Nike: Building a Global Brand Summary

Rupa Mahato PGDM-Marketing Roll No. 163

The case concerns the development of Nike's international marketing program. Although R Nike met with great success in thwarting Reebok's competitive thrust in the U.S., overseas markets posed many challenges. The case concentrates on the European and Asian markets and provides some historical marketing perspectives. The issue faced by Nike is how to best build global brand equity. The case focuses on some key marketing decisions in 1992 and 1993 and then focuses on the subsequent challenges Nike faced, including an image crisis as well as intensified competition. Further, a discussion on expanding Nikes brand portfolio is discussed. The Nike Key brand associations were created to performance, high tech, top athletes (e.g., Michael Jordan), and sports. It should be pointed out how consistent, cohesive, and reinforcing this brand image was (and still is). Nike has strong product performance associations as well as user and usage imagery. Nikes advertising in general, and the Just Do It campaign in par ticular, are its contribution to brand equity. To address the challenge of building a global brand, the brand was built in the U.S. In particular, it is important to point out Nikes internal brand mantra, authentic athletic performance, and how it help ed to guide brand-building efforts. European market: The actual means by which they will built, however, may differ. In other words, the strategy will be the same awareness first and image next but the actual tactics in terms of the three main ways to build brand equity may differ.. Perhaps the most important challenges were that: 1) the brand did not have the history nor heritage in the market and was starting more from scratch and 2) European consumers may vary in significant ways from Americans in terms of their sports experience. Nike changed its formula from the U.S. market. As the case points out, they over -relied on their current U.S. marketing program, mainly for budget reasons. A key lesson is that just because an ad campaign or some other aspect of the marketing program seems to work in an overseas market doesnt mean that it the right thing to do to build brand equity. Europeans may have liked and been entertained by Nikes advertising but not reached the level of understanding about the brand that Nike would have desired. In particular, the mantra of authentic athletic performance needs to be translated in a meaningful way. Nike had to change its sponsorship approach, making soccer a big part of this shift. Nikes image problems in the late 1990s: the various contributors to these problems, such as labor relations, swoosh ubiquity, endorsement proliferation, and aggressive marketing. Nike became a lighting rod for criticism from various citizens groups, both domestically and abroad. The pros (e.g., economies of scale in production and distribution, lower marketing costs, consistency in brand image, scope, etc.) and cons (e.g., differences in: consumer behavior, consumer response to marketing, brand and product development, competitive environment, legal environment, etc.) of global marketing. Nikes marketing activities can be evaluated in terms of how they dealt with these benefits and drawbacks.

1. Answer Nike is: Nike is selling a feeling; an emotion. An aggressive and performance oriented brand R Has always given priority to performance and durability along with fashion Purchased by all types of consumers especially by young people who admire Always provides higher quality with high price Uses various slogans in its advertising and marketing campaigns. Brand image (Elite athletes, High technology, Expensive/premium, Running, Irreverent, Aggressive, Cool) Sources of Brand equity The main source of Nikes Brand equity is the professional athletes and players of international sports (Heritage as an athletics-focused brand). Nike has always chosen upcoming stars as its Brand ambassador (Emphasis on technological advancement,). Nike is a Brand that usually signs top athletes of every sport from across the world to lucrative deals so that the athletes can wear and represent Nike to its fullest (Association with top athletes). Nike is also associated with Premium price positioning, Attitude as conveyed in marketing program. 2. Answer Their newest strategy is putting emphasis on individually and appealing to each sport and athlete in the United States, Europe, and Asia. The broadening of their 6 categories and the awareness being arisen in many new countries this could actually be a great potential for Nike and their Brand. They have determined China to be their future number two investors for products. European marketing team attacked a single sport at a time to develop the Brand in Europe. Separate promotional campaigns were conducted in different countries in Europe.

Rupa Mahato PGDM-Marketing Roll No. 163

Requires a diversified portfolio of athletes, covering all popular sports globally. Consider the bottomup approach in each market, while maintaining the original strategy of building awareness first, and then image later. 3. Answer One key tool Nike has used to drive its popularity growth is the use of celebrity endorsers and wellplaced sponsorships. Nike depends seriously on its endorsements and sponsorships to market it-self. Sponsorships of the Olympic Games start of many opportunities to bring sports events into the mainstream for regional and global markets. It will establish Nike as one of the leading sportswear companies in the world. Not only it will enhance Nikes Brand image among the consumers, but the Brand awareness and Brand equity will reach new heights. Sponsorship and endorsement played a key role in Nikes U.S. success Sponsorship and endorsement also important for establishing positive image abroad Image of Nike in U.S. tied to elite athletes, Nike actually began reducing number of endorsers because associations sufficiently high High-profile sponsorship probably more important in regions where Nike image not as high in terms of performance

4. Answer Critics of globalization attacked Nike based on: Nike has been criticized for contracting with factories in countries such as China, Vietnam, Indonesia and Mexico Low wages in Indonesia Child Labor in Pakistan Health and Safety Problems in Vietnam Workers were forced to work 65 hours a week and improperly compensated for overtime.

Nike measures to defend the allegations were effective to some extend not entirely Nike Concerned: Nikes recent efforts in the area of labor and environmental/health standards shows that the company is serious about doing the right thing Nike created several new departments (e.g., Labor Practices (1996), Nike Environmental Action Team (NEAT). Nike has pushed its suppliers to obey standards though increased monitoring and inspection efforts Nike has been active in founding and/or supporting an array of different international and non-profit organizations. Increasing the minimum age of footwear factory workers to 18, and minimum age for all other lightmanufacturing workers (apparel, accessories, equipment) to 16. Expanding education programs, including junior and high school equivalency courses, for workers in all Nike footwear factories. 60-hour work week has been enforced Has assured an average salary well above national salary average Created a corporate responsibility division. o From all these, it appears as if Nike is truly conscious about these issue. 5. Answer Mergers and Alliances Current Nike Mergers: Converse Cole Haan Hurley International LLC Nike Golf Umbro Ltd Exeter Brands Group LLc Nike Bauer Hockey Alliances 2003 Nike Grind 2006 Nike + iPod 2006 Center of Excellence 2008 House of Hoops 2009 BICEP

Yes, these acquisitions make sense for Nike because it had many goals behind these acquisitions.

They were searching for: Brand diversity Ways providing additional avenues for growth Segmenting this business by customer Opportunity to address the low end through distribution at retailers

Nike should try to acquire the Chinese Brand Li-Ning next if it is possible 6. Answer Nikes challenged to respond to a market demand for fashionable athletic footwear and apparel. Fashion is an integral part of their production In 2001 the company opened the first Nike Goddess store to sell fashionable sportswear for women only Fashion is more important for Nike along with performance when they enter a new market like China because some analyst believes that the new middle class in China has began to follow western culture.

7. Answer Nike should do is to differentiate them from Adidas and Reebok. They should preserve their reputation as an innovator and maintain Nike Brand equity domestically and perhaps more importantly abroad. Nike should acknowledge that global competition is becoming fiercer. The brand strategy should be maintained, so the company should continue pursuing successful global athletes. It is possible to consider acquiring other brands to diversify the companys portfolio. To defend Nikes position it should: Targeting some of its promotion to female consumers Service differentiation Apparel and equipment customization Product differentiation Unique shoe technology and innovation Distinctive Competency Marketing (Consumer Loyalty) Think about latest trends and style and introduce fashionable shoe Low price range Nike should go after Asian country markets with reasonable price because demand is elastics here Be more socially responsive for the society.