BrandWatch by Michel Gutsatz

Nike: How to become a Visionary Brand (1)

Let us continue our analysis of Nike that we started last week when we looked at the birth of the brand (Nike: Birth of a brand): how a brand of sports shoes, built up from the outset as an Expert Brand (one that knows athletes best, as it said on the first shoeboxes: "Nike sports shoes are manufactured to the exact specifications of champion athletes throughout the world") became a Visionary Brand from the late 80's.

To find the answer, it is worth studying a chart: the evolutions in Nike and Reebok sales between 1980 and 1995. Why Reebok? Because Nike completely missed out in the "aerobics" movement that emerged in the US in the early 80's. Locked in their purist and rigid idea of sports and athletes, Nike executives regarded this movement as dancing, only requiring casual wear: For them, aerobics was not a sport. They were reluctant to enter the "sissy fashion" market. Reebok - a company in total disarray at the time - quickly grasped the interest of this market and capitalised on it very quickly – in particular with the launch of an elegant model (the 'Freestyle'), stylish, supple and comfortable – and white. Within the space of five years (1986) Reebok overtook Nike in the sports shoes market.






But we see that Reebok's dominance was short-lived: in 1990 Nike took over the top spot in the US market and then widened the gap. How does one explain this new domination?
Of course there was the 'Air' technology, the arrival of Michael Jordan (late 1984) and the launch of Air Jordan. But stopping short at a single product, innovation or athlete was not enough. The real revolution came through advertising - but it took several years to truly achieve it.
In 1983 Nike launched the first advertising campaign for a sports shoe brand on television in anticipation of the 1984 Olympic games in Los Angeles ... but without displaying a single product. The reason was simple: none of the Nike products was truly competitive. It was decided (with Chiat/Day, Apple's ad agency) to feature the athletes - Carl Lewis, John McEnroe, Mary Decker, and others.

But this initial effort was not enough: in 1984 Nike laid off 400 people, about 10% of its employees. Then 500 people again in December 1986. And the rise of Reebok continued.
The real accelerator was the meeting with the Wieden & Kennedy agency in 1987. Legend has it that Phil Knight, during his first meeting with Dan Wieden, said to him: "I'm Phil Knight and I hate advertising".

We'll see next week how the work of this agency transformed Nike into a Visionary Brand – building on the values of the brand ​​and giving them a strong cultural dimension (the ad 'There is no finish line' shown above dates back to 1972 - all the values ​​of the brand are already depicted here).

Nike: Birth of a Brand

Nike is now a global brand with a turnover of $ 28.7 billion in 2015. It was on the 18th of June 1971 that the first Nike shoes went on the market in the four shops under the banner 'Blue Ribbon Sports'. The turnover in 1972 was slightly under 2 million. But as the first annual report post IPO in 1981 stated - the year when sales reached $ 458 million: "Since that time, revenues have grown at a compound annual rate of approximately 85%, while net income has grown at nearly 100% per year". Why was an unknown brand able to become the world's first sports brand - demoting Adidas that dominated the sports world in 1972 far behind?

Two books tracing the first twenty years of the trademark help us to better understand how Nike was constructed as a brand: "Swoosh: the Unauthorized Story of Nike and the Men Who Played There" (J. B. Strasser & L. Becklund, Harper Business, 1991) and "Out of Nowhere - The Inside Story of How Nike Marketed the Culture of Running" (G. Hollister, Meyer & Meyer Sport, 2008).

From the outset two elements appear as fundamental:

1. A tribe: that of middle-distance and long-distance runners from US universities. It was around one of the most famous teams - the University of Oregon, coached by Bill Bowerman - that the core of the original company BRS was constructed. The company recruited only athletes or former university runners - who understood what runners needed, and sold the shoes directly to the athletes and their coaches. "BRS was a company run by athletes, for athletes". The shared culture within this 'tribe' enabled the brand to "adhere" as close as possible to the expectations of its consumers. Knowing the customer / consumer had therefore been Nike's strength from the outset.
2. The pursuit of performance through the product: a permanent tinkering to make the shoes better - often to the detriment of quality.

