Overview

The company was started in 1964 as Blue Ribbon Sports by Bill Bowerman and Phil Knight. It changed the name to Nike in 1978. Nike is a sales-earning machine, and year-over-year sales continue to climb. In the previous 10-year period, the company had only one year where sales were relatively flat. For the current fiscal year ending May 2016, the company saw an increase in revenue of about 6% to $32.4 Billion. It also manages its bottom line (net income) which came in at $3.7 Billion, representing an increase of almost 16%.

According to several sources, Bill Bowerman used a waffle iron for the first shoe design. He was having breakfast with his wife (waffles) and saw that the ridges would make for a great sports shoe. Whether or not he actually used the waffle iron itself or it was just the inspiration for the design is anyone’s guess.

How the Company Started

The name was inspired by the Greek goddess of victory, Nike. The concise nature of the name has been a great source of inspiration for athletes. When they were Blue Ribbon Sports, they sold a Japanese shoemaker’s product.

They did this until the agreement ran out in 1971, in which case they developed their own product. In 1978, they officially changed the name of the company to Nike.

The company got its start on $1200. While that amount of money was worth a lot more than it is today, it was still peanuts when trying to get a company off the ground. They were able to sell to continue operations.

Initial Problems

Like many companies in the 1980’s, Nike acquired several companies. Unlike other companies in the day, Nike concentrated on businesses that were similar in kind to its own products.

However, trying to manage multiple companies proved too cumbersome for many companies, including Nike. Management decided to concentrate on its core products going forward and divested many of those acquisitions.

Phil Knight started selling the Japanese running shoe from the trunk of his car. He would go to track meets and talk with other runners, showing them how well the shoe was built and why he loved to run with it. The sales were easy pickings, but the travel had worn him down. This was when he and Bowerman decided to open stores and sell the line of shoes exclusively from the stores.

Nike did not cater to women. This is something that competitors pounded the pavement with and left Nike with a gap in potential sales. Because of this, women did not take to the Nike brand initially, even after Nike tried to rectify the situation by coming up with products for women.

Why it Works

One theme that has been around for many years and remains to this day is the “Just Do It!” slogan of the company. It is such a simple statement, yet says so much. The company also has incredible brand recognition. One look at its swoosh logo, and you immediately know it comes from Nike. This is the epitome of brand recognition.

When Blue Ribbon Sports started making enough money from sales, they opened up several stores to sell this new line of running shoes. Phil Knight used his notoriety as a track star to promote the running shoe line, and runners became aware of it through word-of-mouth.

The company continues to operate its own stores but has branched out into other sporting good retailers and other establishments that sell running shoes. The company has also expanded its line of sporting-related clothing as well.

Promotion:

Nike’s biggest promotional efforts are through licensing and endorsements. The company uses the same advertising firm that it has used for many years. The campaigns of the agency have been quite effective throughout. One of its biggest endorsement campaigns was with Michael Jordan and its Air Jordan line.

Jordan was a relatively unknown player which meant the company did not have to pay big bucks for the endorsement. However, Knight saw the huge potential in him which meant this endorsement should take off big for the company.

In fact, when Jordan played for the NBA wearing the brand, the NBA banned it because it was not a black shoe worn by other players. Jordan was fined $5,000 for every game he wore it. This publicity boosted both Jordan and the brand. Of course, Jordan’s playing ability set him apart as one of the greatest players. But the controversy helped to draw attention to him quicker.

The message the company projects is that by using its products, you will be able to accomplish anything. In fact, an early campaign used the slogan, “there is no finish line” and believes in that concept entirely.

At the time of this writing, the company uses as its tagline, “If you have a body, you are an athlete.” Nike projects the concept that everyone, including customers, is part of the Nike team. It’s almost as if you are on the team with whichever sports celebrity they are endorsing.

Customer loyalty is a quality the company enjoys. When someone is hooked on one product, they are likely to buy several others from the company. They will also become great brand ambassadors and talk up the products via word-of-mouth and social media.

One event that put Nike on the map is the promotion of their brand during the 1972 Olympics. This was huge for the company and helped it develop Nike as a brand.

Features:

Nike’s biggest competitor was (and still is) German-based Adidas. The Adidas line of running shoes was popular with many athletes in that period. The biggest problem was its price. Phil Knight was a runner who was coached by Bill Bowerman.

When the two formed the partnership to bring in the Japanese running shoe, they could do so at a much lower cost than Adidas. Bowerman’s connection with runners, including ones he would later coach in the 1972 Olympics, gave the company an edge in getting endorsements for the product.

Presently, the company has enough brand quality to charge higher prices than its earlier days. There are athletes who are loyal to Nike and then others who are loyal to the Adidas brand. In the early days, Nike could compete on price. Today, it’s more about preferences and longevity.

Lessons Learned By The Business

• Make products that are in demand. The company is great at doing this. To many, it seems like Nike is able to create demand based on its brand name and top notch advertising. There is probably some truth to this belief.

• Nike knows how to keep the customer pipeline active. They know that existing customers produce the lowest cost of sales as they no longer need to be sold. Sometimes, a simple email message to an existing customer with a coupon for discounts is all that is needed to trigger repeat sales.

• The company is not afraid of using technology in its products to improve the products. This is especially true in its sports footwear. It seems to be ahead of its competition with this key aspect of their business.

• You’ve no doubt heard the slogan, “Just Do It” and think about the company when you hear it. But, it is something the company believed in doing internally. They didn’t spend a lot of time overthinking their strategy. They just did it!

How Other Businesses Can Learn From This

The biggest takeaway for other business is to develop your brand and loyalty to the brand to the point where your products practically sell themselves. The company uses great advertising that makes people believe their products are cool. Celebrity endorsements go a long way in bringing this message to the fans.