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Nike is the world's #1 manufacturer and marketer of athletic footwear and apparel. Almost out of the blue, the company established itself during the 1980s and 1990s as one of the world's most familiar brands; as ubiquitous as a Coke bottle or Big Mac. The Nike "swoosh" logo came to symbolize not just sports culture, but street culture, as the appeal of the star players who endorsed the brand was carried onto city streets. The approach of the new century set Nike new problems. Trainers went (briefly) out of fashion, economic slowdown and labour problems hit Asian performance. But the group has bounced back strongly, retaining its iron grip on the global sporting footwear sector and on US sports-related apparel in particular. Sports culture remains an intrinsic part of modern daily life, and Nike has strengthened its hold on the market as a whole through endorsement partnerships with many of the world's most prominent sports men and women as well as a string of memorable and effective marketing campaigns. A key development has been its erosion of arch-rival Adidas's grip on the global soccer market.
Nike's main agency is Wieden & Kennedy, which works for the company in most global markets. Media is handled mostly by Mindshare. Click here for agency account assignments for Nike from Adbrands.net. Nike declared what it calls "demand creation expense", comprising advertising, promotion and endorsement payments, of $3.34bn in the year to May 2017. In the US, Kantar (in Advertising Age) reported measured expenditure of $80m for 2016, out of an estimated total of $1.5bn.
Nike's main competitors are Adidas (also owner of Reebok) and Puma. Other include VF Corp, Under Armour, Li Ning, Asics, Fila, K-Swiss and New Balance. See Clothing & Fashion Accessories Sector index for other companies and brands.
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Recent stories from Adbrands Weekly Update:
Adbrands Weekly Update 4th Jan 2018: Ads of the Week: "Find Your Groove". Wieden & Kennedy gets playful for Nike's signature line for basketball star Kyrie Irving, in an ad which also stars and is directed by Kyrie Irving. The film serves as a promo for Kyrie's new team, the Boston Celtics. He wants to be the face of the Celtics, just like his former team-mate (and rival) LeBron James was the face of the Cleveland Cavaliers. Stepping out from LeBron's shadow, Irving makes for an even more engaging ambassador, so clearly he has a huge career ahead of him in sponsorship opportunities and personal appearances off the court; possibly in commercial direction too. That's definitely the way to go. US primetime ads are stuffed full of athlete endorsements these days. Most sportsmen now seem to spend more time selling other companies' products on TV than they do playing the sports that got them there.
Adbrands Weekly Update 19th Oct 2017: Ads of the Week: "Want It All". Here's a supercharged extended spot for Nike Basketball from - who else? - Wieden & Kennedy, charting the evolution of fictional superstar Dante Grand from the street court to the NBA championships. Nike's not so fictional endorsement partners LeBron James and Kevin Durant are along for the ride to add their authority. The resulting film is pure electricity: you won't be able to take your eyes from the screen for the full two minutes. As a side-note, the ad ties in with Nike's first season as official apparel provider to the NBA, taking over from former sponsor Adidas. However, it got off to a lousy start when - of all the possible players affected - top ambassador LeBron's Nike-made shirt ripped in half during the first game of the season.
Adbrands Weekly Update 12th October 2017: Ads of the Week: "Down But Not Out". So what ever happened to director Michael "Heat" Mann? It's all gone very quiet since his last two movies Public Enemies and Blackhat got a critical mauling. Well it seems he still has good friends at Nike, for whom he has made a few really great ads over the years. This latest, out of Wieden & Kennedy Shanghai and featuring boxer Rex Tso, is pretty good too, even if it doesn't match the football spots he made for the brand back in the 2000s. Revisit his classic Nike/NFL spot "Leave Nothing" over on our Facebook page.
