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Marketing Excellence Nike

Nike hit the ground running in 1962. Originally known as Blue Ribbon Sports, the company focused on providing high-quality running shoes designed for athletes by athletes. Founder Philip Knight believed high-tech shoes for runners could be manufactured at competitive prices if imported from abroad. Nike’s commitment to designing innovative footwear for serious athletes helped build a cult following among U.S. consumers.

Nike believed in a “pyramid of influence” where the preferences of a small percentage of top athletes influenced the product and brand choices of others. Nike’s marketing campaigns have always featured accomplished athletes. For example, runner Steve Prefontaine, the company’s first spokesperson, had an irreverent attitude that matched Nike’s spirit.

In 1985, Nike signed up then-rookie guard Michael Jordan as a spokesperson. Jordan was still an up-and-comer, but he personified superior performance. Nike’s bet paid off—the Air Jordan line of basketball shoes flew off the shelves and revenues hit more than $100 million in the first year alone. As one reporter stated, “Few marketers have so reliably been able to identify and sign athletes who transcend their sports to such great effect.”

In 1988, Nike aired the first ads in its $20 million “Just Do It” ad campaign. The campaign, which ultimately featured 12 TV spots in all, subtly challenged a generation of athletic enthusiasts to chase their goals. It was a natural manifestation of Nike’s attitude of self-empowerment through sports.

As Nike began expanding overseas, the company learned that its U.S.-style ads were seen as too aggressive in Europe, Asia, and South America. Nike realized it had to “authenticate” its brand in other countries, so it focused on soccer (called football outside the United States) and became active as a sponsor of youth leagues, local clubs, and national teams. However, for Nike to build authenticity among the soccer audience, consumers had to see professional athletes using its product, especially athletes who won.

Nike’s big break came in 1994 when the Brazilian team (the only national team for which Nike had any real sponsorship) won the World Cup. That victory transformed Nike’s international image from a sneaker company into a brand that represented emotion, allegiance, and identification. Nike’s new alliance with soccer helped propel the brand’s growth internationally. In 2003, overseas revenues surpassed U.S. revenues for the first time, and in 2007, Nike acquired Umbro, a British maker of soccer-related footwear, apparel, and equipment. The acquisition made Nike the sole supplier to more than 100 professional soccer teams around the world and boosted Nike’s international presence and authenticity in soccer. The company sold Umbro in 2012 for $225 million.

In recent years, Nike’s international efforts have been focused on emerging markets. During the 2008 Summer Olympics in Beijing, Nike honed in on China and developed an aggressive marketing strategy that countered Adidas’s sponsorship of the Olympic Games. Nike received special permission from the International Olympic Committee to run Nike ads featuring Olympic athletes during the games. In addition, Nike sponsored several teams and athletes, including most of the Chinese teams. This aggressive sponsorship strategy helped ignite sales in the Asian region by 15 percent.

In addition to expanding overseas, Nike has successfully expanded its brand into many sports and athletic categories, including footwear, apparel, and equipment. Nike continues to partner with high-profile and influential athletes, coaches, teams, and leagues to build credibility in these categories. For example, Nike aligned with tennis stars Maria Sharapova, Roger Federer, and Rafael Nadal to push its line of tennis clothing and gear. Some called the famous 2008 Wimbledon match between Roger Federer and Rafael Nadal—both dressed in swooshes from head to toe—a five-hour Nike commercial valued at $10.6 million.

To promote its line of basketball shoes and apparel, Nike has partnered with basketball superstars such as Kobe Bryant and LeBron James. In golf, Nike’s swoosh appears on many golfers but most famously on Tiger Woods. In the years since Nike first partnered with Woods, Nike Golf has grown into a $523 million business and literally changed the way golfers dress and play today. Tiger’s powerful influence on the game and his Nike-emblazoned style has turned the greens at the majors into “golf’s fashion runway.”

Nike is the biggest sponsor of athletes in the world and plans to spend more than $3 billion in athletic endorsements between 2012 and 2017. The company also has a history of standing by its athletes, such as Tiger Woods and Kobe Bryant, even as they struggle with personal problems. It severed its relationship with Lance Armstrong in 2012, however, after strong evidence showed that the cyclist doped during his time as an athlete and while competing during all Tour de Frances. Nike released a statement explaining, “Nike does not condone the use of illegal performance enhancing drugs in any manner.” Prior to the scandal, the company had helped develop Armstrong’s LIVESTRONG campaign to raise funds for cancer. It designed, manufactured, and sold more than 80 million yellow LIVESTRONG bracelets, netting $500 million for the Lance Armstrong Foundation.

