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Strategic brand management refers to the evolution of brand characteristics that build authenticity, assurance and emotional bonds with customers that ultimately result in value creation and building of social interactions and behavior (Rosenbaum-Elliot et al., 2011).
Understanding customer problems and making efforts to solve those problems form the core of marketing strategy (Alexander, 2015).
Customers are swayed by social and behavioral impulses leading to purchases which either solve a problem or meet their unique need. For this discussion we will evaluate the strategic brand management of Nike. The paper will discuss the four steps of brand management and the way Nike has managed the brand over decades, followed by a few recommendations to add value to future marketing and brand strategy.
Brand Positioning
The company started operating in 1978. Though the market already had entrenched European brands like Puma and Adidas, Nike managed to penetrate the market by launching lesser priced shoes with waffle sole designs. The shoes offered a superior grip as compared to the European brands and Nike positioned the brand as a jogging shoe for professionals and office workers.
The brand was targeted at the sport lovers, in cities and large towns who belonged to the middle class or upper classes (Willigan, 1992). Nike targeted a large market segment with different needs. The brand caters to many sport fans and enthusiasts and is differentiated by a great product innovations and brand image.
Nike is recognised for its iconic image in sports marketing and sponsorship and a slogan that appeals to a wide range of audiences. ‘Just Do It’ is a unique slogan by itself. It is action oriented and appeals to sport lovers. It is very universal and can appeal to different cultures and differences in socio-economic levels. It is highly motivational, aspirational and addresses each customer individually.
It is also a slogan that is used across all categories of Nike – including accessories and wearable devices (Pride, 2017). Nike as a brand has managed to keep pace with changing realities in the market place. It has constantly evolved its brand mantra and engaged audiences with innovative insights (Sanusi et al., 2014).
The rendition of the Nike Swoosh is so universally accepted, it signifies speed and performance. Nike brand has a very distinct identity with the use of the slogan and the Swoosh (Rosenbaum-Elliot et al., 2011). Nike has positioned itself as a brand which celebrates individuality, aggression and the spirit of achievement and winning.
This has helped the brand differentiate itself from competitors like Reebok, Adidas and other new brands like Under Armour. Brand Nike has a strong bent on parameters like performance and athleticism. Many of the product innovations also follow the same path – such as the Nike Watch, apparel and sports equipment (Keller, 2013).
Brand Marketing
Nike has led the market in many categories across the world due to its unique strategy. It targets a single segment and builds differentiation through product innovation and customer delight. Nike understands the needs of different customers – among sports people and casual users.
Shoes are produced to address key problems faced by different sports and they target the audience with a sharp focus.
They have launched Nike Air and Shox for special uses in basket ball and running. Nike has engaged in innovation very strongly. It has developed and integrated many new technology features in to shoes (Sanusi et al., 2014). It has evolved the brand by launching newer products and keeping the life cycle young.
Nike realised that customers are using digital gadgets so they shifted focus to digital integration in to their shoes and apparel. The philosophy was “if you have a body, you are an athlete” (Sanusi et al., 2014). The Nike-iPod kit helped the athlete or runner calculate the distance and their speeds. The partnership with Apple showed the successes of strong marketing alliance strategy.
Nike uses a premium pricing strategy for its shoes and apparel (Soni, 2014). Nike uses its strong focus on star sponsorships, product innovations and power to keep its price premium. The brand has sustained its appeal to a large number of affluent consumers who are strongly aligned to the brand.
As Nike continues to innovate with new products and keeps pace with changes in customer behavior, it can afford to charge a premium in relation to its brand value. Nike has a wide network of distribution and channels to reach its global customer base (Soni, 2014). Nike manufactures its products globally, in 142 cities and across 15 countries. The network is comprised of 3 major routes – direct to wholesalers, direct to consumers through Nike retail outlets or multi brand outlets and ecommerce site - nike.com.
Nike has focused on DTC since a large number of consumers have now opted for ecommerce and online purchases. In terms of brand promotions, Nike has employed a multi channel strategy with emphasis on celebrity sport sponsorships and a large budget on advertising. It has also engaged in below the line merchandising at store levels and large community building social media campaigns (Sanusi et al., 2014).
Each Nike product has its own social media presence giving out information about the shoes, new launches and stories for their audience. Nike also uses a ‘cool’ image for all its shoes and products. The brand makes people feel good and look good while indulging in sports or causal activities.
