Company case: Nike

Nike hit the ground running in 1962. Originally known as Blue Ribbon Sports, the company
focused on providing high-quality running shoes designed for athletes by athletes. Founder
Philip Knight believed high-tech shoes for runners could be manufactured at competitive prices
if imported from abroad. Nike’s commitment to designing innovative footwear for serious
athletes helped build a cult following among U.S. consumers.

Nike believed in a “pyramid of influence” where the preferences of a small percentage of top
athletes influenced the product and brand choices of others. Nike’s marketing campaigns have
always featured accomplished athletes. For example, runner Steve Prefontaine, the company’s
first spokesperson, had an irreverent attitude that matched Nike’s spirit

In 1985, Nike signed up then-rookie guard Michael Jordan as a spokesperson. Jordan was still an
up-and-comer, but he personified superior performance. Nike’s bet paid off—the Air Jordan line
of basketball shoes flew off the shelves and revenues hit more than $100 million in the first year
alone. As one reporter stated, “Few marketers have so reliably been able to identify and sign
athletes who transcend their sports to such great effect.”

In 1988, Nike aired the first ads in its $20 million “Just Do It” ad campaign. The campaign, which
ultimately featured 12 TV spots in all, subtly challenged a generation of athletic enthusiasts to
chase their goals. It was a natural manifestation of Nike’s attitude of self-empowerment through
sports.

As Nike began expanding overseas, the company learned that its U.S.-style ads were seen as too
aggressive in Europe, Asia, and South America. Nike realized it had to “authenticate” its brand
in other countries, so it focused on soccer (called football outside the United States) and became
active as a sponsor of youth leagues, local clubs, and national teams. However, for Nike to build
authenticity among the soccer audience, consumers had to see professional athletes using its
product, especially athletes who won.

Nike’s big break came in 1994 when the Brazilian team (the only national team for which Nike
had any real sponsorship) won the World Cup. That victory transformed Nike’s international
image from a sneaker company into a brand that represented emotion, allegiance, and
identification. Nike’s new alliance with soccer helped propel the brand’s growth internationally.
In 2003, overseas revenues surpassed U.S. revenues for the first time, and in 2007, Nike acquired
Umbro, a British maker of soccer-related footwear, apparel, and equipment. The acquisition
made Nike the sole supplier to more than 100 professional soccer teams around the world and
boosted Nike’s international presence and authenticity in soccer. The company sold Umbro in
2012 for $225 million

In recent years, Nike’s international efforts have been focused on emerging markets. During the
2008 Summer Olympics in Beijing, Nike homed in on China and developed an aggressive
marketing strategy that countered Adidas’s sponsorship of the Olympic Games. Nike received
special permission from the International Olympic Committee to run Nike ads featuring Olympic
athletes during the games. In addition, Nike sponsored several teams and athletes, including
most of the Chinese teams. This aggressive sponsorship strategy helped ignite sales in the Asian
region by 15 percent.
In addition to expanding overseas, Nike has successfully expanded its brand into many sports
and athletic categories, including footwear, apparel, and equipment. Nike continues to partner
with high-profile and influential athletes, coaches, teams, and leagues to build credibility in
these categories. For example, Nike aligned with tennis stars Maria Sharapova, Roger Federer,
and Rafael Nadal to push its line of tennis clothing and gear. Some called the famous 2008
Wimbledon match between Roger Federer and Rafael Nadal—both dressed in swooshes from
head to toe—a five-hour Nike commercial valued at $10.6 million.

To promote its line of basketball shoes and apparel, Nike has partnered with basketball
superstars such as Kobe Bryant and LeBron James. In golf, Nike’s swoosh appears on many
golfers but most famously on Tiger Woods. In the years since Nike first partnered with Woods,
Nike Golf has grown into a $523 million business and literally changed the way golfers dress and
play today. Tiger’s powerful influence on the game and his Nike-emblazoned style has turned
the greens at the majors into “golf’s fashion run way.”

Nike is the biggest sponsor of athletes in the world and plans to spend more than $3 billion in
athletic endorsements between 2012 and 2017. The company also has a history of standing by
its athletes, such as Tiger Woods and Kobe Bryant, even as they struggle with personal problems.
It severed its relationship with Lance Armstrong in 2012, however, after strong evidence showed
that the cyclist doped during his time as an athlete and while competing during all Tour de
Frances. Nike released a statement explaining, “Nike does not condone the use of illegal
performance enhancing drugs in any manner.” Prior to the scandal, the company had helped
develop Armstrong’s LIVESTRONG campaign to raise funds for cancer. It designed,
manufactured, and sold more than 80 million yellow LIVESTRONG bracelets, netting $500 million
for the Lance Armstrong Foundation.

While Nike’s athletic endorsements help inspire and reach consumers, its most recent
innovations in technology have resulted in more loyal and emotion- ally connected consumers.
For example, Nike’s lead in the running category has grown to 60 percent market share thanks
to its revolutionary running application and community called Nike+ (plus). Nike+ allows runners
to engage in the ultimate running experience by seeing their real-time pace, distance, and route
and by giving them coaching tips and online sharing capabilities. Nike expanded Nike+ to focus
on key growth areas like basketball and exercise and recently launched Nike+ Basketball, Nike+
Kinect, and Nike+ Fuelband, a bracelet/ app that tracks daily activities.