While Nike’s athletic endorsements help inspire and reach consumers, its most recent innovations in technology have resulted in more loyal and emotionally connected consumers. For example, Nike’s lead in the running category has grown to 60 percent market share thanks to its revolutionary running application and community called Nike+ (plus). Nike+ allows runners to engage in the ultimate running experience by seeing their real-time pace, distance, and route and by giving them coaching tips and online sharing capabilities. Nike expanded Nike+ to focus on key growth areas like basketball and exercise and recently launched Nike+ Basketball, Nike+ Kinect, and Nike+Fuelband, a bracelet/app that tracks daily activities.

Like many companies, Nike is trying to make its company and products more eco-friendly. However, unlike many companies, it does not promote these efforts. One brand consultant explained, “Nike has always been about winning. How is sustainability relevant to its brand?” Nike executives agree that promoting an eco-friendly message would distract from its slick high-tech image, so efforts like recycling old shoes into new shoes are kept quiet.

As a result of its successful expansion across geographic markets and product categories, Nike is the top athletic apparel and footwear manufacturer in the world. In 2014, revenues exceeded $27 billion, and Nike dominated the athletic footwear market with 31 percent market share globally and 50 percent market share in the United States. Swooshes abound on everything from wristwatches to skateboards to swimming caps. The firm’s long-term strategy, however, is focused on running, basketball, football/soccer, men’s training, women’s training, and action sports.

Questions

1. What are the pros, cons, and risks associated with Nike’s core marketing strategy?

2. If you were Adidas, how would you compete with Nike?

Sources: Justin Ewers and Tim Smart, “A Designer Swooshes In,” U.S. News & World Report, January 26, 2004, p. 12; “Corporate Media Executive of the Year,” Delaney Report, January 12, 2004, p. 1; Barbara Lippert, “Game Changers: Inside the Three Greatest Ad Campaigns of the Past Three Decades,” Adweek, November 17, 2008; “10 Top Nontraditional Campaigns,” Advertising Age, December 22, 2003, p. 24; Chris Zook and James Allen, “Growth Outside the Core,” Harvard Business Review, December 2003, p. 66; Jeremy Mullman, “NIKE; What Slowdown? Swoosh Rides Games to New High,” Advertising Age, October 20, 2008, p. 34; Allison Kaplan, “Look Just Like Tiger (until You Swing),” America’s Intelligence Wire, August 9, 2009; Reena Jana and Burt Helm, “Nike Goes Green, Very Quietly,” BusinessWeek, June 22, 2009; Emily Jane Fox and Chris Isidore, “Nike Ends Contracts with Armstrong,” CNNMoney.com , October 17, 2012; Nike Annual Report 2012.

(Kotler 30-32)

Kotler, Philip T., Kevin Keller. Marketing Management, VitalSource for Columbia Southern University, 15th Edition. Pearson Learning Solutions, 2016-11-01. VitalBook file.

The citation provided is a guideline. Please check each citation for accuracy before use.

Marketing Excellence Cisco

Cisco Systems is the worldwide leading supplier of networking equipment for the Internet. The company sells hardware (routers and switches), software, and services that make most of the Internet work. Cisco was founded in 1984 by a husband-and-wife team who worked in the computer operations department at Stanford University. They named the company cisco—with a lowercase c, short for San Francisco, and developed a logo that resembled the Golden Gate Bridge, which they frequently traveled.

Cisco went public in 1990, and the two founders left the company shortly thereafter. Over the next decade, the company grew exponentially, led by new-product launches such as patented routers, switches, platforms, and modems, which significantly contributed to the backbone of the Internet. Cisco opened its first international offices in London and France in 1991 and has expanded to more than 165 countries. During the 1990s, Cisco acquired and successfully integrated 49 companies into its core business, growing its market capitalization faster than that of any company in history—from $1 billion in 1991 to $300 billion in 1999. In March 2000, Cisco became the most valuable company in the world, with market capitalization peaking at $582 billion, or $82 per share.

By the end of the 20th century, the company was extremely successful, but brand awareness was low. Many consumers and investors knew Cisco for its stock price, but few outside the industry knew what it did. Cisco developed partnerships with Sony, Matsushita, and US West to co-brand its modems with the Cisco logo in hopes of building name recognition and brand value. In addition, it launched its first television spots as part of a campaign titled “Are You Ready?” In the ads, children and adults from around the world delivered facts about the power of the Internet and challenged viewers to ponder, “Are you ready?”

