Current Advertising Campaign Analysis of Nike, Inc.

8 November 2013 To: Mr. Lee From: Yuhui Mo Subject: Current Advertising Campaign Analysis of Nike, Inc. The purpose of the report is to analyze the current advertising campaign of Nike, Inc. Furthermore, this report helps answer what type of advertisement the Nike uses, who Nike's target audience is, and how effective Nike's advertising campaign is. This report recognizes that advertising strategy, which emphasizes communication, lifestyle, and star effect plays a very large part in Nike’s overall success of advertising campaign. The research in this report will provide useful information in obtaining a depth understanding of the advertising campaign of Nike, Inc. While the report researches a variety of advertising campaign and effectively targeted populations in the market, it cannot analyze each aspect in the advertising campaign. Therefore the report will focus on advertising strategy. Due to lack of data of recent years, the report will pay attention to the financial performance from 2005 to 2009. Using the information in the report may help understanding of current market strategies, which will in turn help the development of future market strategies.

Current Advertising Campaign Analysis of Nike, Inc.

Prepared for Mr. Lee WRD 203-013 Instructor 1318 Patterson Office Tower Lexington, KY 40506

Prepared by Yuhui Mo 261 Simpson Ave Lexington, KY 40504

8 November 2013

TABLE OF CONTENTS INTRODUCTION.............................................................................................................1 ADVERTISING STRATEGY...............................................................................................1 Focus On Communication.......................................................................................1 Convey Life Style To Audience................................................................................2 The Sign Of Swoosh..........................................................................................3 “Just Do It” Campaign......................................................................................3 Star Effect...............................................................................................................4 TARGET MARKET...........................................................................................................5 EFFECTIVENESS OF CAMPAIGN.....................................................................................5 High Advertising Expenditure.................................................................................5 The Best Reward.....................................................................................................6 CONCLUSION.................................................................................................................7 BIBLIOGRAPHY...............................................................................................................8

LIST OF ILLUSTRATIONS Figure 1: Nike, Inc. Advertising Expenditure, Fiscal Year 2005-2009.......................5 Figure 2: Nike, Inc. Revenue Performance, Fiscal Year 2005-2009..........................6 Figure 3: Athletic Footwear-Global Market Shares in 2009.......................................6

INTRODUCTION

Nike Inc. is the world's leading sporting goods manufacturer. As the world's most successful sports consumer goods company, it influences every aspect of the industry, from its production systems to its fashion systems. Along the way, Nike has developed powerful advertising techniques and campaigns, which have made significant contributions to promote the company’s sales and market share. Looking to diversify its market, Nike launched Nike Fuelband SE. In order to successfully expand sales, Nike needs to craft a detail strategy for the advertising campaigns. By learning from the previous campaigns, Nike will be better equipped to know how to reach its goal. Nike's market strategy focuses on using its advertising campaign to interpret its value of brand and spirit of sport. This strategy has enabled Nike to become popular and successful all over the world. Nike promises these qualities to attract more customers, increase sales, and promote brand value. In order to achieve a deep understanding of Nike's advertising campaign, we need to know the type of advertisement that Nike uses, Nike’s target audience, and Nike's advertising campaign efficacy. Since there are various aspects in the advertising campaign, attention must be focused on advertising strategy and especially on the advertising content. With limited information of recent years, it was only possible to focus on business performance of Nike from 2005 to 2009. From analysis of its advertising campaigns, Nike can obtain valuable information, possibly to develop future advertising strategies that better target the market, based on findings from previous campaigns.

ADVERTISING STRATEGY

Advertising is mass media content intended to persuade audiences of readers, viewers, or listeners to take action on products, services, and ideas. In order to understand the success of Nike’s advertising campaigns, it is necessary to know what advertising strategy it uses at first.