Like many companies, Nike is trying to make its company and products more eco-friendly.
However, unlike many companies, it does not promote these efforts. One brand consultant
explained, “Nike has always been about winning. How is sustainability relevant to its brand?”
Nike executives agree that promoting an eco-friendly message would distract from its slick high-
tech image, so efforts like recycling old shoes into new shoes are kept quiet.

As a result of its successful expansion across geographic markets and product categories, Nike
is the top athletic apparel and footwear manufacturer in the world. In 2014, revenues exceeded
$27 billion, and Nike dominated the athletic footwear market with 31 percent market share
globally and 50 percent market share in the United States. Swooshes abound on everything from
wristwatches to skateboards to swimming caps. The firm’s long-term strategy, however, is
focused on running, basketball, football/soccer, men’s training, women’s training, and action
sports.
Questions:

1. What are the pros, cons, and risks associated with Nike’s core marketing strategy?
2. If you were Adidas, how would you compete with Nike?

Company case: Google

In 1998, two Stanford University PhD students, Larry Page and Sergey Brin, founded a search
engine company and named it Google. The name plays on the number googol—1 followed by
100 zeroes—and refers to the massive quantity of data available online that the company helps
users find. Google’s corporate mission is “To organize the world’s information and make it
universally accessible and useful.” As such, the company focuses first and foremost on creating
the perfect search engine. Google search works because it uses the millions of links on other
Web sites to help determine which sites offer the most valuable content. The company has
become the worldwide market leader for search engines through its strategic business focus and
constant product innovation.

Google creates and distributes its products for free, which in turn has attracted a host of online
advertisers seeking targeted advertising space. About 96 percent of its revenues come from
online advertising, which means that creating new advertising space is critical to the company’s
growth. Google sells advertising space on its search pages through a program called AdWords,
which is linked to specific keywords. Hundreds of thousands of companies use AdWords by
buying “search ads,” little text-based boxes shown alongside relevant search results that
advertisers pay for only when users click on them. Google also runs an advertising program
called AdSense, which allows any Web site to display targeted Google ads relevant to the
content of its site. Web site publishers earn money every time their visitors click on these ads.

In addition to offering prime online real estate for advertisers, Google adds value by providing
tools so businesses can better target their ads and understand the effectiveness of their
marketing. Google Analytics, for example, is free to Google’s advertisers and provides a custom
report detailing how Internet users found the site, what ads they saw and/or clicked on, how
they behaved on the site, and how much traffic was generated.

With its ability to deploy data that enable up-to- the-minute improvements in a Web marketing
program, Google supports a style of marketing in which the advertising resources and budget
can be constantly monitored and optimized. Google calls this approach “marketing asset
management,” implying that advertising should be managed like assets in a portfolio depending
on the market conditions. Rather than following a marketing plan developed months in advance,
companies use the real-time data collected on their campaigns to optimize the campaign’s
effectiveness and be more responsive to the market.

Since its launch, Google has expanded far beyond its search capabilities with numerous other
products, applications, and tools that benefit both consumers and businesses. The goal behind
each product was to help users find information they need and to help them get things done
better, faster, and easier than before. Today, Google’s wide range of products and services fall
into the following categories: Web (Web Search, iGoogle, Google Chrome), Mobile (Mobile,
Search for Mobile, Maps for Mobile), Media (Picasa, Google Play, Youtube.com, which Google
acquired in 2006 for $1.65 billion), Geo (Earth, Maps), Home & Office (Docs, Gmail, Calendar),
Social (Google+, Blogger), Specialized Search (Patents, Finance, Scholarly Papers), and
Innovation.

As the world becomes more mobile, Google is betting big in the mobile category. In 2008, Google
launched Android, a mobile operating system that went head to head with Apple’s iPhone. The
biggest differentiation between the two was that Android was free, open sourced, and backed
by a multimillion-dollar investment. That meant Google wanted its partners to help build and
design Android over the years. The investment paid off, and by 2010, Android became the
number-one mobile operating system in the market.

As Google expanded into mobile technology, it quickly became the leader in mobile advertising
with 75 percent market share for search ads and approximately 50 percent market share for all
mobile ads. In 2012, Google entered the mobile device category when it purchased Motorola
and launched the Nexus 7, a sleek tablet that competed directly with the iPad and Kindle. As
Google looks toward the future, the company wants to offer the ultimate mobile solution—
Google mobile devices along with mobile services so users can use all Google all the time.

Google’s ultimate goal is to reach as many people as possible on the Web—whether by PC or by

Google has enjoyed great success as a company and a brand in its short lifetime. From the
beginning, it has strived to be one of the “good guys” in the corporate world, supporting a
touchy-feely work environment, strong ethics, and a famous founding credo: “Don’t be evil.”
Google currently holds a 67 percent market share for core searches in the United States,
significantly greater than Microsoft’s 17 percent and Yahoo!’s 15 percent market shares.
Globally, Google holds a more dominant lead, with 85 percent market share over Yahoo!’s 8
percent and Microsoft’s 3 percent. Google’s revenues topped $59 billion in 2013, and the
company was ranked the second most powerful brand in the world with a brand value of $107
billion. In addition, Google’s $400 billion market capitalization in 2014 edged out companies like
Walmart and Microsoft to become the second most valuable company in the world.

Questions

1 With a portfolio as diverse as Google’s, what are the company’s core brand values?
2 What’s next for Google? Is the company right to put so much focus on Mobile?