike successfully overhauled its apparel operations, garnered surging sales of its golf equipment after Woods began using Nike golf balls in 2000, and made a big push in the soccer shoe market, where it gained the top spot among Euro-pean soccer shoe buyers, leapfrogging over Adidas, by 2003. Nike also continued to score endorsement coups, inking high school basketball phenom LeBron James to a $90 million contract in 2003.

The Nike comeback also centered around a commitment to lessen its dependence on the volatile market for high-performance shoes by owning a portfolio of brands covering different market sectors and price points. In 2002 the company bought Hurley International, a teen lifestyle brand, for an estimated $95 million. Based in Costa Mesa, California, Hurley was a designer and distributor of action sports apparel and footwear for surfing, skateboarding, and snowboarding. Nike next bought Converse Inc. for $305 million in September 2003. The 95-year-old Converse of North Andover, Massachusetts, was best known for its retro, low-tech Chuck Taylor All-Star sneakers, a product that for many teenagers and young adults had come to be viewed as the very antithesis of everything Nike. Converse's management team remained in place following the takeover, with the company operating as an autonomous subsidiary. In August 2004 Nike bought Official Starter Properties LLC and Official Starter LLC for approximately $47 million. These companies marketed athletic apparel, footwear, and accessories under the Starter, Team Starter, Asphalt, Shaq, and Dunkman brands (the latter two featuring NBA star Shaquille O'Neal), primarily through discount chains such as Wal-Mart Stores, Inc. These brands were placed within a new wholly owned subsidiary, Exeter Brands Group LLC, focusing on developing products for value-conscious consumers.

While these acquisitions were unfolding in the United States, Nike was pushing hard into overseas markets, and by 2003 international sales exceeded domestic sales for the first time. Starting in 2002 the company also concentrated on building an extensive program to address the perennial charges of labor exploitation. Nike began allowing a monitoring organization it had cofounded, the Fair Labor Association, to conduct random factory inspections. It also built an in-house staff of approximately 100 employees to inspect hundreds of factories and grade them on labor standards. In early 2005 Nike took an unprecedented step toward greater transparency by issuing a list of its more than 700 contract factories. Such moves provided the basis for an improving relationship between Nike and its critics. There were even a few cases in which activists worked with the company to resolve specific issues at certain factories.

Nike enjoyed record results in the fiscal year ending in May 2004, posting profits of $945.6 million on revenues of $12.25 billion. Profits surged past the $1 billion mark the next year, hitting $1.21 billion, while revenues jumped to a new high of $13.74 billion. Late in 2004 Knight stepped aside from his executive position, while remaining chairman, to bring William D. Perez onboard as president and CEO. Perez, a marathon runner and avid golfer, was hired away from S.C. Johnson & Son, Inc., the family-controlled consumer products company, where he spent 34 years and rose to the top as president and CEO. His vast international experience was expected to help Nike as it continued its expansion abroad, and Perez was known as an excellent marketer with a stellar reputation of acquiring and managing well-known brands. Within months of Perez's appointment, Nike's need for such an experienced hand appeared to grow when adidas-Salomon AG agreed to buy Reebok International Ltd. for approximately $3.8 billion. The deal, announced in August 2005, promised to combine two of Nike's biggest rivals, giving the newly enlarged company about 30 percent of the worldwide athletic footwear market, compared to Nike's 37 percent. A revitalized Nike nevertheless seemed to have the strategies in place to fend off this new threat and stay on top of the global sneaker heap.

Principal Subsidiaries

Bauer Nike Hockey Inc.; Cole Haan Holdings Incorporated; Converse Inc.; Hurley International LLC; Exeter Brands Group LLC.

Principal Competitors

Reebok International Ltd.; adidas-Salomon AG; Fila USA, Inc.; PUMA AG Rudolf Dassler Sport; Skechers U.S.A., Inc.

Nike, Inc.

views updated May 23 2018

Nike, Inc.

One Bowerman Dr.
Beaverton, Oregon 97005
U.S.A.
(503) 671-6453
Fax: (503) 671-6300

Public Company
Incorporated: 1964 as Blue Ribbon Sports; 1972 as Nike, Inc.
Employees: 5,500
Sales: $3.00 billion
Stock Exchanges: NASDAQ New York Pacific
SICs: 3149 Footwear Except Rubber Nec; 2329 Men’s/Boys’ Clothing Nec; Women’s/Misses’ Outerwear Nec

Founded as an importer of Japanese shoes, Nike, Inc. has grown to be one of the world’s largest makers of athletic footwear and apparel. The company has relied on consistent innovation in the design of its products and steady promotion to fuel its growth in both U.S. and foreign markets.

Nike’s precursor originated in 1962, a product of the imagination of Philip H. Knight, a Stanford University business graduate who had been a member of the track team as an undergraduate at the University of Oregon. Traveling in Japan after finishing up business school, Knight got in touch with a Japanese firm that made athletic shoes, the Onitsuka Tiger Co., and arranged to import some of its products to the United States on a small scale. Knight was convinced that Japanese running shoes could become significant competitors for the German products that then dominated the American market. In the course of setting up his agreement with Onitsuka Tiger, Knight invented Blue Ribbon Sports to satisfy his Japanese partner’s expectations that he represented an actual company, and this hypothetical firm eventually grew to become Nike, Inc.

At the end of 1963, Knight’s arrangements in Japan came to fruition when he took delivery of 200 pairs of Tiger athletic shoes, which he stored in his father’s basement and peddled at various track meets in the area. Knight’s one-man venture became a partnership in the following year, when his former track coach, William Bowerman, chipped in $500 to equal Knight’s investment. Bowerman had long been experimenting with modified running shoes for his team, and he worked with runners to improve the designs of prototype Blue Ribbon Sports (BRS) shoes. Innovation in running shoe design eventually would become a cornerstone of the company’s continued expansion and success. Bowerman’s efforts first paid off in 1966, when a shoe known as the Cortez, which he had designed, became a big seller.

BRS sold 1,300 pairs of Japanese running shoes in 1964, its first year, to gross $8,000. By 1965 the fledgling company had acquired a full-time employee, and sales had reached $20,000. The following year, the company rented its first retail space, next to a beauty salon in Santa Monica, California, so that its few employees could stop selling shoes out of their cars. In 1967 with fast-growing sales, BRS expanded operations to the East Coast, opening a distribution office in Wellesley, Massachusetts.

Bowerman’s innovations in running shoe technology continued throughout this time. A shoe whose upper portion was made of nylon went into development in 1967, and the following year, Bowerman and another employee came up with the Boston shoe, which incorporated the first cushioned mid-sole throughout the entire length of an athletic shoe.

By the end of the decade, Knight’s venture had expanded to include several stores and 20 employees, and sales were nearing $300,000. The company was poised for greater growth, but Knight was frustrated by a lack of capital to pay for expansion. In 1971 using financing from the Japanese trading company Nissho Iwai, BRS was able to manufacture its own line of products overseas, for import to the United States. At this time, the company introduced its Swoosh trademark, and the brand name Nike, the Greek goddess of victory. These new symbols were first affixed to a soccer shoe, the first Nike product to be sold.

A year later, BRS broke with its old Japanese partner, Onitsuka Tiger, after a disagreement over distribution, and kicked off promotion of its own products at the 1972 U.S. Olympic Trials, the first of many marketing campaigns that would seek to attach Nike’s name and fortunes to the careers of well-known athletes. Nike shoes were geared to the serious athlete, and their high performance carried with it a high price.

In their first year of distribution, the company’s new products grossed $1.96 million, and its staff swelled to 45. In addition, operations were expanded to Canada, the company’s first foreign market, which would be followed by Australia, in 1974.

In 1974 BRS opened its first U.S. plant, in Exeter, New Hampshire. The company’s payroll swelled to 250, and worldwide sales neared $5 million by the end of 1974.

This growth was fueled in part by aggressive promotion of the Nike brand name. The company sought to expand its visibility by having its shoes worn by prominent athletes, including tennis players Ile Nastase and Jimmy Connors. At the 1976 Olympic Trials these efforts began to pay off as Nike shoes were worn by rising athletic stars.

The company’s growth had truly begun to take off by this time, riding the boom in popularity of jogging that took place in the United States in the late 1970s. BRS revenues tripled in two years to $14 million in 1976, and then doubled in just one year to $28 million in 1977. To keep up with demand, the company opened new factories, adding a stitching plant in Maine and additional overseas production facilities in Taiwan and Korea. International sales were expanded when markets in Asia were opened in 1977 and in South America the following year. European distributorships were lined up in 1978.

By the start of the 1980s, Nike’s combination of ground-breaking design and savvy and aggressive marketing had allowed it to surpass the German athletic shoe company Adidas AG, formerly the leader in U.S. sales. In December of that year, Nike went public, offering two million shares of stock. With the revenues generated by the stock sale, the company planned continued expansion, particularly in the European market. In the United States, plans for a new headquarters on a large, rural campus were inaugurated, and an east coast distribution center in Greenland, New Hampshire, was brought on line. In addition, the company bought a large plant in Exeter, New Hampshire, to house the Nike Sport Research and Development Lab and also to provide for more domestic manufacturing capacity. The company had shifted its overseas production away from Japan at this point, manufacturing nearly four-fifths of its shoes in South Korea and Taiwan. It established factories in mainland China in 1981.

By the following year, when the jogging craze in the United States had started to wane, half of the running shoes bought in the United States bore the Nike trademark. The company was well insulated from the effects of a stagnating demand for running shoes, however, since it gained a substantial share of its sales from other types of athletic shoes, notably basketball shoes and tennis shoes. In addition, Nike benefited from strong sales of its other product lines, which included apparel, work and leisure shoes, and children’s shoes.

Given the slowing of growth in the U.S. market, however, the company turned its attention to growth in foreign markets, inaugurating Nike International, Ltd., in 1981 to spearhead the company’s push into Europe and Japan, as well as into Asia, Latin America, and Africa. In Europe, Nike faced stiff competition from Adidas and Puma, which had a strong hold on the soccer market, Europe’s largest athletic-shoe category. The company opened a factory in Ireland to enable it to distribute its shoes without paying high import tariffs, and in 1981, bought out its distributors in England and Austria, to strengthen its control over marketing and distribution of its products. In 1982 the company outfitted Aston Villa, the winning team in the English and European Cup soccer championships, giving a boost to promotion of its new soccer shoe.