Focus On Communication It is no secret that the success of Nike is based on its advertisement; communication is the key that enables the advertisement of Nike to be more attractive and effective. Similar to other sporting goods manufacturers, such as Adidas and Reebok, Nike was an early adopter of Internet marketing, email management technologies, and broadcasting and narrowcasting communication technologies to create multimedia marketing campaigns. However, there is a significant difference between Nike and other companies. While other companies pay more attention to sales appeal in their advising campaigns, Nike focusses more on communication. Robert Goldman’s Nike culture: the sign of the swoosh claims that Nike applies metacommunication in its advertising campaign. He writes “meta-communication as the shared, 1

but usually unstated, take-for-granted assumptions about the nature of communication. It is communication about communication. Meta-communication is the level of communication where the subject of discourse is the relationship between speakers, but these assumptions are generally unspoken; yet we can monitor this level of communication by tone of voice, or facial gesture, or body language” (33). Nike applies the concept of meta-communication. It emphasizes meta-communication rather than product features. In Nike's ads, Nike no longer simply introduces new product performance, usage, style, and so forth; rather it relates a feeling or emotion to its audiences through meta-communication. According to the article “How does Nike communicate its values to its target audience”, "the overall communication of the brand values of Nike has been built on a strong principle which states that Nike is selling a feeling, an emotion. Without seeing or directly experiencing the product, they convey a feeling to the audience to experience what it would be like to use their products. This is promoted through all types of media in the following ways: enlists famous spokespersons, top athletes, depicts inspirational stories, creating emotional connections between the viewer and the depicted person and motivate the viewer directly" (Sam). It is like a process of self-reflection of the world for every Nike audience. For instance, if Nike advertises its shoes, it does not strive to highlight shoe features or functions at all; instead, it stimulates the emotions of its audiences in impresses a certain lifestyle upon its audience. Therefore, Nike's commercial is a valuable form of communication, not merely a sales appeal. With its emphasis on communication in its advertising campaign, Nike attracts and targets its clients successfully. Nike expresses its perfect blend of elements of brand culture and sport spirit to its customers through communication. By doing so, Nike achieves and improves its brand's cultural significance and adds value.

Convey Life Style To Audience The other key to success is that Nike not only sells sports goods to consumers, but also conveys a life style to its customers. This portrayed lifestyle is representative of powerful sporting spirit and positive life attitude. It encourages the audience to conquest nature and achieves accomplishments beyond their own limits, to revel in positive energy, to make the right selections and to do the right things. Therefore customers who own Nike's product do not just own the material product, but rather accept the life style of Nike. Such influence of Nike’s communication makes the product very popular among its customers and encourages perpetual support of the company.

The Sign Of Swoosh Nike blends its rich cultural connotation into its symbol. The Nike swoosh symbol is eyecatching as it represents an abstract form of flying, to the human eye. Furthermore, this sign expresses the meaning of being having correct aspirations and positive attitudes in a nonjudgmental fashion, which compels people to believe that Nike is the best brand to own. Nowadays, evidence of the Nike swoosh sign is everywhere; the swoosh sign has become a popular sign in the world, and few other sporting goods companies' brands are as well-known as Nike's. Robert Goldman also argues that “the swoosh now runs so deep that visitors to remote, rural and impoverished regions of the Third World report finding peasants sewing 2

crude swoosh imitations on to shirts and caps, not for the world market but for local consumption. The swoosh symbol carries recognition and status. As the Nike symbol has grown ascendant in the marketplace of images, Nike has become the sign some people love to love and the sign others love to hate” (Golaman 2). Thus it can be seen that the sign has become a perfect advertising tool, and it has become a cultural icon, which Nike uses to enhance brand values and awareness.

