Brand Equity Case Study Nike Marketing Essay

The world constantly changes and disparities, however, some top brands seem to keep their leadership position in their industry to this day. Strong brands are amazingly durable and have the ultimate ability to overcome many challenges. Either does Nike. Since its creation in 1971 in the USA, the Nike swoosh is still one of the world’s most valuable brand despite of the severe crises. Ranked at 26 on the list of Interbrand’s “Best Global Brands” in 2009 with a brand value at $13.2 billion dollars, up 4% from a value of $12.7 billion last year, Nike is the best among sports brand, left the big competitors, Adidas and Puma far behind (Interbrand report, 2009).

So how has Nike “got ahead and stayed ahead”?

Figure 1: Swoosh “=” achievement. Source: www.nikefootball.com This article will be employed Elliott and Percy’s structural framework of brand equity synthesis to investigate in four dimensions of Nike brand equity, namely: brand attitude (functional and emotional features), symbolic meaning, brand awareness and brand loyalty to draw the deposit picture of Nike brand equity in the sportswear industry.

About Nike

In 1962, inspired by athlete aspiration, Bill Bowerman and Phil Knight shook their hand to cofounded Blue Ribbon Sports, precursor of Nike. The initial business then was to distribute low-cost and high quality Japanese athletic shoes to American. Today, Nike not only designs and sells athletic shoes at every profitable market worldwide, but also operates in athletic apparel, sport equipment and subsidiary venture including Cole Haan, Converse Inc., Hurley International LLC, Nike Golf and Umbro Ltd (Nike report, 2009). Headquartered at Oregon, United States, Nike has been presented across more than 160 countries around the world targeting its primary market regions: United States, Europe, Asia Pacific and the Americas. Nike employs about 32,500 people as of May 31, 2008 (Datamonitor Research, 2009). By indirect or direct way, Nike touches “the lives of millions more with its innovative products that transform every sport into a winning battle” (Superbrands, 2002).

Nike customers

The decade ago, Bill Bowerman, the co-founder of Nike once said “If you have a body, you are an athlete” (Nike – company overview, 2010). This motto transmitted not only the whole brand characteristics but also the main targeted customers. They are athletes and anyone with a body.

Nike offers a wide product portfolio of sport-inspired lifestyle apparel, accessories and equipment. Nike provides athletic footwear for runners, trainers and basketball players. The company also offers shoes and equipments specially designed for those addicted tennis and golf players and etcetera. Such diverse product extensions enable the company to satisfy the varied athletic needs of its customers (Datomonitor Research, 2009)

Nike and its rivals

Sportswear has been a thriving market in recent years. According to the research “Global footwear: Industry profile” releasing by Datomonitor in 2009, the global footwear market generated total revenues of $ 196,617 million in 2008. Thus, Nike has experienced intense competition from the moment its first sporting shoes being introduced to their customers. Globally, this market is dominated by “the big three” – namely Nike, Adidas, and Puma (Sport+Markt Report, 2008; Keynote Report, 2010).

Adidas

Adidas was truly the first sports company, it was founded in 1920. They once really blew in the decade of 70s and 80s. By the early 90s, Adidas realized itself forgotten in the back of game. In the 21st century, the brand has steadily affirmed its position and seems on renaissance. Adidas brand increased its value at 6%, ranked 62th on the list of Best Global Brands 2009 and continued to take the second largest sporting goods manufactures behind Nike (Interbrand, 2009)

The overall Adidas brand competes straightly and closely with Nike’s value proposition. Nike aims “To bring inspiration and innovation to every athlete in the world”, meanwhile, Adidas mission is “Improving every athlete’s performance through innovation”. The brand values of Adidas have been claimed that “authenticity, inspiration, honesty and commitment – are derived from sport.” (Datamonitor research, 2009)

Puma

Figure 1: the leaping puma symbolizes the combination of speed, power and elegance exhibited by professional athletes

Placed at 97th, Puma brand appeared at the first time on the Interbrand annual report. Interbrand analysts gave the positive compliments for Puma’s effort to compete against the big rivals. Through new design, co-branding and partnerships with celebrities and famous designers such as Alexander McQueen and Hussein Chalayan, Puma refreshes their brand image. The company defines its brand as the mixes of sport, lifestyle and fashion to increase its desirability (Puma report, 2009). The Puma brand differentiates itself from Nike by communicating “lifestyle driven style” with “active lifestyle” themes whereas Nike focusing on “performance driven style”.

Nike – brand equity

Having and holding customers is likely to be a competitive battle which each brand tries all efforts to win. They compete for functional attributes, distinctive services or innovative technologies (Aaker, 1991).

So what are emotional and functional benefits which Nike provides for their customers?