Adbrands Weekly Update 6th Jul 2017: Investors had been bracing themselves for a disappointing final quarter from Nike, but in fact the numbers came in better than expected, as flat performance in the US was offset by surging demand in international markets. For the full year, revenues were up 6% to $34.3bn, including an 8% lift for Nike brand sales to $32.2bn. At constant currency rates, sales from China alone soared by 17%, and other emerging markets by 14%. That helped to lift net income by 13% to $4.2bn. The other big gain was in sales direct to consumers rather than via traditional wholesale channels. This is an area in which Nike plans to invest considerable money and attention. After years of avoiding any direct relationship with Amazon, for example, Nike finally confirmed it will pilot sales of footwear, apparel and equipment via the ecommerce giant in the US, in addition to its own direct channels. Previously, Nike product has only been available on Amazon via resellers. The move towards direct sales was further encouraged by a weakening in wholesale profit margins. Though group revenues were up, costs were up sharply as well, so any move to cut unnecessary expenses would be beneficial to continuing profit growth.
Adbrands Weekly Update 23rd Feb 2017: Ads Of The Week: "What Will They Say About You?". Nike is tackling Middle Eastern female stereotypes head-on in this excellent campaign for Arabic markets for its Nike Women banner. Wieden & Kennedy is, as always, the agency. A measure of just how bold the ad is can be seen in the extraordinarily negative comments it has elicited in social media, in most cases from male Arabic viewers. Presumably TV airtime will be limited in the Middle East, so if that's where you live, this is an ad you need to share virally.
Kevin Hart adds to his endorsement portfolio with this new campaign for Nike, from Wieden & Kennedy of course, for the...Posted by Adbrands.net on Wednesday, 4 January 2017
Nike remains the clear leader in the global sportswear market, and has if anything strengthened its position in recent years, especially in the global football (soccer) market, where it had traditionally lagged behind rival Adidas. With general approval of the sportswear market in general and Nike in particular at an all-time high there seems little evidence of any likely future downgrade in performance. The only significant clouds on the horizon could be rising costs of manufacturing or raw materials, and any extraordinary surge in performance by merging competitors.
Nike is the world's #1 manufacturer and marketer of athletic footwear and apparel. The group operates a broad collection of separate divisions, and produces footwear and sportswear for just about every conceivable sport within its main range. Combined sales for the Nike brand were $32.2bn in the year to May 2017, up 6%.
The business is now structured as now key segments of running, Nike basketball, Jordan (including basketball), football (soccer), men's training (including American football and baseball), women's training, action sports, general sportswear and golf. It is the clear market leader in running, training and basketball (the latter mostly under the Jordan brand), all of which reflect its powerbase in the US, where it now has around 60% share of the branded athletic footwear market, up from just 36% in 2005. The group reports an annual breakdown by category of wholesale sales (not including its own sales direct to consumer). Out of total wholesale sales for the Nike brand of $28.7bn, running accounted for 18%, the Jordan brand for 11%, men's training for 9%, football (soccer) for 7%, Nike basketball for almost 5% and women's training for 4%. General sportswear is still the brand's biggest category, at 30% of wholesale sales. Men's footwear and apparel accounted for 56% of sales, women's for 23%. Some categories are doing significantly better with others, with the best growth, even at currency-neutral rates, coming from US-centric lines like running and Jordan. Sales of soccer, action sports and golf have fallen sharply since 2015.
Traditionally Nike was less all-conquering in less American-focused sports, but has caught up very quickly indeed with its traditional European rival. In soccer, for example, Nike had traditionally held 2nd place to Adidas, but the Air Zoom Total 90 soccer boot launched in 2003 was extremely successful in Europe's main football markets, giving Nike the edge over its rival in soccer footwear for the first time. It continues to hold onto the leading position in football footwear in Europe, although Adidas has the edge in overall apparel and equipment. Soccer alone contributed revenues of around $1.7bn to Nike in fiscal 2010, compared to just $40m in 1994. In 2008, Nike agreed a stunning deal to replace Adidas as official sponsor of the French national team from 2011 to 2018, offering a total fee of around E320m. (The shine came off that deal somewhat because of France's disastrous performance in the 2010 World Cup).