In Japan, Nike allied itself with Nissho Iwai Corp., the sixth-largest Japanese trading company, to form Nike-Japan Corporation. Because Nike already held a part of the low-priced athletic shoe market, the company set its sights on the high-priced end of the scale in Japan.

By 1982 the company’s line of products included more than 200 different kinds of shoes, including the Air Force I, a basketball shoe, and its companion shoe for racquet sports, the Air Ace, the latest models in the long line of innovative shoe designs that had pushed Nike’s earnings to an average annual increase of almost 100 percent. In addition, the company marketed more than 200 different items of clothing. By 1983 when the company posted its first-ever quarterly drop in earnings as the running boom peaked and went into a decline, resulting in slowing shoe sales, Nike’s leaders were looking to the apparel division, as well as overseas markets, for further expansion. In foreign sales, the company had mixed results. Its operations in Japan were almost immediately profitable, and the company quickly jumped to second place in the Japanese market, but in Europe, Nike fared less well, losing money on its five European subsidiaries.

Faced with an 11.5 percent drop in domestic sales of its shoes in the 1984 fiscal year, Nike moved away from its traditional marketing strategy of support for sporting events and athlete endorsements to a wider-reaching approach, investing more than $10 million in its first national television and magazine advertising campaign. This followed the “Cities Campaign,” which used billboards and murals in nine American cities to publicize Nike products in the period before the 1984 Olympics. Despite the strong showing of athletes wearing Nike shoes in the 1984 Los Angeles Olympic games, Nike profits were down almost 30 percent for the fiscal year ending in May 1984, although international sales were robust and overall sales rose slightly. This decline was a result of aggressive price discounting on Nike products and the increased costs associated with the company’s push into foreign markets and attempts to build up its sales of apparel.

Earnings continued to fall in the next three quarters, as the company lost market share, posting profits of only $7.8 million at the end of August 1984, a loss of $2.2 million three months later, and another loss of $2.1 million at the end of February 1985. In response, Nike adopted a series of measures to change its sliding course. The company cut back on the number of shoes it had sitting in warehouses, and also attempted to fine-tune its corporate mission by cutting back on the number of products it marketed. It made plans to reduce the line of Nike shoes by 30 percent within a year and a half. In addition, leadership at the top of the company was streamlined, as founder Knight resumed the post of president, which he had relinquished in 1983, in addition to his duties as chairman and chief executive officer, and overall administrative costs were reduced. As part of this effort, Nike also consolidated its research and marketing branches, closing its facility in Exeter, New Hampshire, and cutting 75 of the plant’s 125 employees. Overall, the company laid off about 400 workers during 1984.

Faced with shifting consumer interests, as, for instance, the U.S. market moved from jogging to aerobics, the company created a new products division in 1985 to help keep up with changing market demands. In addition, Nike purchased Pro-form, a small maker of weight-lifting equipment, as part of its plan to profit from all aspects of the fitness movement. The company was restructured further at the end of 1985 when its last two U.S. factories were closed and its previous divisions of apparel and athletic shoes were rearranged by sport. In a move that would prove to be the key to the company’s recovery, in 1985 the company signed up basketball player Michael Jordan to endorse a new version of its Air shoe, introduced four years earlier.

In early 1986 Nike announced expansion into a number of new lines, including casual apparel for women, a less-expensive line of athletic shoes called Street Socks, golf shoes, and tennis gear marketed under the name “Wimbledon.” By mid-1986 Nike was reporting that its earnings had begun to increase again, and that year sales topped $1 billion for the first time. At that time, the company sold its 51 percent stake in Nike-Japan to its Japanese partner, and six months later, at year’s end, laid off 10 percent of its U.S. employees at all levels in a cost-cutting move.

Following these moves, Nike announced a drop in revenues and earnings in 1987, and another round of restructuring and cost-cutting ensued, as the company attempted to come to grips with the continuing evolution of the U.S. fitness market from jogging to walking, from aerobics to cross-training—diversified physical workout. Only Nike’s innovative Air athletic shoes provided a bright spot in the company’s otherwise erratic progress, allowing the company to regain market share from rival Reebok International Ltd. in several areas, including basketball and cross-training.

The following year, Nike branched out from athletic shoes, purchasing Cole Haan, a maker of casual and dress shoes, for $80 million. Advertising heavily, the company took a commanding lead in sales to young people to claim 23 percent of the overall athletic shoe market. Profits rebounded to reach $100 million dollars in 1988, as sales rose 37 percent to $1.2 billion. Later that year, Nike launched a $10 million dollar television campaign around the theme “Just Do It,” and announced that its 1989 advertising budget would reach $45 million.

In 1989 Nike marketed several new lines of shoes, and led its market with $1.7 billion in sales, yielding profits of $167 million. The company’s product innovation continued, as a basketball shoe with an inflatable collar around the ankle was introduced under the brand name Air Pressure. In addition, Nike continued its aggressive marketing, using ads featuring Michael Jordan and the Mars Blackmon character played by actor-director Spike Lee, the ongoing “Just Do It” campaign, and “Bo Knows” television spots featuring athlete Bo Jackson. At the end of 1989, the company began relocation to its newly constructed headquarters campus in Beaverton, Oregon.

In 1990 the company sued two competitors for copying the patented designs of its shoes, and found itself engaged in a dispute with the U.S. Customs Service over import duties on its Air Jordan basketball shoes. In 1990 the company’s revenues hit $2 billion. The company acquired Tetra Plastics Inc., producers of plastic film for shoe soles. That year, the company opened Nike Town, a prototype store selling the full range of Nike products, in Portland, Oregon.

By 1991 Nike’s Visible Air shoes had enabled it to surpass its rival Reebok in the U.S. market. In the fiscal year ending May 31, 1991, Nike sales surpassed the $3 billion mark, fueled by record sales of 41 million pairs of Nike Air shoes and a booming international market. Its efforts to conquer Europe had begun to show fruit as the company’s business grew by 100 percent in Europe that year, producing over $1 billion in sales and gaining the second-place market share behind the leading German company, Adidas. Nike’s U.S. shoe market had largely matured, slowing to five percent annual growth down from 15 percent annual growth from 1980 and 1988. The company began eyeing overseas markets and predicted ample room to grow in Europe. However, Nike’s U.S. rival Reebok also saw potential for growth in Europe, and by 1992 European MTV was glutted with athletic shoe advertisements as the battle for the youth market heated up between Nike, Reebok, and their European competitors, Adidas and Puma.

Nike also saw growth potential in its women’s shoe and sports apparel division. In February of 1992 Nike began a $13 million print and television advertising pitch for its women’s segment, built upon its “Dialogue” print campaign which had been slowly wooing 18-to-34 year old women since 1990. Sales of Nike women’s apparel lines Fitness Essentials, Elite Aerobics, Physical Elements, and All Condition Gear increased by 25 percent in both 1990 and 1991 and jumped by 68 percent in 1992.

In July of 1992 Nike opened its second Nike Town retail store in Chicago, Illinois. Like its predecessor in Portland, the Chicago Nike Town was designed to “combine the fun and excitement of FAO Schwartz, the Smithsonian Institute and Disneyland in a space that will entertain sports and fitness fans from around the world” as well as provide a high-profile retail outlet for Nike’s rapidly expanding lines of footwear and clothing.

Nike celebrated its 20th anniversary in 1992, virtually debt free and with company revenues of $3.4 billion. Gross profits jumped $100 million in that year, fueled by soaring sales in its retail division which expanded to include 30 Nike-owned discount outlets and the two Nike Towns. To celebrate its anniversary, Nike brought out its old slogan, “There is no finish line.” As if to underscore that sentiment, Nike chairman Philip Knight announced massive plans to remake the company with the goal of being “the best sports and fitness company in the world.” To fulfill that goal, the company set the ground plans for a complicated yet innovative marketing structure seeking to make the Nike brand into a worldwide megabrand along the lines of Coca-Cola, Pepsi, Sony, and Disney.

Nike continued expansion of its high-profile Nike Town chain, opening outlets in Atlanta, Georgia, in spring of 1993 and Costa Mesa, California, later that year. Also in 1993, as part of its long-term marketing strategy, Nike began an ambitious venture with Mike Ovitz’s Creative Artists Agency to organize and package sports events under the Nike name—a move that could lead the company into competition with sports management giants such as ProServ, IMG, and Advantage International.

Nike also began a more controversial venture into the arena of sports agents, negotiating contracts for basketball’s Scottie Pippin, Alonzo Mourning, and others in addition to retaining athletes such as Michael Jordan and Charles Barkley as company spokespeople. Nike’s influence in the world of sports grew to such a degree that in 1993 the Sporting News dubbed Knight the most powerful man in sports.

Critics contend that Nike’s influence runs too deep, having its hand in negotiating everything in an athlete’s life from investments to the choice of an apartment. But Nike’s marketing executives see its as part of a campaign to create an image of Nike not just as a product line but as a lifestyle, a “Nike attitude.” Marketing ideas under consideration range from the creation of Nike theme park to creating Nike television programs sponsored by Nike products.

Although much of Nike’s marketing plan remains in the conceptual stage, its goal after 20 years in the business remained simple: to sell more shoes and clothing. Nike entered into this massive marketing plan with a large supply of financial reserves, a highly polished image, and a strong foothold in both U.S. and European markets. The company has a record of innovative design and savvy promotion. And if it succeeds at enacting its current plan, Nike may well become a household name worldwide.

Principal Subsidiaries

Cole Haan Holdings, Inc.; Tetra Plastics Inc.

NIKE, Inc.

views updated Jun 08 2018

NIKE, Inc.