Functional and emotional features of the brand

Since Nike was set up by someone who has “a deep passion for athletics and running”, it should come no surprise that product is important. Products that are comfortable, “authentic, functionally innovative and uniquely designed” (Nike report, 1985). The innovative technology is considered as one of the defining dimensions of Nike’s brand identity and corporate culture.

The simple driving concept has led to some impressive innovations which is considered as one of the defining dimensions of Nike’s brand identity and corporate culture. The first highlight was Air cushioning, using pressurized gas to cushion impact and new materials such as Urathane, that was used first with the Air Max running shoes (Nike report, 1987). More recently, to obtain maximum performance, Nike Sport Research laboratory has discovered the innovative technology such as Shox, which are made mostly of rubber and “spring back adding more power to a runner’s stride” and Total 90 Concept, a range of equipment to help players perform over 90 minutes of a soccer match (Keller, 2008)

Such innovative technology which Nike has used has gained the strong hold in consumers’ perceptions. The research of Ross and Harradine (2004) focusing on relationship between young school children and branding, particularly sportswear shoes brands showed that children aged from 4 – 7 years old believed that these brands could improve their personal performance. “They do very fast shoes. They make you run faster”. They are also “comfortable and look good”, they added.

Clearly, functional benefit is the fundamental and classical features to communicate with customers. However, if Nike just provided high quality running shoes to enhance athletic performance”, Nike would not be strong brands. According to Aakers (1991), big brands need to be beyond the purely functional relationships. They should create a more strong emotional attachment with core consumers because “emotional bene­fits add richness and depth to the brand and the experience of owning and using the brand” (Aakers, 2009)

Figure 2: Nike – “Commitment to win” Source: Nikefootball.comGuinn et al (p219, 2008) stated that Nike offers emotional benefits which are “the exhilaration of athletic performance excellence; feeling engaged, active, and healthy; exhilaration from admiring professional and college athletes as they perform wearing “your brand” – when they win, you win too”.

Associated brand with the top athletes, Nike tells story of brands which the main themes is “sportsmanship and unrelenting effort”. These are the story of Michael Jordan who won a record 10th scoring title and was selected as one of the 50 Greatest Players (NBA history, 2010) in American’s National basketball association championship. Lance Armstrong survived and won a second straight Tour de France while Tiger Woods completed the career Grand Slam, “ensuring his place in golf history at the age where most of us are still wondering what we will do when we grow up” (Nike report, 2000). The most three prominent athletes has generated the inspiration for young and next generation of athletes. Nike has succeeded to transfer their inspirations to every single purchaser. Wearing every pair of Nike shoes is to engage a passion for excellence and encourage to “do your own thing”. “Just do it” – the tagline could sum up all the greatest values of brand which is (Superbrands case study, 2002).

Symbolic meaning

Products are no longer just products, they move beyond the functional meanings. Nowadays, they are definitely social tools “serving as a means of communication between the individual and his significant references” (Grubb and Grathwohl, 1967 as cited by Banister and Hogg, 2003). Products are considered as a symbol of individuality and uniqueness, and also symbol of affiliation and social identification. It is particularly trued with the fashion brands. Fashion brands such as clothes, bags, shoes and etc satisfy opposing functions, both social identification and distinction among individuals (Banister & Hogg, 2003)

Nike must have understood the recipe well. The “Just do It” campaign in the early 1990s would be a perfect example. Losing ground to archrival Reebok which was quick initiative on designing “style”, “fashion” aerobics shoes in 1980s (Keller, 2008), Nike responded dramatically and forcefully by launching the “Just do it” campaign which was mainly focused on person wearing on products instead of product itself.

“Purchasing an athlete-endorsed product is one means of symbolically and publicly demonstrating aspirations to be a part of the group and such behaviors are directly influenced by the extent to which a fan identifies with an athlete endorser”

Carlson and Donavan (2008)Heroes and hero worship was being built as the main themes of advertising. Celebrity endorsements such as Bo Jackson, John McEnroe and Michael Jordon appealed to the consumers’ sense of belonging and “hipness”. In other words, Americans consumers were convinced that “wearing for every part of your life was smart (the shoes are designed for comfort) and hip (everyone else is wearing them; you too can belong to this group)” (CFAR, 1998).

“Just Do It” campaign succeeded (Nike increased its share of the domestic sport shoe business after launching this campaign in America from 18 percent to 43 percent, regained the leader position) because it could fascinate customers in both separating ways. Wearing Nike as a self fulfilling image declaration – “if you are hip, you are probably wearing Nike”. But perhaps most importantly, it could create the desirable needs -“if you want to be hip, wear Nike” (CFAR, 1998).