The company survived the Internet bust but reorganized in 2001 into 11 new technology groups and a marketing organization, which planned to communicate the company’s product line and competitive advantages better than it had in the past. In 2003, Cisco introduced its largest marketing campaign to date, including a new slogan, “This Is the Power of the Network. Now.” The international campaign targeted corporate executives and highlighted Cisco’s critical role in a complicated, technological system by using a soft-sell approach. Television commercials explained how Cisco’s systems change people’s lives around the world, and an eight-page print ad spread didn’t mention Cisco’s name until the third page. Marilyn Mersereau, Cisco’s vice president of corporate marketing at the time, explained, “Clever advertising involves the reader in something that’s thought-provoking and provocative and doesn’t slam the brand name into you from the first page.”

Cisco entered the consumer segment with the acquisition of Linksys, a home and small-office network gear maker. Within a year, Cisco offered several home entertainment solutions, including wireless capabilities for music, printing, and video. The transition into the consumer segment triggered a rebranding campaign in 2006, aimed at increasing awareness among consumers and lifting the overall value of Cisco’s brand.

“The Human Network” campaign tried to reposition the technology giant as more than just a supplier of switches and routers by communicating its role in connecting people through technology. The campaign evolved into “Built for the Human Network” and targeted everyone from consumers to IT professionals. As a result, Cisco developed a new marketing strategy that showcased its brand as fun and digestible, using interactive games, videos, and virtual events.

Cisco’s partnership with sports and entertainment venues created the perfect opportunity to exhibit the way its technologies connected people to their passions. Cisco Connected Sports turned sports stadiums into digitally connected interactive venues, “the ultimate fan experience.” Fans could meet the players virtually through a videoconferencing system, while digital displays throughout the stadium allowed them to pull up scores from other games, order food, and view local traffic. These flexible platforms could also work with business conferences and music concerts.

Cisco’s ultimate goal is to increase overall Internet traffic, ultimately driving demand for its wide range of products. The company has recently expanded into consumer electronics, business collaboration software, and computer servers. Revenues topped $47 billion in 2014, and its market cap exceeded $118 billion. Its Web site boasts, “We help the most innovative companies in the world do things they never could before.”

Questions

1. How is building a brand in a business-to-business context different from doing so in the consumer market?

2. Is Cisco’s plan to reach out to consumers a viable one? Why or why not?

Sources: Marguerite Reardon, “Cisco Spends Millions on Becoming Household Name,” CNET, October 5, 2006; Michelle Kessler, “Tech Giants Build Bridge to Consumers,” USA Today, March 13, 2006; Marla Matzer, “Cisco Faces the Masses,” Los Angeles Times, August 20, 1998; David R. Baker, “New Ad Campaign for Cisco,” San Francisco Chronicle, February 18, 2003; Bobby White, “Expanding into Consumer Electronics, Cisco Aims to Jazz Up Its Stodgy Image,” Wall Street Journal, September 6, 2006, p. B1; Burt Helm, “Best Global Brands,” BusinessWeek, September 18, 2008; Ashlee Vance, “Cisco Buys Norwegian Firm for $3 Billion,” New York Times, October 1, 2009; Jennifer Leggio, “10 Fortune 500 Companies Doing Social Media Right,” ZDNet, September 28, 2009; Karen Bannan, “How Cisco Used Consumer-Based Marketing Strategies to Reach B2B Clients,” BtoB Marketing, July 20, 2010; Cisco.com.

(Kotler 58-59)

Kotler, Philip T., Kevin Keller. Marketing Management, VitalSource for Columbia Southern University, 15th Edition. Pearson Learning Solutions, 2016-11-01. VitalBook file.

The citation provided is a guideline. Please check each citation for accuracy before use.

Marketing Excellence Intel

Intel makes the microprocessors found in most of the world’s personal computers, tablets, and smart phones. It is one of the most valuable brands in the world, with revenues exceeding $54 billion. In the early days, however, Intel microprocessors were known simply by their engineering numbers, such as “80386” or “80486.” Because numbers can’t be trademarked, competitors came out with their own numbered chips, and Intel had no way to distinguish itself. Nor could consumers see Intel’s products, buried deep inside their PCs. Thus, Intel had a hard time convincing consumers to pay more for its high-performance products.

To correct this situation, Intel created the quintessential ingredient-branding marketing campaign. First, it chose the name Pentium for its latest microprocessor and trademarked it. Next, it launched the “Intel Inside” campaign to build brand awareness of its family of microprocessors. This campaign helped move the Intel brand name outside the PC and into the minds of consumers. To secure crucial support from the computer manufacturers who used its processors, Intel gave them significant rebates when they included its logo in their ads or placed “Intel Inside” stickers on the outside of their PCs and laptops.

Intel created several memorable marketing campaigns in the late 1990s, making it a recognizable ingredient brand name. The “Bunny People” series featured Intel technicians dressed in brightly colored contamination suits as they danced to disco music inside a processor facility. Intel also used the famous Blue Man Group in its commercials for Pentium III and Pentium IV.

