Nike Case Study from Acquired Podcast

Introduction

• Hosts: Ben Gilbert & David Rosenthal
• Main Question: Is a great product or great marketing more important for a business?
• Perfect case study: Nike
• Aim: To understand if Nike's success is due to innovation or marketing prowess.

Background on Nike

• Nike is the largest apparel business globally outside luxury brands.
• Nike generates over $50 billion in revenue without making a single shoe.
• The company is undergoing a significant strategy shift.

Founding and Early Days

• 1962: Phil Knight writes a business plan at Stanford, focusing on Japanese sports shoes.
  • Market opportunity: Undercutting Adidas by importing Japanese shoes.
• Post-graduation, Knight visits Japan and partners with Onitsuka, maker of Tiger shoes.
• 1964: Knight and Bowerman co-found Blue Ribbon Sports (BRS), the precursor to Nike.
  • Business model: Selling shoes out of Knight's car at track meets.
  • Revenue: $8,000 in 1964, $16,000 in 1965.

Key Personalities

• Bill Bowerman: Legendary track coach, co-founder.
  • Innovator in shoe design, created the first shoes for Nike.
• Phil Knight: Co-founder, focused on business operations and growth.
• Jeff Johnson: First full-time employee, pivotal in early sales and brand evangelism.
• Carolyn Davidson: Designed the "swoosh" logo for $35.
• Rob Strasser: Key figure in Nike’s marketing and strategy.

Nike's Innovations and Growth

• 1967: Bowerman innovates with nylon uppers, creating the Cortez model.
• 1970: Revenue reaches $500,000; Nike's relationship with Onitsuka grows tense.
• 1972: Nike brand is officially created, separating from Blue Ribbon Sports.
• 1974: Nike's Waffle Trainer becomes a major hit.
• 1977: Strasser articulates Nike's guerrilla-style business principles.

Partnership with Onitsuka and Transition to Nike

• 1971: Phil Knight's relationship with Onitsuka ends due to strategic differences.
• 1972: Nike begins designing its own shoes, launches the "swoosh."

Marketing and Sponsorship Strategy

• Nike innovates in athlete sponsorships, colleges, and pro sports.
• Nike focuses on running, basketball, and tennis as core segments due to broad consumer applicability.
• Nike creates the Futures program, shifting financing from banks to retailers.

Challenges and Strategic Shifts

• 1980s: Aerobics boom threatens Nike, with competitors like Reebok gaining ground.
• 1984: Nike signs Michael Jordan; the Air Jordan line becomes a massive success.
  • 1985: Air Jordan I sells $126 million in the first year.

Recent Developments

• Nike pivots to direct-to-consumer sales and digital engagement.
• Emphasis on technology integration and personalized products.
• Continued expansion in basketball and global markets.

Key Insights and Future Considerations

• Nike’s brand revolves around athletes, but it’s the marketing strategy that propels this.
• Challenges include maintaining dominance in a changing global market.
• Nike’s strategy leverages scale economies and a strong brand identity to continue growth.

Conclusion

• Nike's success is a complex interplay of marketing genius, strategic partnerships, and innovation.
• Continues to lead the market by adapting to consumer trends and leveraging brand power.