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Closing Case Nike--The Ugly American? Nike has always cultivated its rebel image-James Dean in sneakers. Nike was founded in 1972 by Phil Knight, a former university track star, and Bill Bowerman, who had been his coach. In the subsequent quarter of a century, the Beaverton, Oregon, company has grown from a niche supplier of running shoes for hard-core athletes into a global colossus in the athletic footwear and apparel business with sales of $10 billion, 40 percent of which are generated outside its core US market. Three main factors seem to underpin the companys success: the quality and innovation of its products, its sponsorship of key athletes with "star appeal" such as Michael Jordan and Tiger Woods, and its global advertising, which has carved out a strong brand image for the company. The image of Nike as the cool iconoclastic rebel shines through strongly in its advertising. Tough and gritty, Nike ads urge consumers to damn the consequences and Just Do It!-while wearing Nike gear, of course. In America, the rebel has done extraordinarily well. Nike dominates the market, selling $20 in footwear and apparel per year for every man, woman, and child in the country. But herein lies a problem. The company has been so successful that it is difficult to see how it can continue to grow in the now mature US market. This is not a pleasant thought for an aggressive, ambitious risk-taker like CEO Phil Knight. Knight has set a goal of growing revenues by 15 percent a year, and has focused the companys attentions on international markets where the opportunities for growth seem much greater. In contrast to the saturated US market, annual per capita Nike sales in Japan are $4, in Germany they are $3, and in China just over 2 cents. Knight wants to see foreign sales rise to 50 percent of total sales by 2000 and continue upwards from there. There is only one problem with this vision. Basketball, for all of its recent global success, is still a fringe sport outside the United States; jogging is a distinctly American passion; and as for baseball and football, dont ask! For Nike to grow its international business, it must focus on the dominant global sport, soccer. But in many countries, soccer is imbued with nationalistic pride, and Nike is American, and Americans arent very good at soccer. Also, soccer already has its dominant footwear and apparel suppliers, Adidas and Umbro, which have tied up most of the worlds top teams and stars in sponsorship deals. However, Knight and his team dont shy from a challenge. Underdog once more, Nike embarked on an aggressive advertising campaign to build awareness for its brand in the world of soccer. In the spring of 1996, Nike announced its intentions to the world with a series of ads in soccer magazines around the world. "Europe, Asia, and Latin America," the ad screamed, "Barricade your stadiums. Hide your trophies. Invest in some deodorant. As Asia and Latin America have been crushed, so shall Europe...the world has been warned." The world was not amused. The reaction was more along the lines of "who do these Americans think they are, and whats in the gibe about deodorant?" Nike, however, had only just begun. Next was the TV commercial portraying Satan and his demons playing soccer against a team of Nike endorsers. The ad, which set a company record for cost, ran worldwide. Knight declared the ad his favorite Nike commercial ever, and it was well-received in America. But several European broadcasters deemed it too scary and offensive to show in prime time when children were watching. The ad also drew angry letters from viewers. But this is all grist for the mill of the American rebel, so Nike plunged ahead with an ad for British television that featured a French soccer star and perennial "bad boy" proudly detailing how his spitting at a fan and calling his coach a bag of s________ had won him a Nike contract. This ad provoked a scathing editorial against Nike in the newsletter of soccer's governing federation, FIFA. Sepp Blatter, now president of FIFA, condemned an "advertising trend that glorifies violence or bad taste...technically clever and futuristic as it may be, such style does nothing to promote values, especially among impressionable youngsters." What really set anti-American tongues wagging among soccer's ruling establishment, however, was Nike's coup in Brazil. The Brazilian soccer team is legendary, having won a record five World Cups. It is also a vibrant symbol of Brazil's samba culture and a huge source of national pride. Imagine the shock when the loud American waltzed into town with bundles of money and purchased the rights to sponsor Brazil's national team for the next 10 years, pushing aside the existing sponsor, Umbro. The deal, which cost $200 million, commits the Brazil team to appearances in Nike-produced exhibition matches and community events and requires team members to wear Nike shoes and uniforms sporting the Nike "swoosh" logo. To the soccer establishment, it looked as if the Visigoths had just stormed the high temple of soccer. While Nike may have alienated soccer's establishment, it is not clear that the same is true of Nike's target market--the youth of the world. The establishment may have hated Nike's Satan soccer ad, but Nike managers tell about a focus audience of teens being mesmerized when French soccer star Mr. Cantona flips up his collar, says "au revoir," and kicks the winning goal through the Devil. As they left the room, the youngsters all flipped their collars and said "au revoir." The kids, apparently, got it! Source: M. Sawyer, "Fashion: It's Not Working Out," The Observer, May 3, 1998, p. 12; P. Vallely, "Saturday Story," The Independent," December 6, 1997, p. 19; and N. Robinson, "Nike Just Does It in Bad Taste," The Guardian, November 26, 1996, p. 22. Case Discussion Question
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