Symbolic meanings of Nike brand are also tracked in the research on “Symbolic and functional positioning of brands” of Bhat and Reddy (1998). This study showed that Nike scored high on the prestige and personality expression scales (See Appendix). The findings of Hogg et al (1998) also support the success of attached the symbolic and emblematic meanings to sportswear brands. The youth showed facility in interpreting the symbolic meanings attached to the sports brands which were associated with the different sports stars (such as footballers, rugby players, athletes and tennis players) and with different sports (e.g. football and rugby.)

Brand Loyalty

Luring by “good shoe with innovative functionality” and athletic aspiration value, Nike has indeed come to “mind” and “heart” of its customers. By the mid of 1990s, 77 percent of male Americans from the age of 18 to 25 chose Nike as their “favourite shoe”, according to Rozanski et al (1999). The figure still remains stably despite of that “up” and “down” year Nike has been experience, gaining the high score of customer satisfaction at 79 percent rated by The American Customer Satisfaction Index Organization (2009).

Figure: 3NIKE – The American Customer Satisfaction Index

Base-

line

97

98

99

00

01

02

03

04

05

06

07

08

09

10

Previous

Year

%

Change

First

Year

%

Change

All Others

NM

73

76

79

79

78

81

81

83

79

81

83

82

83

1.2

13.7

Athletic Shoes

79

74

74

76

79

76

79

79

82

77

76

79

79

80

1.3

1.3

NIKE

82

74

73

73

78

74

76

76

78

75

72

75

78

79

1.3

-3.7

adidas

75

74

74

75

78

73

76

74

77

75

78

77

78

78

0.0

4.0

Source: American customer satisfaction index organization, 2010

It could be said that loyalty to the Nike brand is driven by many external and internal factors such as brands’ subjective and objective characteristics and loyalty building programs.

One visible example of creating innovative method to capture the strong relationships with Nike users is that creating Joga.com, a social network site for foot ball fans. Launching quietly in the early 2006, the site became an instant hit, peaking at 7.5 million viewers when Nike showed Ronaldinho video clips, according to Nike (2006). More than 1 million members from 140 countries signed up by mid July. In this site, fans can create their personal blogs, build communities around favorite teams or players, download video and organize pickup games. By enrolling consumers in building and shaping the content of the website, Nike pulled their loyal customers closer, nurtured deeper bonds of loyalty and advocacy. (Kotler and Amstrong, 2007)

Brand Awareness

Brand awareness is the first and crucial stage of consumer’s preference. It refers to the strength of a brand’s presence in the consumers’ mind (Aakers, 1996). Nike has been successful in building awareness. The “Swoosh” symbol has been appeared everywhere, on shoes, hats, billboards and soccer balls across the globe too remarkably to such extent that one author used the title “The Swooshification of the World” on Sports Illustrated column that imaged a future in which the swoosh could surpass sports to become “a letter of the alphabet and the new presidential seal, among other things”(Keller, 2008). True be told, the recognition of the ‘swoosh’ is extremely high.

According to Keller (2008), as of 2000, 97 percent of American citizens recognized the brand logo, as the strong brand penetration. The studying of Arona and Stoner (2009) on understanding brand personality also assists this fact. The findings indicated that Nike was perceived as a “dominant force” or “authority” in the market place, reaching at nearly 90 percent (Figure below)

Figure 4: The difference between Nike and Adidas. Source: Arora, R. and Stoner, C. (2009) a mixed method approach to understanding brand personality, Journal of product and Brand management, 18(4), 272-283.

The results of Ross and Harradine’s research (2004) on brand recognition and awareness on children is also supportive, which showed that Nike could be recognized consistently without identification of brand name, even by the youngest group (aged from 4 to 6 years old). This perhaps may reflect the general level of advertising and promotion that children are exposed to.

How has Nike done to build brand awareness?

Sponsorships, advertising and experience focused retailing (Nike town) are three vivid channels that Nike has applied to enhance its brand image and awareness. Among these strategies, athlete endorsements could be considered as the most significant success of Nike brand.

Nike has been invested millions of dollars to associate their brand names with easily recognizable athletes with the aim of brand image building (1.6 billion dollars is spent on multiyear athlete endorsement by Nike according to Horrow (2007). Athletes at the top of their respective sport such as Micheal Jordan, Tiger Woods, and Lance Armstrong who are well – liked and respected by members of the brand’s target audience are chosen as endorsers to associate the Nike brand with the athlete’s celebrity image. This strategy has been paid off, for example, since Tiger Woods and Nike cooperated, annual sales for Nike Golf have exceeded to nearly $500 million dollars with an estimated 24 percent growth per year in the first five years of the agreement (Pike, 2006 cited by Carlson and Donavan, 2008).

Conclusion

Since the Nike name is chosen in 1971 with the concepts of victory, success and speed, Nike has been keeping its great speed in the fierce competitive environment. Building brand image and its associations around a famous person and conducting the two – way conversation with power consumers through innovative digital channels, Nike has hold the strong presence in the heart of consumers.

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