June 3, 2019
Nike’s Marketing Strategy: 8 Lessons for Entrepreneurs
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From a natural-born entrepreneur’s college paper to a $34-billion-a-year company, Nike has come a long way. And it isn’t just shoes that have brought Nike this far. It’s a brilliant marketing strategy.
There’s a lot of information available online about Nike’s marketing strategy. Reading Nike’s story between the lines, however, reveals a few secrets that might slip passed a casual reader.
Here are eight untold secrets every entrepreneur and aspiring startup can emulate.
Phil Knight, the founder of the $130 billion global sports shoes and apparel enterprise, knew little about business. But he was an athlete and a sports buff and knew a lot about running and running shoes.
It was during a class at Stanford in the late 1950s that he discovered he was born to be an entrepreneur. Knight recalls in his fascinating biography Shoe Dog.
In that class, Knight had an assignment to develop a business plan for a new company, so he wrote the paper that became the foundation of the world's biggest sports shoe and apparel brand. The title of his paper was, “Can Japanese Sports Shoes Do to German Sports Shoes What Japanese Cameras Did to German Cameras?”
Unlike most other students, Knight decided to turn his college paper into a real business. He started selling Japanese sports shoes under the label Blue Ribbon Sports. He combined his knowledge of sports and shoes with his passion for marketing, strengths that still define the Nike brand.
It was a long time ago, and running wasn’t nearly as popular as it is today. Running was something only athletes and weirdos did back then. Knight decided to play to his strengths instead of following the conventional.
Positioning is the way you want your customers to look at your product. It allows you to specialize and develop skills to serve your customers better. Nike’s marketing strategy positioned the brand for track and running.
Behemoths like Adidas, Reebok, and Puma dominated the market at the time. By focusing on the niche for running shoes, Nike was able to grow his market and become bigger than the giants.
Later on, it would expand the brand into other sports like basketball and soccer, but the running-shoe niche was the wedge that split the market open for Nike.
Most startups go under because they fail to anticipate and control their financial needs. Looking at Nike’s story, you’ll see that Phil Knight was realistic about the funding that the business required and that he could arrange.
He didn’t have a million dollars to invest, so he didn’t try to do everything perfectly right from the start.
He couldn’t possibly establish a manufacturing facility in the beginning, so he partnered with a Japanese manufacturer and started selling their shoes under the brand Blue Ribbon Sports. All he needed was some correspondence and a visit to Japan, which his father could easily fund.
He couldn’t afford TV or newspaper ads or billboards, so his marketing strategy skipped these popular marketing channels and focused on direct selling. His first retail outlet was a Volkswagen van that he parked outside sporting venues during collegiate and scholastic track meets.
The year 1964 will be remembered in Nike’s history as the year when Phil Knight partnered with famous athletics coach Bill Bowerman.
Bowerman had been Knight’s track and field coach at the University of Oregon and was known for training dozens of All American and Olympic athletes. He became so excited by the idea of selling Japanese sports shoes that he asked Knight for a partnership in business.
Knight knew having Bowerman by his side would be like a startup football equipment company today having five-time SuperBowl-winning coach Bill Belichick as a partner. He took the opportunity and made Bowerman his partner for an investment of $500.
With Bowerman pushing the Onitsuka sports shoes through his connections, the orders started to climb. However, Bowerman was more than a partner and influencer. He was also the mentor and innovator who invented the first waffle trainer, the running shoe that helped Nike become the world’s largest shoe and sports apparel manufacturing company.
By selling Nike shoes to athletes and track runners, Knight used influencers as brand ambassadors right from the start. Bowerman was an influencer himself and the early adopters were all athletes and runners.
In 1974 Nike sparked controversy by signing John McEnroe for a stupendous fee of $100,000.
In 1984, Nike signed up NBA player Michael Jordan and produced a sneaker exclusively for him. The Jordan brand was created, which now grosses exceed $3.1 billion a year.
Nike’s first Just Do It commercial featured 80-year-old Bay Area icon Walter Stack, who ran approximately 62,000 miles in his lifetime.
Nike has continued its strategy of using influencers in marketing and advertising. The most recent celebrity ad features Colin Caepernick, the footballer who refused to stand up in protest against the oppression of black people when the national anthem was played. The ad had runaway publicity and created quite a stir.
Nike started by selling the Onitsuka shoes under his brand, Blue Ribbon Sports (BRS). He signed an exclusive distribution agreement to sell Onitsuka shoes on the West Coast of the United States.
Working with an established manufacturer gave Knight the time and focus he needed for marketing. BRS sold Onitsuka Tigers like hotcakes in the second half of the 1960s.
The business was doing so well that Knight finally decided to become a full-time employee of his own company. However, there was one big problem in their relationship with the manufacturer. Their contract limited them to distributorship and made them dependent on a single manufacturer.
The problem for Onitsuka was that they realized selling exclusively through a relatively small and inexperienced player was not in their business interest, as they were likely losing millions of dollars by not being able to expand the number of distributors in the US.
Onitsuka asked BRS to form a joint venture for selling Onitsuka Tiger and give Onitsuka a 51% share of the company. This was like surrendering the company to Onitsuka. Meanwhile, Bowerman had designed a successful shoe—the Cortez—which Onitsuka believed was their design.
Finally, BRS parted ways with Onitsuka in 1971 and made arrangements for manufacturing 6,000 pairs of The Cortez, the first shoe sold under the Nike brand name.
The untold secret here is that entrepreneurs should look for partnership opportunities and enter joint ventures when it suits their interests. You can enter and leave partnerships as long as you’re focused on your goals and know what’s best for your business.
When Phil Knight started selling Onitsuka Tiger, he was working two jobs, one as a CPA at Price Waterhouse and the other as an assistant professor of business administration at Portland State University.
It took him five years to leave both jobs and become the full-time CEO of the BRS. He must have managed his time very well during those five crucial years.
If you need more time for your business, try getting up early in the morning and work a couple of hours before the regular workday starts. Utilize the weekends and holidays. Make a plan and do not procrastinate.
Unlike Phil Knight fifty years ago, these days we have mobile apps to help us keep our schedule. Use Todoist or another time management app to squeeze out more hours each day and stay focused on your goals.
There was neither Google Ads nor Facebook back in those days. And Knight didn’t have the money to buy TV, radio, or newspaper ads. So, he did the only thing an entrepreneur in his position could do. Get out on the road and go to his customers.
Selling from the van helped him generate over $1B in revenue. It also helped him build relationships with customers. He knew the models they liked, the problems they faced, and how they wanted their running shoes.
In today’s world, social media and digital channels have made it easy to reach out to your customers. However, you shouldn’t discount the value of face-to-face interaction.
Events and exhibitions are excellent venues for in-person interactions. Think about where your customers can be and go to those places with your product or idea. It’s called hustling these days, and it’s a great use of an entrepreneur’s time.
Nike’s tagline “Just Do It” was introduced in 1988. It helped the brand increase its market share from 18 percent to 43 percent and sales by 1,000 percent in the next ten years.
Most of Nike’s advertising uses simple one-liners to speak to its customers, just like its short and clear tagline.
The secret here is it pays off to spend time on developing a great tagline. Start with your positioning statement and work your way down to one simple one-liner that represents the core benefit your product delivers.
In Nike’s marketing strategy, that core benefit is not the ease of running, durability, or aesthetics. Instead, Nike’s tagline appeals to people’s emotions and encourages them to take on the challenge and set themselves free—Just Do It!
The art is building the right growth campaign. The science is in the results.
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