“Just Do It” Campaign In addition to the sign of swoosh, the slogan "Just Do It" has also became a significant cultural symbol of Nike, functioning in conjunction with the sign of swoosh. The slogan of "Just Do It" is classic advertising, expresses the spirit of sports and attitude of Life. It can be interpreted as “I choose to enjoy what I do”. It also can be interpreted as “I just do what I desire to do and never give up”. Nike employs a motivational message in its slogan to inspire customers, which encourages people to cheer up, grasp the steering wheel of life, and take action. No matter who you are, no matter the color of a person’s hair, no matter the color of his or her skin, and no matter what limitations that he or she suffers, Nike will persuade that anything is possible, achievable, and attainable. "Just Do It" is one of widespread advertising slogans in the world. David Gianatasio’s “Happy 25th Birthday to Nike's ‘Just Do It’, the Last Great Advertising Slogan” states that "Nike's ‘Just do it’ slogan, unveiled 25 years ago this month by Wieden and Kennedy, might be the last great tagline in advertising history. Other notables have come since among them including Apple's 'Think different' and Volkswagen's "Drivers wanted", but none have come close to duplicating the cultural impact and mass appeal of the 'Just do it’ campaign"(Giantasio). Nike creates a strong and impressionable brand into customers' hearts by applying "Just Do It" – one of the most powerful advertising slogans in the world. "Just Do It" incorporates a certain positive attitude regarding life into its products, and it has become a fashion symbol globally. People originating from all facets of socioeconomic circumstances from all over the world know this slogan. Nike focuses much effort on its advertising campaigns. The effective performance of the “Just Do It” campaign has helped Nike seize markets and increase sales. David Karen Sandmire notes that from 1988 to 1998, the “Just Do It” campaign allowed Nike to further increase its share of the domestic sport-shoe business from 18% to 43%, (from SEK 6109.40 million to SEK 64.09 billion in worldwide sales)" (“Nike Presents: Just Do It-Possibilities”). In just ten years, Nike experienced remarkable development. Due to the "Just Do It" campaign, Nike has attracted more and more customers and created a myth of brand sales. In order to perpetuate the myth of brand sales, Nike still pays much effort on its "Just Do It" campaign. As Nike claimed, “Nike will redefine ‘Just Do It’ with its new ‘Possibilities’ campaign. The new ‘Possibilities’ campaign takes ‘Just Do It’ from inspiration to action, enabling viewers to participate in challenges through the Nike and digital ecosystem. ‘Possibilities’ inspires viewers to push their limits and strive to reach new goals through a variety of playful scenarios featuring an all-star cast of athletes and guest stars. Digital and social media activations help viewers to ‘Just Do It’ themselves through a series of Nike and challenges” (Nike, Inc.). "Possibilities" developed from "Just Do It", and it continues to convey what Nike views to be the spirit of sports and the attitude of life to customers, emphasizing that nothing is impossible and that people can continually be challenged beyond their limits. 3

Star Effect Nike emphasizes the effect of advertising communication. In order to promote its communication, Nike continually signs famous top athletes as spokespeople for its products which therefore enhances its brand image and promotes its corporate culture. Endorser selections are typically discerning, and Nike has complete, long-term planning of marketing strategy after signing top athletes. It can be said that the cooperation of Nike and sports stars is a win-win model. Karen Sandmire also states that throughout the campaign that Nike enlisted numerous notable athletes in order to attract customers and promote the image of Nike as being reliable to not only everyday customers but professional athletes. In addition to showcasing appeal to athletes in various sports through soccer stars Ronaldinho and Wayne Rooney, basketball stars Kobe Bryant and LeBron James, and tennis stars Roger Federer and Rafael Nadal in their advertisements, Nike also includes a range of people from varying ethnicities and races (“Nike Presents: Just Do It-Possibilities”). These top stars are outstanding in their fields, and they have distinctive personalities. Nike builds its powerful brand by promoting inspirational stories of such super star athletes. These stories always bring people positive feeling and emotion, and most of the stories are about heroism. Nike builds an incredible, loyalty based, relationship with customers through these stories and stars, leading to a heightened level of brand awareness for Nike.

TARGET MARKET

The reason why Nike signs famous top athletes as spokesperson is that Nike commonly targets the youth market. According to Nike Competitive Analysis, Fernino et al. states that Nike's main target market for their shoes, clothes and other accessories includes males and females between 18 and 35 years old (4). Since these customers share common characteristics in the market: they love sports, revere heroes, chase stars, they are inspired by others, and chase their dreams. Targeting its customers, Nike grasps customer needs preferences and psychological characteristics accurately.

EFFECTIVENESS OF CAMPAIGN

One of Nike's significant success factors is its attention to and efforts in advertising campaigns, which leads to growth of sales and ensures that Nike may make full use of advertising strategies to seize larger market shares in the future.

High Advertising Expenditure According to Figure 1 below, Nike spends a large amount of money of advertising. 4

Figure 1. Nike, Inc. Advertising Expenditure, Fiscal Year 2005-2009.