One Bowerman Drive
Beaverton, Oregon 97005-6453
U.S.A.
Telephone: (503) 671-6453
Fax: (503) 671-6300
Web site: http://www.nike.com

Public Company
Incorporated: 1968 as Blue Ribbon Sports
Employees: 20,700
Sales: $8.78 billion (1999)
Stock Exchanges: New York Pacific
Ticker Symbol: NKE
NAIC: 316219 Other Footwear Manufacturing; 315220 Men’s and Boys’ Cut and Sew Apparel Manufacturing; 315230 Women’s and Girls’ Cut and Sew Apparel Manufacturing; 339920 Sporting and Athletic Goods Manufacturing; 422340 Footwear Wholesalers; 448190 Other Clothing Stores; 448210 Shoe Stores

Founded as an importer of Japanese shoes, NIKE, Inc. (Nike) has grown to be the world’s largest marketer of athletic footwear and apparel. In the United States, Nike products are sold through about 20,000 retail accounts; worldwide, the company’s products are sold in about 110 countries. Both domestically and overseas Nike operates retail stores, including NikeTowns and factory outlets. Nearly all of the items are manufactured by independent contractors, primarily located overseas, with Nike involved in the design, development, and marketing. In addition to its wide range of core athletic shoes and apparel, the company also sells Nike and Bauer brand athletic equipment, Cole Haan brand dress and casual footwear, and the Sports Specialties line of headwear featuring licensing team logos. The company has relied on consistent innovation in the design of its products and heavy promotion to fuel its growth in both U.S. and foreign markets. The ubiquitous presence of the Nike brand and its Swoosh trademark led to a backlash against the company by the late 20th century, particularly in relation to allegations of low wages and poor working conditions at the company’s Asian contract manufacturers.

BRS Beginnings

Nike’s precursor originated in 1962, a product of the imagi-nation of Philip H. Knight, a Stanford University business graduate who had been a member of the track team as an undergraduate at the University of Oregon. Traveling in Japan after finishing up business school, Knight got in touch with a Japanese firm that made athletic shoes, the Onitsuka Tiger Co., and arranged to import some of its products to the United States on a small scale. Knight was convinced that Japanese running shoes could become significant competitors for the German products that then dominated the American market. In the course of setting up his agreement with Onitsuka Tiger, Knight invented Blue Ribbon Sports to satisfy his Japanese partner’s expectations that he represented an actual company, and this hypothetical firm eventually grew to become Nike, Inc.

At the end of 1963, Knight’s arrangements in Japan came to fruition when he took delivery of 200 pairs of Tiger athletic shoes, which he stored in his father’s basement and peddled at various track meets in the area. Knight’s one-man venture became a partnership in the following year, when his former track coach, William Bowerman, chipped in $500 to equal Knight’s investment. Bowerman had long been experimenting with modified running shoes for his team, and he worked with runners to improve the designs of prototype Blue Ribbon Sports (BRS) shoes. Innovation in running shoe design eventually would become a cornerstone of the company’s continued expansion and success. Bowerman’s efforts first paid off in 1968, when a shoe known as the Cortez, which he had designed, became a big seller.

Bowerman’s innovations in running shoe technology continued throughout this time. A shoe with the upper portion made of nylon went into development in 1967, and the following year Bowerman and another employee came up with the Boston shoe, which incorporated the first cushioned mid-sole throughout the entire length of an athletic shoe.

Emergence of Nike in 1970s

By the end of the decade, Knight’s venture had expanded to include several stores and 20 employees and sales were nearing $300,000. The company was poised for greater growth, but Knight was frustrated by a lack of capital to pay for expansion. In 1971 using financing from the Japanese trading company Nissho Iwai Corporation, BRS was able to manufacture its own line of products overseas, through independent contractors, for import to the United States. At this time, the company introduced its Swoosh trademark and the brand name Nike, the Greek goddess of victory. These new symbols were initially affixed to a soccer shoe, the first Nike product to be sold.

A year later, BRS broke with its old Japanese partner, Onitsuka Tiger, after a disagreement over distribution, and kicked off promotion of its own products at the 1972 U.S. Olympic Trials, the first of many marketing campaigns that would seek to attach Nike’s name and fortunes to the careers of well-known athletes. Nike shoes were geared to the serious athlete, and their high performance carried with it a high price.

In their first year of distribution, the company’s new products grossed $1.96 million and the corporate staff swelled to 45. In addition, operations were expanded to Canada, the company’s first foreign market, which would be followed by Australia, in 1974.

Bowerman continued his innovations in running-shoe de-sign with the introduction of the Moon shoe in 1972, which had a waffle-like sole that had first been formed by molding rubber on a household waffle iron. This sole increased the traction of the shoe without adding weight.

In 1974 BRS opened its first U.S. plant, in Exeter, New Hampshire. The company’s payroll swelled to 250, and world-wide sales neared $5 million by the end of 1974. This growth was fueled in part by aggressive promotion of the Nike brand name. The company sought to expand its visibility by having its shoes worn by prominent athletes, including tennis players Hie Nastase and Jimmy Connors. At the 1976 Olympic Trials these efforts began to pay off as Nike shoes were worn by rising athletic stars.

1980s Growth Through International Expansion and Aggressive Marketing

By the start of the 1980s, Nike’s combination of ground-breaking design and savvy and aggressive marketing had allowed it to surpass the German athletic shoe company Adidas AG, formerly the leader in U.S. sales. In December 1980, Nike went public, offering two million shares of stock. With the revenues generated by the stock sale, the company planned continued expansion, particularly in the European market. In the United States, plans for a new headquarters on a large, rural campus were inaugurated, and an East Coast distribution center in Greenland, New Hampshire, was brought on line. In addition, the company bought a large plant in Exeter, New Hampshire, to house the Nike Sport Research and Development Lab and also to provide for more domestic manufacturing capacity. The company had shifted its overseas production away from Japan at this point, manufacturing nearly four-fifths of its shoes in South Korea and Taiwan. It established factories in mainland China in 1981.

By the following year, when the jogging craze in the United States had started to wane, half of the running shoes bought in the United States bore the Nike trademark. The company was well insulated from the effects of a stagnating demand for running shoes, however, since it gained a substantial share of its sales from other types of athletic shoes, notably basketball shoes and tennis shoes. In addition, Nike benefited from strong sales of its other product lines, which included apparel, work and leisure shoes, and children’s shoes.

Company Perspectives

Nike’s Corporate Mission Statement:
“To be the world’s leading sports and fitness company.

Given the slowing of growth in the U.S. market, however, the company turned its attention to growth in foreign markets, inaugurating Nike International, Ltd. in 1981 to spearhead the company’s push into Europe and Japan, as well as into Asia, Latin America, and Africa. In Europe, Nike faced stiff competition from Adidas and Puma, which had a strong hold on the soccer market, Europe’s largest athletic shoe category. The company opened a factory in Ireland to enable it to distribute its shoes without paying high import tariffs, and in 1981 bought out its distributors in England and Austria, to strengthen its control over marketing and distribution of its products. In 1982 the company outfitted Aston Villa, the winning team in the English and European Cup soccer championships, giving a boost to promotion of its new soccer shoe.

By 1982 the company’s line of products included more than 200 different kinds of shoes, including the Air Force I, a basketball shoe, and its companion shoe for racquet sports, the Air Ace, the latest models in the long line of innovative shoe designs that had pushed Nike’s earnings to an average annual increase of almost 100 percent. In addition, the company marketed more than 200 different items of clothing. By 1983—when the company posted its first-ever quarterly drop in earnings as the running boom peaked and went into a decline—Nike’s leaders were looking to the apparel division, as well as overseas markets, for further expansion. In foreign sales, the company had mixed results. Its operations in Japan were almost immediately profitable, and the company quickly jumped to second place in the Japanese market, but in Europe, Nike fared less well, losing money on its five European subsidiaries.

Faced with an 11.5 percent drop in domestic sales of its shoes in the 1984 fiscal year, Nike moved away from its traditional marketing strategy of support for sporting events and athlete endorsements to a wider-reaching approach, investing more than $10 million in its first national television and magazine advertising campaign. This followed the “Cities Campaign,” which used billboards and murals in nine American cities to publicize Nike products in the period before the 1984 Olympics. Despite the strong showing of athletes wearing Nike shoes in the 1984 Los Angeles Olympic games, Nike profits were down almost 30 percent for the fiscal year ending in May 1984, although international sales were robust and overall sales rose slightly. This decline was a result of aggressive price discounting on Nike products and the increased costs associated with the company’s push into foreign markets and attempts to build up its sales of apparel.

Earnings continued to fall in the next three quarters as the company lost market share, posting profits of only $7.8 million at the end of August 1984, a loss of $2.2 million three months later, and another loss of $2.1 million at the end of February 1985. In response, Nike adopted a series of measures to change its sliding course. The company cut back on the number of shoes it had sitting in warehouses and also attempted to fine-tune its corporate mission by cutting back on the number of products it marketed. It made plans to reduce the line of Nike shoes by 30 percent within a year and a half. In addition, leadership at the top of the company was streamlined, as founder Knight resumed the post of president—which he had relinquished in 1983—in addition to his duties as chairman and chief executive officer. Overall administrative costs were also reduced. As part of this effort, Nike also consolidated its re-search and marketing branches, closing its facility in Exeter, New Hampshire, and cutting 75 of the plant’s 125 employees. Overall, the company laid off about 400 workers during 1984.

Faced with shifting consumer interests (i.e., the U.S. market move from jogging to aerobics), the company created a new products division in 1985 to help keep pace. In addition, Nike purchased Pro-form, a small maker of weightlifting equipment, as part of its plan to profit from all aspects of the fitness movement. The company was restructured further at the end of 1985 when its last two U.S. factories were closed and its previous divisions of apparel and athletic shoes were rearranged by sport. In a move that would prove to be the key to the company’s recovery, in 1985 the company signed basketball player Michael Jordan to endorse a new version of its Air shoe, introduced four years earlier. The new basketball shoes bore the name “Air Jordan.”