In 2007, Nike attempted unsuccessfully to wrest the contract to sponsor the kit for German national football team from Adidas (it will try again in 2017), and subsequently announced a $291m takeover of UK-based sportswear manufacturer Umbro, best known as the official manufacturer of the England football team's kit. Umbro retained standalone status within the group as an affiliate brand, generating sales of $262m in 2012. However the group put that business up for sale during the year, and a deal was eventually agreed with Iconix Brand Group, who acquired the business for $225m. Nike retains the England football team contract (now until 2030). Football remains one of the brand's key segments, although it was also the only one to record a decline at constant exchange rates between 2014 and 2015, falling by 2% from highs encouraged by the build-up to the 2014 World Cup.
German firm PR Marketing estimated that Nike had an overall 36% share of the total football market in 2012, just behind Adidas at 38%. Globally Nike has around 33% share of the athletic footwear market. In the US it is more like 48%.
In running and training, Nike has strengthened its position with a range of innovative add-ons, most notably, Nike+, a partnership with Apple to integrate its iPod technology with footwear and apparel. As a result, Nike+ running shoes are able to transmit performance data wirelessly to the Nano, including distance run, pace and calories burned. The accompanying apparel has a special pocket to house the iPod. Along similar lines, the group introduced the Nike+ Fuelband in 2012, a digital bracelet that tracks daily activity and calories burned.
Key to the marketing of its main brand is the group's huge portfolio of endorsement agreements with leading sportsmen and women. Combined payments are well in excess of $1bn per year. The most celebrated such arrangements have been the original precedent-setting deal with Michael Jordan in 1985 (then worth a little more than $4m), and a later gamble on golfer Tiger Woods which turned into an ongoing $105m endorsement contract, currently still the reigning record for a solo sportsman. In 2005, Nike dipped deep into its wallet again to sign up teenage golfing phenomenon Michelle Wie to a contract estimated to be worth at least $5m a year. In the US, Nike was able in 2010 to poach the prestigious contract to become official uniform supplier to the NFL from Reebok from 2012.
In soccer, the group has a deal with the Brazilian national football squad worth $695m over 10 years to 2018. It also supplies the French, US and Chinese teams. Other football endorsements in Europe include kit sponsorship deals with Barcelona, Paris St Germain, Internazionale and 24 other top European clubs, though it lost Manchester United to Adidas in 2015, and Juventus from 2016. Tottenham Hotspur joined the portfolio in 2017 (from Under Armour). Individual players include England striker Wayne Rooney and Brazil's Ronaldinho. French soccer star Thierry Henry (now retired) controversially quit Nike in 2006 to sign with rival Reebok. At the beginning of 2013, the group signed what was then thought to be its richest deal to-date, securing a 10-year partnership with golfer Rory McIlroy for a rumoured $250m. That deal proved something of a disappointment as McIlroy's performance slumped dramatically during the course of the first year, though it has since improved significantly. The group now pays out at least $1bn a year to its various endorsement partners, and even without new deals or renewals, Nike's outstanding financial commitments under existing endorsement contracts at the end of May 2017 totalled $1.3bn for 2018 alone, and total future commitments of $9.85bn.
Nike's vast range of clothing and footwear is manufactured by independent suppliers in more than 450 factories around the world (mostly in Asia), and sold in nearly 160 countries. Most Nike-branded merchandise is designed and developed by Nike, but several lines including swimwear, sports bras and maternity exercise clothing, children's clothing and timepieces are licensed to other manufacturers. There are also several specialist lines including the Jordan Jumpman 23 sportswear brand; Nike All Conditions Gear (ACG), producing footwear and apparel "infused with the flavor and attitude of the outdoor athlete"; and Nike Team Sports, which manufactures custom-designed uniforms for amateur and college sports teams. Nike NSW is a newer line of premium sportswear introduced in 2010.
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