As the PC industry slowed in the mid-2000s, Intel sought opportunities in new growth areas such as wireless, home entertainment, and mobile devices. The company launched a handful of new platforms: Centrino, which featured wireless capabilities, Viiv (rhymes with “five”) aimed at home entertainment enthusiasts, and Centrino Duo mobile. Intel created a $2 billion global marketing campaign to help reposition itself from a brainy microprocessor company to a “warm and fuzzy company” that offered solutions for consumers as well. With a new logo, its new slogan “Leap Ahead” replaced the familiar “Intel Inside” campaign.

In 2008, reacting to the new wave of mobile Internet devices and lightweight netbooks, Intel launched the Atom, its smallest processor to date, about the size of a grain of rice. Also that year, Intel introduced its most advanced microprocessor to date, the Intel Core i7, which served the increased need for video, 3-D gaming, and advanced computer activities. Both processors were instant hits. Intel sold more than 20 million Atom processors in its first year alone and 28 million in its second year.

Intel’s corresponding campaign aimed to improve the company’s brand awareness among consumers and was titled “Sponsors of Tomorrow.” Commercials highlighted the company’s role in changing the future of technology and took a humorous tone. In one, a middle-aged man wearing his company ID tag strutted through the cafeteria as fellow employees screamed, groped, and begged for his autograph. The ad explained, “Ajay Bhatt, co-inventor of the USB. Our superheroes aren’t like your superheroes.”

As the post-PC era dawned, Intel, known for its relationship with the PC, found itself refocusing and taking risky steps to remain a technological leader. In 2011, it acquired two major companies, McAfee and Infineon Technologies’ Wireless Solutions business, expanding its capabilities. That same year, Intel made a strategic shift in its product line and introduced the Ultrabook system, a new category of thin and secure mobile devices that combined features of tablets and netbooks.

The company launched its biggest marketing campaign in more than a decade—“A New Era of Computing”—to communicate its evolution into the category of tablets and smart phones. Kevin Sellers, vice president, Sales and Marketing Group, explained, “This is not a campaign where we’re talking about the microprocessor or Intel the company. Instead, we’re giving a cinematic and epic feel to how Intel-inspired Ultrabook systems are ushering in a new era of computing and making everything else seem like ancient history.”

As Intel expands into mobile devices, its influence on the future of technology and its brand value will grow. The combination of effective, consistent marketing along with innovative technological launches have made its brand one of the most valuable in the world, exceeding $34 billion.

Questions

1. Discuss how Intel changed ingredient-marketing history. What did it do so well in those initial marketing campaigns?

2. Evaluate Intel’s more recent marketing efforts as the industry moves out of the PC era. What are Intel’s greatest risks and strengths during this changing time?

Sources: Cliff Edwards, “Intel Everywhere?” BusinessWeek, March 8, 2004, pp. 56–62; Scott Van Camp, “ReadMe.1st,” Brandweek, February 23, 2004, p. 17; “How to Become a Superbrand,” Marketing, January 8, 2004, p. 15; Roger Slavens, “Pam Pollace, VP-Director, Corporate Marketing Group, Intel Corp,” BtoB, December 8, 2003, p. 19; Kenneth Hein, “Study: New Brand Names Not Making Their Mark,” Brandweek, December 8, 2003, p. 12; Heather Clancy, “Intel Thinking outside the Box,” Computer Reseller News, November 24, 2003, p. 14; Cynthia L. Webb, “A Chip Off the Old Recovery?” Washingtonpost.com, October 15, 2003; “Intel Launches Second Phase of Centrino Ads,” Technology Advertising & Branding Report, October 6, 2003; David Kirkpatrick, “At Intel, Speed Isn’t Everything,” Fortune, February 9, 2004, p. 34; Don Clark. “Intel to Overhaul Marketing in Bid to Go Beyond PCs,” Wall Street Journal, December 30, 2005; Stephanie Clifford, “Tech Company’s Campaign to Burnish Its Brand,” New York Times, May 6, 2009, p. B7; Tim Bajarin, “Intel Makes Moves in Mobility,” PC Magazine, October 5, 2009; “Intel Ushers in ‘A New Era of Computing’ with Ultrabook Campaign,” Intel press release, April 4, 2012; Interbrand’s Best Global Brands 2014.

(Kotler 59-60)

Kotler, Philip T., Kevin Keller. Marketing Management, VitalSource for Columbia Southern University, 15th Edition. Pearson Learning Solutions, 2016-11-01. VitalBook file.

The citation provided is a guideline. Please check each citation for accuracy before use.