Key Dates

1962:: Philip H. Knight founds Blue Ribbon Sports (BRS) to import Japanese running shoes.
1963:: BRS takes its first delivery of 200 shoes from Onitsuka Tiger Co.
1964:: BRS becomes partnership between Knight and William Bowerman.
1966:: The company’s first retail outlet opens.
1968:: Company is incorporated; the Bowerman-designed Cortez shoe becomes a big seller.
1971:: BRS begins manufacturing its own products over-seas, through subcontractors; the Swoosh trademark and the Nike brand are introduced.
1972:: At the 1972 U.S. Olympic Trials, the Nike brand is promoted for the first time; company enters its first foreign market, Canada.
1978:: Company changes its name to Nike, Inc.
1979:: First line of clothing is launched and the Nike Air shoe cushioning device debuts.
1980:: Nike goes public.
1981:: Nike International, Ltd. is created to spearhead overseas push.
1985:: Company signs Michael Jordan to endorse a version of its Air shoe—the “Air Jordan.”
1988:: Cole Haan, maker of casual and dress shoes, is acquired; “Just Do It” slogan debuts.
1990:: First NikeTown retail outlet opens in Portland, Oregon.
1991:: Revenues reach $3 billion.
1994:: Company acquires Canstar Sports Inc., the leading maker of skates and hockey equipment in the world, later renamed Bauer Nike Hockey Inc.
1995:: Company signs golfer Tiger Woods to a 20-year, $40 million endorsement deal.
1996:: The Nike equipment division is created.
1999:: Company begins selling its products directly to consumers via its web site.

In early 1986 Nike announced expansion into a number of new lines, including casual apparel for women, a less expensive line of athletic shoes called Street Socks, golf shoes, and tennis gear marketed under the name “Wimbledon.” By mid-1986 Nike was reporting that its earnings had begun to increase again, with sales topping $1 billion for the first time. At that point, the company sold its 51 percent stake in Nike-Japan to its Japanese partner; six months later, Nike laid off ten percent of its U.S. employees at all levels in a major cost-cutting strategy.

Following these moves, Nike announced a drop in revenues and earnings in 1987, and another round of restructuring and budget cuts ensued, as the company attempted to come to grips with the continuing evolution of the U.S. fitness market. Only Nike’s innovative Air athletic shoes provided a bright spot in the company’s otherwise erratic progress, allowing the company to regain market share from rival Reebok International Ltd. in several areas, including basketball and cross-training.

The following year, Nike branched out from athletic shoes, purchasing Cole Haan, a maker of casual and dress shoes, for $80 million. Advertising heavily, the company took a commanding lead in sales to young people to claim 23 percent of the overall athletic shoe market. Profits rebounded to reach $100 million in 1988, as sales rose 37 percent to $1.2 billion. Later that year, Nike launched a $10 million television campaign around the theme “Just Do It” and announced that its 1989 advertising budget would reach $45 million.

In 1989 Nike marketed several new lines of shoes and led its market with $1.7 billion in sales, yielding profits of $167 million. The company’s product innovation continued, including the introduction of a basketball shoe with an inflatable collar around the ankle, sold under the brand name Air Pressure. In addition, Nike continued its aggressive marketing, using ads featuring Michael Jordan and actor-director Spike Lee, the ongoing “Just Do It” campaign, and the “Bo Knows” television spots featuring athlete Bo Jackson. At the end of 1989, the company began relocation to its newly constructed headquarters campus in Beaverton, Oregon.

Market Dominance in the Early to Mid-1990s

In 1990 the company sued two competitors for copying the patented designs of its shoes and found itself engaged in a dispute with the U.S. Customs Service over import duties on its Air Jordan basketball shoes. In 1990 the company’s revenues hit $2 billion. The company acquired Tetra Plastics Inc., producers of plastic film for shoe soles. That year, the company opened NikeTown, a prototype store selling the full range of Nike products, in Portland, Oregon.

By 1991 Nike’s Visible Air shoes had enabled it to surpass its rival Reebok in the U.S. market. In the fiscal year ending May 31, 1991, Nike sales surpassed the $3 billion mark, fueled by record sales of 41 million pairs of Nike Air shoes and a booming international market. Its efforts to conquer Europe had begun to bear fruit; business there grew by 100 percent that year, producing more than $1 billion in sales and gaining the second place market share behind Adidas. Nike’s U.S. shoe market had, in large part, matured, slowing to five percent annual growth, down from 15 percent annual growth from 1980 and 1988. The company began eyeing overseas markets and predicted ample room to grow in Europe. Nike’s U.S. rival Reebok, however, also saw potential for growth in Europe, and by 1992 European MTV was glutted with athletic shoe advertisements as the battle for the youth market heated up between Nike, Reebok, and their European competitors, Adidas and Puma.

Nike also saw growth potential in its women’s shoe and sports apparel division. In February 1992 Nike began a $13 million print and television advertising pitch for its women’s segment, built upon its “Dialogue” print campaign, which had been slowly wooing 18- to 34-year-old women since 1990. Sales of Nike women’s apparel lines Fitness Essentials, Elite Aerobics, Physical Elements, and All Condition Gear increased by 25 percent in both 1990 and 1991 and jumped by 68 percent in 1992.

In July 1992 Nike opened its second NikeTown retail store in Chicago, Illinois. Like its predecessor in Portland, the Chicago NikeTown was designed to “combine the fun and excitement of FAO Schwartz, the Smithsonian Institute and Disney-land in a space that will entertain sports and fitness fans from around the world” as well as provide a high-profile retail outlet for Nike’s rapidly expanding lines of footwear and clothing.

Nike celebrated its 20th anniversary in 1992, virtually debt free and with company revenues of $3.4 billion. Gross profits jumped $100 million in that year, fueled by soaring sales in its retail division, which expanded to include 30 Nike-owned discount outlets and the two NikeTowns. To celebrate its anniversary, Nike brought out its old slogan “There is no finish line.” As if to underscore that sentiment, Nike Chairman Philip Knight announced massive plans to remake the company with the goal of being “the best sports and fitness company in the world.” To fulfill that goal, the company set the ground plans for a complicated yet innovative marketing structure seeking to make the Nike brand into a worldwide megabrand along the lines of Coca-Cola, Pepsi, Sony, and Disney.

Nike continued expansion of its high-profile NikeTown chain, opening outlets in Atlanta, Georgia, in the spring of 1993 and Costa Mesa, California, later that year. Also in 1993, as part of its long-term marketing strategy, Nike began an ambitious venture with Mike Ovitz’s Creative Artists Agency to organize and package sports events under the Nike name—a move that potentially led the company into competition with sports management giants such as ProServ, IMG, and Advantage International.

Nike also began a more controversial venture into the arena of sports agents, negotiating contracts for basketball’s Scottie Pippin, Alonzo Mourning, and others in addition to retaining athletes such as Michael Jordan and Charles Barkley as company spokespersons. Nike’s influence in the world of sports grew to such a degree that in 1993 Sporting News dubbed Knight the most powerful man in sports.

Critics contended that Nike’s influence ran too deep, having its hand in negotiating everything in an athlete’s life from investments to the choice of an apartment. But Nike’s marketing executives saw it as part of a campaign to create an image of Nike not just as a product line but as a lifestyle, a “Nike attitude.”

Nearly everyone agreed, however, that Nike was the dominant force in athletic footwear in the early to mid-1990s. The company held about 30 percent of the U.S. market by 1995, far outdistancing the 20 percent of its nearest rival, Reebok. Over-seas revenues continued their steady rise, reaching nearly $2 billion by 1995, about 40 percent of the overall total. Not content with its leading position in athletic shoes and its growing sales of athletic apparel—which accounted for more than 30 percent of revenues in 1996—Nike branched out into sports equipment in the mid-1990s. In 1994 the company acquired Canstar Sports Inc., the leading maker of skates and hockey equipment in the world, for $400 million. Canstar was renamed Bauer Nike Hockey Inc., Bauer being Canstar’s brand name for its equipment. Two years later Bauer Nike became part of the newly formed Nike equipment division, which aimed to extend the company into the marketing of sport balls, protective gear, eyewear, and watches. Also during this period, Nike signed up its next superstar spokesperson, Tiger Woods. In 1995, at the age of 20, Woods agreed to a 20-year, $40 million endorsement contract. The golf phenom went on to win an inordinate number of tournaments, often shattering course records, and to become only the second golfer in history to win three “majors” within a single year, more than validating the blockbuster contract.

Late 1990s Slippage

For the fiscal year ending in May 1997, Nike earned a record $795.8 million on record revenues of $9.19 billion. Overseas sales played a large role in the 42 percent increase in revenues from 1996 to 1997. Sales in Asia increased by more than $500 million (to $1.24 billion), while European sales surged ahead by $450 million. Back home, Nike’s share of the U.S. athletic shoe market neared 50 percent. The picture at Nike soon turned sour, however, as the Asian financial crisis that erupted in the summer of 1997 sent sneaker sales in that region plunging. By fiscal 1999, sales in Asia had dropped to $844.5 million. Compounding the company’s troubles was a concurrent stagnation of sales in its domestic market, where the fickle tastes of teenagers began turning away from athletic shoes to hiking boots and other casual “brown shoes.” As a result, overall sales for 1999 fell to $8.78 billion. Profits were falling as well—including a net loss of $67.7 million for the fourth quarter of fiscal 1998, the company’s first reported loss in more than 13 years. The decline in net income led to a cost-cutting drive that included the layoff of five percent of the workforce, or 1,200 people, in 1998, and the slashing of its budget for sports star endorsements by $100 million that same year.

Nike was also dogged throughout the late 1990s by protests and boycotts over allegations regarding the treatment of workers at the contract factories in Asia that employed nearly 400,000 people and that made the bulk of Nike shoes and much of its apparel. Charges included abuse of workers, poor working conditions, low wages, and use of child labor. Nike’s initial reaction—which was highlighted by Knight’s insistence that the company had little control over its suppliers—resulted in waves of negative publicity. Protesters included church groups, students at universities that had apparel and footwear contracts with Nike, and socially conscious investment funds. Nike finally announced in mid-1998 a series of changes affecting its contract workforce in Asia, including an increase in the minimum age, a tightening of air quality standards, and a pledge to allow independent inspections of factories. Nike nonetheless remained under pressure from activists into the 21st century. Nike, along with McDonald’s Corporation, the Coca-Cola Company, and Starbucks Corporation, among others, also be-came an object of protest from those who were attacking multi-national companies that pushed global brands. This undercur-rent of hostility burst into the spotlight in late 1999 when some of the more aggressive protesters against a World Trade Organization meeting in Seattle attempted to storm a NikeTown outlet.