Nike has successfully understood the customer need for technology and has integrated that in to product design. Due to its brand power and celebrity endorsements the brand has managed to engage a vast range of audiences globally, building brand awareness, preference, desire and loyalty.
Brand Performance
Nike has successfully managed its brand across its many product categories, customers, countries and operations. It has designed many unique advertising campaigns including a unique slogan and identity and made it a global icon. As markets have evolved Nike has seized the opportunity by closely engaging with the digital consumer and made a mark on social media. It has managed to stay as a top brand globally and due to the integration of technology, reduce the advertising costs by 40%.
Brand Value
Nike has built a strong value proposition from its launch in 1978 and is now continuing to innovate with new products. Over the years it has become a necessary part of growing up for its entire customer base – from youth to older generations. It has managed the building of its brand by expanding to new markets and engaging with new customers effectively.
The universality of its brand strategy has enabled Nike to become a household name in every part of the globe. According to Interbrand (2016) brand survey, Nike is at rank 18 among the top 100 brands with a valuation of $25 billion. The next shoe brand in the ranking is Adidas at rank 60 with a valuation of $7 billion. This clearly demonstrates the effectiveness and success of Nike’s strategic brand management.
Changing environment and recommendations
As seen in the analysis, the digital generation is growing. Future sales and revenues for Nike will really depend on its strong engagement with the new Gen Y segment and the way it promotes to them. It is also evident that sales from Direct-to-Consumer (DTC) through the ecommerce channel are increasing (Soni, 2014). This will mean that new consumers will make their information seeking and purchase decisions based on social media peer reviews.
Nike will need to therefore expand its ecommerce presence by strong partnerships in future with Amazon, eBay, Alibaba and such companies.
There is also scope for many new innovations based on Internet of Things (IoT). Since Nike is already holding the position of technology in consumer minds, it is beneficial if the company takes technology to the next level by integrating it strongly with Gen Y consumer lifestyles.
Nike should continue with their sponsorships of celebrity sports men and women but also add new sports like cricket, badminton and younger players to appeal to audiences in emerging markets. They could sponsor Badminton stars like Carolina Marin who can appeal to a wide range of global audiences. Nike needs to evolve a new strategy to counter new brands which are gaining traction – Under Armour and Asics. These brands are carving out a niche by targeting younger generations. Nike has to become more relevant to Gen Y segments by influencing their minds and augmenting their digital lifestyles. Sponsorship of school level sports events and expanding social channel engagements from Facebook to Instagram and Pinterest, will help Nike keep pace with the needs of Gen Y. A sub-brand strategy could be considered to meet the needs of the digital generation- ‘Nike Digital - Just Click It’.
References
Alexander, R., Khonglah, O. and Subramani, A. K., 2015. CUSTOMER BUYING
BEHAVIOUR TOWARDS BRANDED CASUAL SHOES. International Journal of Business Economics & Management Research, 5(6), 48-54.
Interbrand, 2016. Best Global Brands 2016 Rankings. [Online]. Interbramd.com. Available at http://interbrand.com/best-brands/best-global-brands/2016/ranking/. [Accessed 7 January 2017].
Keller, K.L., 2013. Strategic Brand Management: Building, Measuring, and Managing Brand Equity. 4th Ed. Harlow: Pearson.
Pride, A., 2017. What You Can Learn from Nike Branding Strategy. [Online]. rivaliq.com. Available at https://www.rivaliq.com/blog/nike-branding-strategy/. [Accessed 7 January 2017].
Rosenbaum-Elliott, R., Elliott, R. H., Percy, L. and Pervan, S., 2011. Strategic Brand Management. 3rd Ed. Oxford: Oxford University Press.
Sanusi, M., Lazarev, A., Jorgensen, J. M., Latsanych, V. and Badtiev, T., 2014. The Swoosh of Creativity. [Online]. businesstoday.in. Available at http://www.businesstoday.in/magazine/lbs-case-study/nike-marketing-strategies-global-brand/story/207237.html. [Accessed 7 January 2017].
Soni, P., 2014. Understanding NIKE’s Pricing Power And Premium Products Tilt. [Online]. yahoo.com. Available at http://finance.yahoo.com/news/understanding-nike-pricing-power-premium-213606075.html. [Accessed 7 January 2017].
Willigan, G. E. 1992. High-Performance Marketing: An Interview with Nike’s Phil Knight. [Online]. hbr.org. Available at https://hbr.org/1992/07/high-performance-marketing-an-interview-with-nikes-phil-knight. [Accessed 7 January 2017].