$2.50 $2.00 $1.50

$1.60

$1.74

$2.31

$2.35

2008

2009

$1.91

$1.00 $0.50 $0.00 2005

2006

2007 (In Billions)

Source: Nike, Inc. As can be seen from figure 1 above, a positive trend in Nike's advertising expenditure has been present, especially from 2005 to 2008. In 2005, the advertising expense of Nike was $1.6 billion; in 2009, the expense increased about 47% to $2.35 billion. Nike out-spent its competitors such as Adidas and Reebok in the advertising campaign. Petrecca and Howard claim that in the United States alone, Nike spent $85 million on advertising in 2005; in comparison, Adidas spent $47 million and Reebok spent $26 million (“Adidas-Reebok Merger Lets Rivals Nip at Nike's Heels”). As a result, the predominant advertising campaigns made a significant contribution to the market share of Nike.

The Best Reward With a great amount of attention invested in its advertising campaign, Nike achieved a high return from 2005 to 2009. Figure 2 shows the revenue performance of Nike.

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Figure 2. Nike, Inc. Revenue Performance, Fiscal Year 2005-2009.

$25.00 $20.00 $15.00 $10.00

$13.74

$14.96

2005

2006

$16.33

$18.63

$19.18

2008

2009

$5.00 $0.00 2007 (In Billions)

Source: Nike, Inc. The growth trend corresponds to the advertising expenditure. From 2005 to 2009, there was a growth of 40% as the revenue was $13.74 billion in 2005 and $19.18 billion in 2009. In addition, Nike still obtained a good revenue performance, despite cutting the budget in 2009. In Figure 3, it becomes clear can see Nike had a distinct advantage in global market shares.

Figure 3. Athletic Footwear-Global Market Shares in 2009.

Source: TT-NikeSports-Finance

6

18% Nike

31%

Adidas Reebok

5%

Puma

2%

New Balance

4%

ASICS Converse

5%

K-Swiss Skechers

6%

16% 7%

Others

6%

Nike occupied the largest market share, 31% in athletic footwear in 2009, largely due to the efficacy of its advertising campaigns. In terms of market share, Nike was about twice as large as its main competitor Adidas, which held the second largest market share, while Reebok, one of the next largest competitors, had only 6% of the market share. Nike's dominance in this situation is extremely significant.

CONCLUSION

Based on what has been discussed previously, it is evident that Nike focuses on advertising campaigns. Nike targets markets through strong advertising strategies by valuing communication, conveying life style, and enlisting famous spokespeople. Nike communicates with customers by promoting positive feelings and emotions as ideas that are interwoven throughout their products, spreading brand culture and sport spirit all around the world, building an incredible, loyalty based, relationship with customers, and achieving a tremendous business success in the competitive field of sports goods. The most powerful aspect of the advertising campaign is that Nike portrays its products as having soul and being able to instill that soul in consumers who buy its products. It can be conceivable that the advertisement of Nike products is the root of the enormous sales of Nike and that such advertisement not only portrays Nike as strong and undefeatable, but that such advertisement allows Nike to manifest itself as a superpower in the field of sports goods.

BIBLIOGRAPHY

Goldman, Robert, and Stephen Papson. Nike culture: the sign of the swoosh. London: Sage, 7

1998. Print. Sam, Michael. “How does Nike communicate its values to its target audience?” Wordpress. N.P., 12 May. 2011. Web. 22 Oct. 2013. Gianatasio, David. “Happy 25th Birthday to Nike's ‘Just Do It’, the Last Great Advertising Slogan.” Adweek. Guggenheim Digital Media. 2 July. 2013. Web. 8 Nov. 2013. Sandmire, Karen. “Nike Presents: Just Do It – Possibilities.” Empower Network. 5 Sept. 2013. Web. 8 Nov. 2013. Nike, Inc. Nike 2009 Annual Report. Form 10K. Washing, D.C.: Nike Inc., 2010. Web. 4 Nov. 2013. Nike, Inc. “Nike Redefines "Just Do It" with New Campaign.” Nike Inc. 21 Aug. 2013. Web. 8 Nov. 2013. Fernino, Josh, et al. “Nike Competitive Analysis.” File Last Modified 20 Apr. 2009. Microsoft Powerpoint file. Petrecca, Laura and Howard, Theresa. “Adidas-Reebok Merger Lets Rivals Nip at Nike's Heels.” USA Today. Gannett Co. Inc. 4 Apr. 2005. Web. 8 Nov. 2013. “Nike Inc. B NKE.” TT-NikeSports-Finance. Telfer School of Management. N.P. Web. 8 Nov. 2013.

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