Seeking to recapture the growth of the early to mid-1990s, Nike pursued a number of new initiatives in the late 1990s. Having initially missed out on the trend toward extreme sports (such as skateboarding, mountain biking, and snowboarding), Nike attempted to rectify this miscue by establishing a unit called ACG—short for “all-conditions gear”—in 1998. Two years later, the company created a new division called Techlab to market a line of sports-technology accessories, such as a digital audio player, a high-altitude wrist compass, and a portable heart-rate monitor. Both of these initiatives were aimed at capturing sales from the emerging Generation Y demographic group. In early 1999 Nike began selling its shoes and other products directly to consumers via the company web site. Nike announced in September of that year that it would buy about ten percent of Fogdog Inc., which ran a sporting goods e-commerce site, in exchange for granting Fogdog the exclusive online rights to sell the full Nike line. The company finally earned some good publicity in 1999 when it sponsored the U.S. national women’s soccer team that won the Women’s World Cup. With its record of innovative product design and savvy promotion and an aggressive approach to containing costs and revitalizing sales, Nike appeared likely to stage an impressive comeback in the early 21st century.

Principal Subsidiaries

Cole Haan Holdings Incorporated; Nike Team Sports, Inc.; Nike IHM, Inc.; Bauer Nike Hockey Inc.

Principal Competitors

adidas-Salomon AG; Callaway Golf Company; Converse Inc.; Deckers Outdoor Corporation; Fila Holding S.p.A.; Fortune Brands, Inc.; Fruit of the Loom, Ltd.; FUBU; HI-TEC Sports USA Inc.; Levi Strauss & Co.; Nautica Enterprises, Inc.; New Balance Athletic Shoe, Inc.; Polo Ralph Lauren Corporation; Puma AG; R. Griggs Group Limited; Rawlings Sporting Goods Company, Inc.; Reebok International Ltd.; Rollerblade, Inc.; Russell Corporation; Sara Lee Corporation; Skechers U.S.A., Inc.; Spalding Holdings Corporation; The Stride Rite Corporation; The Timberland Company; Timex Corporation; Tommy Hilfiger Corporation; VF Corporation; Wolverine World Wide, Inc.

Nike, Inc.

views updated May 29 2018

Nike, Inc.

One Bowerman Drive
Beaverton, Oregon 97005
U.S.A.
(503) 671-6453
Fax: (503) 671-6339

Public Company
Incorporated: 1964 as Blue Ribbon Sports
Employees: 4,500
Sales: $3.00 billion
Stock Exchanges: New York Pacific

Nike’s precursor originated in 1962, a product of the imagination of Phillip Knight, a Stanford University business graduate who had been a member of the track team as an undergraduate at the University of Oregon. Traveling in Japan after finishing up business school, Knight got in touch with a Japanese firm that made athletic shoes, the Onitsuka Tiger Company, and arranged to import some of its products to the United States on a small scale. Knight was convinced that Japanese running shoes could become significant competitors for the German products that then dominated the American market. In the course of setting up his agreement with Onitsuka Tiger, Knight invented Blue Ribbon Sports to satisfy his Japanese partner’s expectations that he represented an actual company, and this hypothetical firm eventually grew to become Nike.

By the end of the decade, Knight’s venture had expanded to include several stores and 20 employees, and sales were near-ing $300,000. The company was poised for greater growth, but Knight was frustrated by a lack of capital to pay for expansion. In 1971 using financing from the Japanese trading company Nissho Iwai, BRS was able to manufacture its own line of products overseas, for import to the United States. At this time, the company introduced its Swoosh trademark, and the brand name Nike, the Greek goddess of victory. These new symbols were first affixed to a soccer shoe, the first Nike product to be sold.

A year later, BRS broke with its old Japanese partner, Onitsuka Tiger, after a disagreement over distribution, and kicked off promotion of its own products at the 1972 U.S. Olympic Trials, the first of many marketing campaigns that would seek to attach Nike’s name and fortunes to the careers of well-known athletes. Nike shoes were geared to the serious athlete, and their high performance carried with it a high price.

In 1974 BRS opened its first U.S. plant, in Exeter, New Hampshire. The company’s payroll swelled to 250, and worldwide sales neared $5 million by the end of 1974.

This growth was fueled in part by aggressive promotion of the Nike brand name. The company sought to expand its visibility by having its shoes worn by prominent athletes, including tennis players Hie Nastase and Jimmy Connors. At the 1976 Olympic Trials these efforts began to pay off as Nike shoes were worn by rising athletic stars.

By the start of the 1980s, Nike’s combination of groundbreaking design and savvy and aggressive marketing had allowed it to surpass the German athletic shoe company Adidas, formerly the leader in U.S. sales. In December of that year, Nike went public, offering two million shares of stock. With the revenues generated by the stock sale, the company planned continued expansion, particularly in the European market. In the United States, plans for a new headquarters on a large, rural campus were inaugurated, and an east coast distribution center in Greenland, New Hampshire, was brought on line. In addition, the company bought a large plant in Exeter, New Hampshire, to house the Nike Sport Research and Development Lab and also to provide for more domestic manufacturing capacity. The company had shifted its overseas production away from Japan at this point, manufacturing nearly four-fifths of its shoes in South Korea and Taiwan. It established factories in mainland China in 1981.

By the following year, when the jogging craze in the United States had started to wane, half of the running shoes bought in the United States bore the Nike trademark. The company was well insulated from the effects of a stagnating demand for running shoes, however, since it gained a substantial share of its sales from other types of athletic shoes, notably basketball shoes and tennis shoes. In addition, Nike benefited from strong sales of its other product lines, which included apparel, work and leisure shoes, and children’s shoes.

By 1982 the company’s line of products included more than 200 different kinds of shoes, including the Air Force I, a bas- ketball shoe, and its companion shoe for racquet sports, the Air Ace, the latest models in the long line of innovative shoe designs that had pushed Nike’s earnings to an average annual increase of almost 100%. In addition, the company marketed more than 200 different items of clothing. By 1983 when the company posted its first-ever quarterly drop in earnings as the running boom peaked and went into a decline, resulting in slowing shoe sales, Nike’s leaders were looking to the apparel division, as well as overseas markets, for further expansion. In foreign sales, the company had mixed results. Its operations in Japan were almost immediately profitable, and the company quickly jumped to second place in the Japanese market, but in Europe, Nike fared less well, losing money on its five European subsidiaries.

Faced with an 11.5% drop in domestic sales of its shoes in the 1984 fiscal year, Nike moved away from its traditional marketing strategy of support for sporting events and athlete endorsements to a wider-reaching approach, investing more than $10 million in its first national television and magazine advertising campaign. This followed the “Cities Campaign,” which used billboards and murals in nine American cities to publicize Nike products in the period before the 1984 Olympics. Despite the strong showing of athletes wearing Nike shoes in the 1984 Los Angeles Olympic games, Nike profits were down almost 30% for the fiscal year ending in May 1984, although international sales were robust and overall sales rose slightly. This decline was a result of aggressive price discounting on Nike products and the increased costs associated with the company’s push into foreign markets and attempts to build up its sales of apparel.

Earnings continued to fall in the next three quarters, as the company lost market share, posting profits of only $7.8 million at the end of August 1984, a loss of $2.2 million three months later, and another loss of $2.1 million at the end of February 1985. In response, Nike adopted a series of measures to change its sliding course. The company cut back on the number of shoes it had sitting in warehouses, and also attempted to fine-tune its corporate mission by cutting back on the number of products it marketed. It made plans to reduce the line of Nike shoes by 30% within a year and a half. In addition, leadership at the top of the company was streamlined, as founder Knight resumed the post of president, which he had relinquished in 1983, in addition to his duties as chairman and chief executive officer, and overall administrative costs were reduced. As part of this effort, Nike also consolidated its research and marketing branches, closing its facility in Exeter, New Hampshire, and cutting 75 of the plant’s 125 employees. Overall, the company laid off about 400 workers during 1984.

In early 1986 Nike announced expansion into a number of new lines, including casual apparel for women, a less-expensive line of athletic shoes called Street Socks, golf shoes, and tennis gear marketed under the name “Wimbledon.” By mid-1986 Nike was reporting that its earnings had begun to increase again, and that year sales topped $1 billion for the first time. At that time, the company sold its 51% stake in Nike-Japan to its Japanese partner, and six months later, at year’s end, laid off 10% of its U.S. employees at all levels in a cost-cutting move.

Following these moves, Nike announced a drop in revenues and earnings in 1987, and another round of restructuring and cost-cutting ensued, as the company attempted to come to grips with the continuing evolution of the U.S. fitness market from jogging to walking, from aerobics to cross-training— diversified physical workout. Only Nike’s innovative Air athletic shoes provided a bright spot in the company’s otherwise erratic progress, allowing the company to regain market share from rival Reebok in several areas, including basketball and cross-training.

The following year, Nike branched out from athletic shoes, purchasing Cole Haan, a maker of casual and dress shoes, for $80 million. Advertising heavily, the company took a commanding lead in sales to young people to claim 23% of the overall athletic shoe market. Profits rebounded to reach $100 million dollars in 1988, as sales rose 37% to $1.2 billion. Later that year, Nike launched a $10 million dollar television campaign around the theme “Just Do It,” and announced that its 1989 advertising budget would reach $45 million.

By 1991 Nike’s Visible Air shoes had enabled it to surpass its rival Reebok in the U.S. market. Its efforts to conquer Europe had begun to show fruit as the company gained a second-place market share, behind only the leading German company, Adidas. Unlike the U.S. market, which had largely matured, Nike predicted ample room to grow on foreign soil.

As Nike enters the 1990s, this young company can look back on an extraordinary record of growth over a relatively short period of time. Blessed with good timing, the company rode the U.S. fitness and jogging boom to unprecedented profits, only to suffer the pangs of adjustment as the market matured and changed. Given the company’s record of innovative design and savvy promotion, however, it appears unlikely that Nike will stumble again badly as it runs, jogs, walks, dances, jumps, and plays its way into the future.

Principal Subsidiaries

Cole Haan Holdings, Inc.; Tetra Plastics Inc.