The same approach was then developed when the brand (very quickly) tackled other sports: tennis and basketball. Nike developed through the penetration of the sports world and the search for promising young athletes. In tennis, by sponsoring Ilie Nastase and John McEnroe - the two "bad boys" of the circuit. In basketball, by sponsoring the coaches of the university teams (and supplying their teams with shoes). But running remained its core business for a long time - thanks to a fundamental cultural movement that turned Americans into runners: Jogging. Jogging had become a means of keeping fit, and Bill Bowerman had been one of its pioneers since 1963, by proclaiming its health benefits. Nike thus benefited from a double movement that allowed it to grow strongly in the 70's: the conjunction of athletes (runners) and the social and cultural movement of jogging - which enabled the brand to break out of the athlete circle. At the heart of both there was one man: Bill Bowerman. Nike's fantastic growth between 1972 and 1981 therefore was driven by a dual cultural engine: an internal culture (that of distance and middle distance runners) and an external Culture (jogging and fitness).

Mobile payment: the revolution comes from China

WeChat has just launched its 'Wallet' - on a model very close to that already offered by Alipay, the mobile payment app from Alibaba.What does it consist of?  A real revolution – when compared to mobile payment methods available in Europe and the US.
Firstly, you find the usual mobile payment functions - credit cards, a wallet topped up by credit card and the option allowing you to make a quick payment using this wallet. This last function, 'Quick Pay' is new: it generates a QR code that can be scanned by the vendor thus allowing you to pay for the purchase.

 

Then there is a section "Powered by Tencent" (Tencent is the parent company of WeChat, Alibaba's strongest competitor in digital) regrouping 10 apps developed by Tencent:

• 'Transfer' - Transfers money from the 'wallet' to any of your contacts on WeChat.
• 'Mobile Top Up' - Replaces prepaid telephone cards.
• 'Wealth' - Invests your money by clicking on the offers whose returns are displayed and guaranteed.
• 'Buy-QQ Coins' - A virtual currency used in online games.
• 'Utilities' – To pay telephone, gas, water and electricity bills.
• 'Public Services' - To access public services (different in each city) such as: making doctors' appointments / paying fines / display of information about air quality / incidents, displays the traffic situation via road cameras, etc.
• 'Card Repay' - To send money to cover overdrafts on credit cards and avoid bank charges.
• 'Red Packet' – Concretises the Chinese tradition of 'Red Envelopes' when you wish to make gifts to relatives or employees.
• 'Go Dutch' – To share a restaurant bill with friends.
• 'Tencent Charity' - To make donations to philanthropic organizations linked to Tencent.

Illustrated below, is how one makes an appointment with a doctor using the app:

And investment offerings proposed daily:

You can also access 5 other functions outside Tencent:

• 'Order Taxi' - To order a taxi - via the joint Tencent and Alibaba app DidiKuaidi.
• 'Rail & Flights' - To order train and plane tickets.
• 'Specials' - This function accesses the e-commerce site JD.com and finds offers at preferential prices.
• 'Movie Tickets' - To buy cinema tickets.
• 'Group Buy' - To make bulk purchases at bargain prices.

If one word could sum up the Chinese mobile payment approach, it is: INTEGRATION. You have within your 'messenger' (think Facebook or WhatsApp Messenger) all payment functions that so far have been available on as many different apps (that of your bank, your electricity supplier, your telephone company, your favourite taxi or VTC service, etc.). So rather than juggling 10 or even 15 different apps, WeChat offers all these facilities in one place, a place where the Chinese spend the most time each day: the private social network. An extraordinary example of work conceived to solve the concerns of the consumer who seeks, above all, 'convenience' and 'user-friendliness'. The future of digital is being prepared in China.