Nike, Inc.

views updated May 18 2018

Nike, Inc.

founded: 1964 as blue ribbon sports

Contact Information:

headquarters: 1 bowerman dr.
beaverton, or 97005 phone: (503)671-6453 fax: (503)671-6300 url: http://www.nikebiz.com

OVERVIEW

Nike, Inc. is the world's largest shoe company. It controls 43 percent of the U.S. footwear market, an enormous lead over Reebok International Ltd. and Fila, its closest competitors. As the 1990s drew to a close, Nike's share of the U.S. apparel market increased 70 percent, an even greater increase than it achieved in the footwear market. Faced with a mature market in the United States, Nike continued its focus on international markets and experienced significant growth. By the late 1990s the Asia Pacific region was the fastest-growing market for Nike, with revenues in the region reaching $1.2 billion at the end of 1997. Meanwhile, European revenues grew 38 percent that same year to $1.8 billion. Nike continues to diversify its product lines to remain competitive and satisfy evolving consumer demands.

In 1998 Nike came under increasing fire from human rights groups regarding working conditions and wages in the company's foreign factories. In the spring of that year, Nike Chairman and CEO Philip Knight announced that the company would eliminate underage labor from its foreign workforce and improve air-quality controls in factories to meet strict U.S. health and safety standards.

As sales of athletic shoes weakened in the mid- to late 1990s, Nike's stock dipped, losing almost half its value in 1997. In 1998 Nike experienced a slowdown in growth as orders for its footwear declined, and CFO Robert Falcone resigned after several quarters of disappointing earnings. A few months later the firm announced plans to lay off 1,600 workers (7 percent of its workforce worldwide) and admitted that future growth would depend on expanding its reach in markets outside the United States.

COMPANY FINANCES

Since Nike went public in 1980, the price per share of its stock rose from $1.38 to $52.06 by mid-1998, a 3,686-percent increase. During the same period, the value of the company increased from $386.0 million to more than $15.0 billion. Nike's global footwear revenues were down 16 percent in the third quarter of 1998, while global apparel revenues rose 11 percent. For that quarter, total revenues were $2.2 billion, an 8-percent decrease from the previous year. Earnings for the period were $73.1 million or $0.25 per share. Nike's efforts to expand in the Asia Pacific market were hampered by economic difficulties in the region and the dampening effect of a strong U.S. dollar there.

Revenues in footwear and apparel declined in the third quarter of 1998 in the United States and the Asia Pacific region, but increased 4 percent in Europe and 27 percent in the Americas. Globally, however, Nike showed an 80-percent increase in golf, soccer, and Jordan-brand footwear. The global training apparel categories showed a 19-percent increase.

The decline in revenues came after years of solid growth for the company. When Nike reported worldwide revenues of $9.2 billion in 1997, a 42-percent increase over revenues of $6.5 billion in 1996, Chairman and CEO Knight declared that it was "the greatest performance in our 25-year history." Revenues in 1996, meanwhile, reflected a 36-percent increase over 1995.

ANALYSTS' OPINIONS

Merrill Lynch Capital Markets' prediction that Nike's international sales growth would exceed domestic growth in years to come was borne out in 1997, when international footwear revenues grew 42 percent and international apparel revenues 67 percent. Other industry analysts who predicted that Nike's revenues would surpass more than $9 billion in 1997 were not disappointed. By mid-1998, however, the outlook was not as bright. When Nike announced plans to cut jobs, analysts lowered their projections for earnings per share. A forecasted decline in future orders, a key indicator of near-term growth, also dampened analysts' expectations.

HISTORY

Nike was founded in 1968 by entrepreneur Phil Knight and Knight's college track coach, Bill Bowerman. It all began with the idea of developing a running shoe that allowed for better traction and extra cushioning. In 1972 the first shoe with the Nike "swoosh" logo, which represents the wing of the Greek goddess Nike, was introduced. In 1974 Nike introduced the Waffle Trainer, featuring Bill Bowerman's unique waffle outsole, which became the best-selling training shoe in the country. In order to promote the Waffle Trainer, Phil Knight sponsored tennis player John McEnroe. Nike exhibited strong marketing capabilities from the start, and by 1979 was one of the most popular athletic footwear companies. That year the company introduced a line of sporting equipment and the first line of Nike apparel.

In 1980 Nike went public with an offering of 2 million shares of common stock. Revenues in 1980 were $269.0 million, and soared to $457.7 million a year later. During the 1980s professional athletes wearing Nike shoes included Joan Benoit, who broke the women's world marathon record, and Carl Lewis, who won four gold medals in the 1984 Olympics. In 1985 Michael Jordan, a rookie with the Chicago Bulls, endorsed Air Jordan court shoes and apparel. By the mid-1980s revenues had passed the $1 billion mark.

In 1988 Nike introduced its famous "Just Do It" advertising and marketing campaign. By the end of the decade, Nike had acquired Cole-Haan, a shoe company, and reported revenues of over $2 billion.

The first Nike Town, a concept retail store combining products and athletic endorsements, opened in Portland, Oregon, in 1990. One year later Nike became the first international sports company to exceed $3.0 billion in total revenues. Athletes who endorsed Nike products continued to excel in their respective sports. In 1995 Nike broke records once again with $4.8 billion in revenues. As the decade approached an end, Nike continued to introduce new products and expand into new markets and new sports, including golf and soccer.

STRATEGY

Nike's overwhelming success is due to its strategy of developing marketing campaigns around prominent sports celebrities and promising newcomers. For example, the Air Jordan athletic shoe capitalized on the talent and popular appeal of rising Chicago Bulls star Michael Jordan.

In the late 1980s Dan Wieden's "Just Do It" campaign for Nike took the industry by storm. "Just Do It" became a call to action for a generation of fitness enthusiasts. With the combination of celebrity spokespeople and original, clever marketing, Nike became a powerful, dominant sport company globally and the world's largest athletic-shoe manufacturer.

In the late 1970s Nike began what would become an ongoing expansion into international markets with entry into Canada, Australia, and Asia. As the company grew rapidly in the 1980s, expansion continued in emerging growth markets such as Japan and eastern Europe. One of Nike's most successful strategies was to purchase some of its competitors.

To stimulate sales and shore up its image in the face of accusations of unfair treatment of foreign workers, Nike abandoned its famous "Just Do It" advertising campaign in 1998, replacing it with the milder, less strident "I Can" campaign. The new Nike message was designed to be more inclusive and attainable.

INFLUENCES

The largest downturn in sales for Nike, Inc. occurred when the company didn't anticipate the demand for women's sneakers. However, it did not take Chairman and CEO Philip Knight long to regain momentum by returning to his original strategy—marketing new products around a popular athlete. Nike also diversified its line of shoes to include specific footwear for any kind of sport or activity. In 1992 Nike assumed the lead in apparel technology with NIKE F.I.T. fabrics, built for comfort and protection during high-intensity outdoor workouts.

Focusing on the international market, Nike launched a sports magazine intended to define the concept behind "Just Do It" to Italians. Initially, a million copies of the 28-page magazine were distributed in Italian. The magazine covered a range of sports and featured local and international athletes. It also described Nike's various athletic shoes, urging readers to "Just stretch. Just do situps . . . Just try something new. Just build something."

Knight's corporate goals were to turn Nike into a $12-billion company by the end of the 1990s and to become one of the world's largest apparel marketers. By December 1996, Nike had surpassed Russell Corporation, one of its competitors, and became the world's largest athletic apparel manufacturer.

CURRENT TRENDS

At the close of 1995 in-line skating was America's fastest-growing sport with more than 20 million people contributing to $1 billion in sales for skates and protective gear. Participation was expected to grow to more than 35 million bladers before the end of the decade. Also, interest in roller and ice hockey rose dramatically. Nike gained a big edge in hockey by buying Canstar, the world's largest manufacturer of skates and hockey equipment, in 1994. The purchase was part of Nike's expansion into the sports equipment business. In 1996 Nike formed its Equipment Division to produce in-line and hockey skates, swimming goggles, sport balls, protective gear, and watches. The Nike skate debuted at the NHL All-Star Game in 1996.

Soccer also became a priority for Nike. The company made large investments to develop better soccer shoes in order to target the international market. The U.S. women's soccer team planned to take on three of the world's top teams in a six-game tour presented by Nike. The tours' goal was to contribute to the growing number of women's sports in the United States and create a new generation of female-athlete role models. According to Hank Steinbrecher, president of the U.S. Soccer Federation, who pointed out that some 300 million people play the game worldwide, "You cannot be considered a serious global sports company unless you are serious about soccer."

In the mid-1990s, vertical retailing gained popularity as retailers sought to display full lines of merchandise without paying steep ground-floor rents in large metropolitan areas. Second and third floors were added to modest street-level storefronts. Nike joined the trend with its Nike Town stores, which featured eye-catching displays on the ground floor and escalators that led to merchandise displays on the upper floors.

Another trend that Nike embraced in the high-tech 1990s was Internet marketing. In its print and outdoor ads, Nike sought to promote "interactivity" by including e-mail addresses that consumers could use to send online messages to athletes featured in the ads. Responses to the messages are generated by a computer at Nike's Beaverton headquarters, and direct users to web sites that feature more information about Nike products.

To increase its consumer base among women, in 1988 the company opened the first of five national Nike "concept shops" aimed specifically at female athletes. The company based its move on the belief that traditional sporting goods stores did not give priority to products and services for women.

PRODUCTS

In 1995 Nike introduced a new age in its trademark air-cushioning design: Zoom Air footwear, which was sleek and low-profile. In the late 1990s Nike, along with Champion Products Inc. and Starter Corporation, signed with NBA Properties to be an exclusive manufacturer and marketer of all NBA authentic on-court and courtside apparel starting with the 1997-98 season. Retail items include Pro Cut and Authentic game jerseys and shorts, shooting shirts, practice wear, and warm-ups. The three companies also had nonexclusive rights to manufacture headwear, outerwear, and activewear for all 29 NBA teams. In 1997 Nike introduced The Air Zoom Flight and Air Foamposite basketball shoes, as well as the Nike Air GX for soccer players.

FAST FACTS: About Nike, Inc.

Ownership: Nike Inc. is a publicly owned company traded on the New York Stock Exchange.

Ticker symbol: NKE

Officers: Philip H. Knight, Chmn. & CEO, 59, $2,116,625; Thomas E. Clarke, Pres. & COO, 46, $1,497,708; William J. Bowerman, Deputy Chmn. & Sr. VP, 86; Richard K. Donahue, VChmn., 70

Employees: 23,606 worldwide

Principal Subsidiary Companies: Nike's subsidiaries include: Bauer Inc., Cole Haan Holdings Inc., and Sports Specialties Corp.

Chief Competitors: Because Nike sells shoes and a variety of apparel on a global scale, the company's competitors include other multinational athletic-shoe companies and upscale clothing retailers. Primary competitors in the athletic-shoe industry include: Adidas; Converse; Fila; New Balance; and Reebok. Competitors in the apparel industry include: Fruit of the Loom; Levi Strauss; and Tommy Hilfiger. Since branching out into the manufacture of sporting goods such as inline skates, Nike has come into competition with: Rollerblade; Russell Corp.; VF Corp.; and Wolverine World Wide.

CORPORATE CITIZENSHIP

On February 24, 1997, Nike entered a partnership with Atlanta mayor Andrew Young and his firm, Good-Works International. GoodWorks International is dedicated to promoting positive business involvement and investment in developing countries and in American inner cities. As part of its commitment to responsible global business, Nike retained Young to review its Code of Conduct, or guiding set of principles for footwear and apparel production worldwide. Later, Nike added the world's first and only ongoing independent audit to the code. Nike also joined the President's Apparel Industry Partnership on Workplace Standards.

In 1998, however, Nike admitted to problems meeting standards of health and safety in its foreign factories. The company agreed to allow outside representatives from labor and human-rights groups to go with the independent auditors on inspections of factories in Asia. Nike also pledged to raise the minimum age for shoe factory workers to 18. But critics quickly noted that the footwear giant did not promise to increase wages for workers in China and Vietnam, where Nike and other U.S. companies paid less than $2 a day. Human rights and labor groups claimed that workers had to make at least $3 to cover basic needs.

In the United States, meanwhile, Nike had launched a variety of philanthropic programs by the late 1990s. The company contributed more than $10.5 million to nonprofit organizations in 1997. Nike also sponsors youth sports programs and school-based programs, as well as an environmental action team and PLAY (Participate in the Lives of America's Youth), a program designed to promote children's recreation. The company donated millions of dollars worth of athletic equipment, shoes, and apparel to numerous organizations and supported programs for youth mentoring and minority-owned athletic retail businesses.

GLOBAL PRESENCE

With the maturation of U.S. markets in the early 1990s, Nike's focus shifted to the international stage. Japan jumped on the Nike bandwagon, and in 1997 the popular Nike Air Max, introduced in the United States in 1985, became the rage there. Teenagers were eager to own a bit of America and were willing to pay up to $100 for a pair of used Nike Air Max.

Nike's global advertising and endorsement budget reportedly has been well over $200 million. According to Chairman and CEO Philip Knight, the overseas market for athletic footwear alone (not counting apparel) was about $6 to $7 billion annually.

CHRONOLOGY: Key Dates for Nike, Inc.

1968:: Phil Knight and Bill Bowerman found Nike
1972:: The swoosh logo debuts
1974:: Nike introduces the waffle outsole
1979:: Introduces first line of Nike apparel
1980:: Nike goes public
1985:: Michael Jordan begins endorsing Nike Air Jordans
1988:: Nike starts the "Just Do It" campaign
1990:: The first Nike Town opens in Portland, Oregon
1998:: The famous "Just Do It" campaign is dropped for "I Can"

As the leader in the growing international sports and fitness market, Nike distributes more than half its products abroad. In 1994 Nike pursued Samna Sports, its South Korean joint-venture distribution partner. The proposal was part of Nike's attempt to shift its emphasis in South Korea from production to sales. This proved beneficial for South Korea since it was the first instance of a financially sound company being listed on the Korean Stock Exchange. Because there was little opportunity for further growth in the U.S. market and foreign sales offered more potential over the long term, Nike achieved a sponsorship with the Brazilian Soccer Federation; Nike would supply Brazil's national teams with sports kits and training clinics. In 1997 China became both a source country and a thriving market for Nike.

SOURCES OF INFORMATION

Bibliography

cushman, john h., jr. "nike pledges to end child labor and increase safety." the new york times, 13 may 1998. available at http://www.nytimes.com/search.

gall, b.j. "fila/nike/reebok-company report." merrill lynch capital markets, 16 december 1996. available at http://sbweb2.med.iacnet.com/infotrac/session/780/583/1765609/9?xrn_14.

holusha, john. "vertical retailing: upstairs, downstairs a hit in midtown, downtown." the new york times, 13 april 1997. available at http://www.nytimes.com/search.

"how was nike developed," 7 february 1997. available at http://user.centrenet.on.ca/abbas/develop.htm.

lefton, terry. "nike seeks to ice dance with bauer skates." brandweek, 3 october 1994.

liu, robert. "nike cfo falcone resigns," 9 january 1998. available at http://cnnfn.com/hotstories.

"new labor-practices arm to monitor subcontracts." wall street journal, 3 october 1996. available at http://sbweb2.med.iacnet.com/infotrac/session/182/932/1766572/22?xm_5.

nike home page, 8 may 1998. available at http://www.nikebiz.com.

"nike, inc." hoover's handbook of american business 1998. austin, tx: the reference press, 1997.

"nike inc.," 1 march 1997. available at http://sbweb2.med.iacnet.com/infotrac/session/182/932/1766572/sig!n6.

"nike no longer sprinting," 18 september 1997. available at http://cnnfn.com/hotstories.

"nike tries to remake image," 30 january 1998. available at http://cnnfn.com/hotstories.

"nike unveils new concept shop for women athletes." pr newswire, 7 may 1998. available at http://www.marketwatch.newsalert.com.

"rough road ahead for nike," 18 march 1998. available at http://cnnfn.com/hotstories.

sorkin, andrew ross. "nike ads point consumers to the internet." the new york times, 23 july 1997. available at http://www.nytimes.com/search.

tobin, james. "swoosh, there it is: nike emblem on u-m jerseys." detroit news, 1 september 1995.

For an annual report:

on the internet at: http://nikebiz.com/investor/aror write: nike inc., 1 bowerman dr., beaverton, or 97005

For additional industry research:

investigate companies by their standard industrial classification codes, also known as sics. nike's primary sics are:

2321 men/boy's shirts

2329 men/boy's clothing, nec

2331 women/misses' blouses & shirts

2339 women/misses' outerwear, nec

3021 rubber & plastics footwear

3149 footwear except rubber, nec

Company Profiles for Students

Nike, Inc.

views updated May 14 2018

Nike, Inc.

One Bowerman Drive Beaverton, OR 97005
(503) 671-6453
www.nike.com

A relatively young company, Nike, Inc. has existed for only thirty years yet has managed to become one of the world's top companies, selling not only athletic shoes, but athletic clothing and equipment in 140 countries around the world. Headquartered in Beaverton, Oregon, this athletic and apparel giant is named for the Greek goddess of victory, and is represented by a famous symbol, the "swoosh." The Nike swoosh is instantly recognizable, and has become an international symbol for athletes who strive for the very best.

Just Two Guys Who Like to Run

Nike was founded by two men who were rather obsessed with sports, Bill Bowerman (1911-1999) and Philip Knight (1938-). Bowerman was a World War II (1939-45) veteran who began coaching the track-and-field team at the University of Oregon in 1949. A hardcore athlete, he was a man thrilled with speed and running in all forms. He is frequently credited with bringing jogging as a form of exercise and sport into widespread popularity. Bowerman was such a skilled athlete and coach that the University of Oregon earned a reputation for excellence, and attracted athletes from around the world. One of these athletes was Philip Knight, who met Coach Bowerman in 1957.

While Knight competed on Bowerman's track team, the two became friends. They both enjoyed sports, especially running and jogging, and believed athletes could achieve greater balance and speed with better shoes. At the time, the athletic shoe market was ruled by German-made sneakers and tennis shoes manufactured by Adidas and Puma. None were really designed for running or jogging. Bowerman frequently experimented at home trying to create the perfect running shoe.

After Knight earned his business degree at the University of Oregon, he attended graduate school in California at Stanford University. In 1962, he received his master's degree in business administration (MBA). After graduation, Knight rewarded himself with a trip around the world. A very important stop was in Kobe, Japan, where he found, and fell in love with, Oniksuka Tiger shoes. Knight believed the shoes were far superior to the brands currently available in the United States. He bought a large shipment of the Tiger athletic shoes and made up a business on the spot. He called it Blue Ribbon Sports.

Nike at a Glance

Employees: 22,000
CEO: Phil Knight
Subsidiaries: Bauer NIKE Hockey, Inc.; Cole Haan Holdings, Inc.; NIKE Golf; NIKE IHM, Inc.; NIKE Team Sports, Inc.
Major Competitors: Reebok; Fila; Adidas-Saloman; Puma AG
Notable Products: Nike Air; Nike Pegasus; Air Jordan basketball shoes; Typhoon ACG and Triax watches; Airelon sunglasses

Blue Ribbon Sports Is Born

After returning to the United States, Knight and Coach Bowerman decided to form a partnership. They used the name Knight had already created, Blue Ribbon Sports, and each contributed $500 toward their dream of selling better athletic shoes. Bowerman continued to coach at the University of Oregon while serving as the idea and design man of Blue Ribbon, tinkering and experimenting with various materials and types of shoe. Knight handled the business side of the company.

Timeline

1957:: Bill Bowerman and Philip Knight meet at the University of Oregon.
1962:: Knight travels to Japan and purchases Oniksuka Tiger shoes.
1964:: Bowerman and Knight form a partnership; company makes $8,000 in first year.
1965:: Blue Ribbon Sports hires its first employee.
1968:: First Bowerman-designed shoe, the Cortez, takes the United States by storm.
1969:: Knight quits his accounting job to focus on Blue Ribbon Sports; sales reach $800,000.
1971:: Partners begin manufacturing their own shoes.
1972:: Company is renamed Nike.
1979:: Nike introduces its apparel line; company controls 50 percent of U.S. running shoe market.
1980:: Nike becomes a public corporation with twenty-seven thousand employees.
1984:: Sales hit just under $920 million.
1985:: Company signs Michael Jordan to promote Nike shoes.
1988:: Nike-Air shoes for men and women are introduced; "just Do It" ad campaign is launched.
1990:: First NikeTown retail store opens in Portland, Oregon.
1995:: Golfer Tiger Woods is signed as pitchman.
1999:: Bill Bowerman dies at age eighty-eight.
2001:: Sales reach over $9 billion; first NikeGoddess store for women opens.

The shipment of Tiger shoes took over a year to arrive in the United States. When they did, Knight stowed them in his parents' garage and began selling them from his car at sports events. The first year Blue Ribbon Sports was in business, the struggling firm made about $8,000. By 1965, the partners hired their first employee, Jeff Johnson, to help sell the Japanese shoes. Like Phil Knight, Johnson sold the shoes wherever and whenever he could, talking to athletes and demonstrating their high-quality craftsmanship.

In the meantime, Bowerman was busy making adjustments and improvements to the original shoe. A Bowerman-redesigned Tiger shoe, called the Cortez, became a best-seller with area sports enthusiasts and soon caught on across the United States. Cortez sales made the six-year-old company a success.

Based on Cortez sales, Bowerman and Knight decided they were ready to design and manufacture their own brand of shoes. They stopped importing shoes from Japan, and by the early 1970s were producing athletic shoes with a new type of rubber sole that had been crafted by Bowerman for speed and traction. The night before the company's first batch of custom shoe boxes was to be produced, Jeff Johnson suggested another improvement—a name change. His choice was a name taken from Greek mythology, Nike (pronounced NI-kee). Nike was the goddess of victory, an athletic beauty whose winged shoes and love of speed would be a perfect symbol for the young company. In 1972, Blue Ribbon Sports, Inc., officially changed its name to Nike.

Nike Takes the United States by Storm

In Nike's first year, Bowerman and Knight found an excellent way to introduce the fledgling firm to the world. Eugene, Oregon, happened to be hosting the Olympic trials and the partners gave some of the marathon runners Nike shoes to wear while competing. Two of the runners did very well, and the company had proof of the winning potential of its shoes. The company pulled in nearly $2 million in sales for the year; it also grew to forty-five employees. Knight devoted himself fulltime to the company, while Bowerman remained coach at the University of Oregon until 1972 when he retired to focus his energies on Nike and its growing athletic shoe line.

In 1971, Bill Bowerman made his first lightweight shoe sole by pouring rubber into his wife's waffle iron. According to Bowerman, every ounce he could remove from a shoe's sole would make a runner go even faster.

Nike continued to expand and gain attention, with sales topping $3 million for 1973. It also opened its first retail store in Santa Monica, California, which featured a variety of Nike-brand shoes. By 1979, Nike was the leading athletic shoe manufacturer in the United States, controlling half of this quickly expanding market. The company then introduced clothing to its product line, including a variety of shorts, running pants, and shirts.

By 1982, Nike spread its wings and started selling its famous brand internationally; this was also the year the company began a little advertising. Knight had never been a fan of advertising, but felt it was time to bring the Nike name to more Americans. He hired a small agency in Portland, called Weiden & Kennedy to craft a Nike image, although neither the agency nor Phil Knight had any idea their collaboration would eventually achieve worldwide attention. Over time, Nike ads would become almost more famous than the products the company produced.

Missed Trends and New Successes

While Nike had become a tremendous success, it was sometimes slow to respond to trends. For example, the company failed to recognize the potential of the aerobics craze of the 1980s. A new rival, Reebok International, did seize the opportunity and made millions. Nike bounced back in 1985 when it signed Michael Jordan (1963-) of the Chicago Bulls to promote its new Air Jordan basketball shoe. Early sales were good due largely to the "cool" television commercials that featured Jordan flying through the air.

In 1986, the company reached over $1 billion in sales, but Reebok still pushed Nike out of the top slot in the American athletic shoe market. The reason? Nike had continued to overlook a crucial part of the athletic market: women. Reebok had many styles and colors for women while Nike had traditionally looked to men and boys for its sales.

Missed trends caused Nike sales to drop to $850 million in 1987. That same year, however, a new line was released that would boost the company. The shoes featured a special cushioning system in the heel to reduce the stress of running on the foot and ankle. The new Air shoe line (not the same as the Air Jordan basketball shoes) had gas in the shoe's sole to create the cushion, which was like a shock absorber—absorbing the impact of the foot hitting the ground in the same way a shock absorber reduces bumps in the road for a car or truck.

Michael Jordan and Nike

In the early 1970s, Nike began sponsoring athletes as a way to gain attention for its shoes. Its first deal was with a runner named Steve Prefontaine (1951-1975), who was coached by Bill Bowerman at the University of Oregon. Prefontaine was an exceptional athlete with an attitude—he did things his own way, and didn't care what other people said or thought. Bowerman and Knight believed Prefontaine projected the perfect Nike image. They offered the runner money to wear Nike shoes when he competed and Prefontaine began wearing Nikes in 1973.

Sadly, Prefontaine's career was cut short when he died in a car crash in 1975. It would be another ten years before Nike again approached an athlete to wear its shoes. The young man Knight and Bowerman selected was Michael Jordan (1963-) who, in 1985, was just starting to make a name for himself in basketball as a player for the Chicago Bulls. Knight believed Jordan had loads of potential, just like young filmmaker Spike Lee (1957-), who was signed to produce several television ads featuring Jordan.

Lee created memorable commercials depicting how hard work and special Nike shoes made Jordan "fly." The ads were such a big success that everyone wanted to wear Air Jordan shoes. Jordan became known as "His Airness" and Nike quickly became an internationally known sports apparel company. Jordan and the Chicago Bulls went on to win six national titles, and the popularity of Air Jordan shoes continued to soar.

Jordan retired from basketball on two occasions, once to play baseball, then again to pursue other interests. In 2001, he returned to basketball to play with the Washington Wizards. Throughout his career changes, Jordan's popularity remained high and Nike continued to sell products. The Jordan line of shoes and clothing grew so much over the years, it was separated from other Nike products to form its own division. Michael Jordan even has his own office at Nike headquarters, and has played an active role in shaping what goes into the items bearing his name.

In 1988, the advertising campaign featuring the line "Just do it" was launched, and brought Nike instant acclaim as a company with hot products and a lot of attitude. The excitement generated by the ads made Nike the fashion sensation of the year and the company quickly regained the athletic shoe market from rival Reebok. Yet what enabled Nike to hold on to this market position in the coming years was finally taking notice of women buyers. Nike began sponsoring women athletes, initiated research on shoes specifically designed for female feet, and introduced footwear, apparel, and equipment.

Nike Captures the World

When Nike entered the 1990s, its sales had risen to $2 billion and it employed over five thousand people worldwide. For Knight and his top managers, however, this wasn't enough—they wanted to make Nike the world's leading athletic apparel and equipment company. A move in this direction was the purchase of the largest hockey and skating equipment producer, Canstar Sports, in 1995. By the mid-1990s, the Nike name had spread throughout the sports world: NFL football teams wore Nike-made jerseys and shoes; finalists in the U.S. Open tennis championships sported Nike gear; Nike sponsored New York City marathons; the company even outfitted major league soccer teams.

In 1995, sales were just under $5 billion, and Nike was indeed the top athletic shoe and apparel manufacturer in the marketplace. By the following year, sales leapt to over $6 billion, while Nike employees jumped to fifteen thousand throughout the world producing shoes, clothing, and equipment. Nike was on top not only in the shoe business; it had become one of the world's most successful companies.

The Nike Swoosh

The famous Nike "swoosh" was designed in 1971 by Carolyn Davidson, who was attending graduate school at Portland State University. She was paid $35 for this simple, yet rather interesting shape (it looks like a rounded checkmark), having no idea it would change the business world.

The trademark is so well known that the company often uses the symbol instead of its name in advertising on television and in magazines and newspapers. At company headquarters in Oregon, Nike has a giant red swoosh on the outside of its building instead of its name. In 1999, Marketing magazine declared the Nike swoosh to be Logo of the Century, beating out such famous symbols as McDonald's golden "M " arches. This made it the most recognizable logo in the world.

The Nike swoosh, however, is not only a marketing tool. It has become synonymous with hard work and success, and it appeals to a wide range of people—children, teens, and adults of all races and in dozens of countries around the world. Some people, like young athletes, have had the swoosh symbol shaved onto their heads or tattooed on their bodies. Nike cofounder Phil Knight even got a swoosh tattoo on his left ankle after several employees challenged him to do it.

The end of the 1990s brought a major change for Nike and Phil Knight when Bill Bowerman retired from the board of directors after thirty years. Just a few months later, Bowerman died on December 24, 1999, at his home in Fossil, Oregon. Knight, Nike employees, and hundreds of athletes past and present mourned the loss of Bowerman, a vital force in creating Nike and its one-of-a-kind products. While Bowerman could never be replaced, the company honored his memory with a new line of shoes carrying his name.

Into the Future

In the new century, Nike continues to grow. In 2000, the company had over twenty-two thousand employees in offices around the world, with five thousand of them working at the Beaverton, Oregon, "campus." Nike also continues its long tradition of research and development through their Nike Sports Research Lab, which opened in 1980.

In 2000, Tiger Woods (1975-), who like Michael Jordan had become another famous face for Nike, signed a new contract to pitch Nike golf products for another five years. That same year, Nike designed uniforms for over two thousand athletes at the Sydney, Australia, Olympic Games, and formed a women's division within the company, complete with its own vice president and advertising budget. Next came the opening of its first NikeGoddess store in Newport Beach, California, in 2001. There are plans for several more NikeGoddess stores to open in the United States over the next few years.

Whether for men or women, girls or boys, top athletes or beginners, Nike has shoes, apparel, and equipment for everyone. Over the years, it has become one of the world's top companies, recognized for quality athletic apparel, edgy advertising, and famous phrases. The ultimate goal, however, remains the same—a commitment to athletic fitness. According to the Nike Web site, "It's all about the athlete. Always has been, always will be."

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