CASE STUDY OF NIVEA

Resource Person:
Prof. Ghulam Ahmad Rana
(MBA PROFESSIONAL) E-9 4 th SEMESTER LAHORE

Nike: Building a Global Brand

Teaching Notes
Summary
This case concerns the development of Nike's international marketing
program. Although Nike met with great success in thwarting Reebok's
competitive thrust in the U.S., overseas markets posed many challenges.
The case concentrates on the European and Asian markets and provides
some historical marketing perspectives. The issue faced by Nike is how to
best build global brand equity. The case focuses on some key marketing
decisions in 1992 and 1993 and then focuses on the subsequent challenges
Nike faced, including an image crisis as well as intensified competition.
Further, a discussion on expanding Nikes brand portfolio is presented.
Class discussion can revolve around the following sets of questions that
students should consider before class:
1. How would you characterize Nikes brand image and sources of brand
equity in the United States?
2. How have Nikes efforts to become a global corporation affect its
sources of brand equity and brand image in the United States,
Europe, and Asia?
3. Are sponsorships and endorsements vital to Nikes business? For
instance, what effect would Nike becoming an official sponsor for the
Olympics have on the companys relationship with consumers?
4. Why did Nike become a target for critics of globalization? Do you
think Nikes response to allegations of unfair global labor practices
was appropriate and/or effective? Is Nike truly concerned about these
issues?
5. Evaluate Nikes acquisitions and the brands now under its control. Do
these acquisitions make sense for Nike? What, if any, brands should
Nike try to acquire next?
6. How important is fashion to Nike? Are they a performance apparel
company, or a fashion company? What is more important for Nike
when they enter a new market like China? Fashion or performance?
7. Should Nike do anything different to defend its position now that
Adidas and Reebok have joined forces?
Teaching Objectives

1)
2)
3)
4)

To
To
To
To

examine issues in global branding

demonstrate the value of integrated marketing
consider how to manage a strong brand
explore PR issues for established brands

Teaching Strategy
The Nike case is similar to the Levis Dockers case in that it is a brand with
which every student will no doubt have experiences and opinions. The value
to the case discussion is that students can still learn some valuable lessons
about Nike and their marketing expertise. A good place to start the case
discussion, after a quick summary of the historical origins of the brand, is in
1988, a time when Reebok held a sizable market share lead (30% to Nikes
18%). In fact, some students may have already been exposed to the HBR
case that deals with Reeboks integrated marketing communication
program from that time. Students can be asked to identify Reeboks and
Nikes brand image at that time. Essentially, Reebok has concentrated on
creating associations to comfortable, fashionable, and for women. If
students seem to be struggling, just remind them that Reeboks growth was
driven by aerobics shoes and then ask them what associations might that
suggest. Prior to 1988, Reebok was also seen as a hip, cool brand but, by
this time, they were seen as a much more mainstream brand.
The Nike brand image should be easier for students to elicit. Key brand
associations were created to performance, high tech, top athletes (e.g.,
Michael Jordan), and sports. It should be pointed out how consistent,
cohesive, and reinforcing this brand image was (and still is). It is important
to ask students how this brand image was created to provide a point of
reference for the discussion about Europe and other areas of international
expansion. Basically, the brand was built from the ground up in a grass
roots effort. It is worthwhile to note the duality of the brand image and
how this characterizes strong brands. Nike has strong product performance
associations (remind students what an innovation air technology was) as
well as user and usage imagery. Nikes advertising in general, and the Just
Do It campaign in particular, can be analyzed some in terms of its
contribution to brand equity. The power of the slogan a three word
summary of the self-empowerment that the brand represents can be
emphasized.
After analyzing the Reebok and Nike brand images, their respective
positionings can be considered, time permitting. Nikes point-of-difference
is clearly performance. Reeboks point-of-difference was style. Their
respective points-of-parity follow from there. Students can be asked to judge
the two positionings in terms of desirability and deliverability. The former is

a question of how strongly the pyramid of influence operates in this

market. At the top of the pyramid is the competitive athlete, which makes
up roughly 5 percent of shoe buyers. Next, the weekend warrior or casual
athlete makes up the next 15 percent. Since the vast majority of athletic
shoes are never used for anything more athletic than walking, the base of
the pyramid 80 percent of the total is the non-user. Some students might
argue for Nikes high-end trickle down approach of using top athletes to
represent the brand, while others will endorse Reeboks mass-market
approach. Deliverability is less controversial however as Reeboks UBU is a
huge misstep as compared to the focused, well-executed Just Do It
campaign.
The depth of the analysis of the U.S. experience will depend on the time
available. To address the challenge of building a global brand, students
must appreciate how the brand was built in the U.S. In particular, it is
important to point out Nikes internal brand mantra, authentic athletic
performance, and how it helped to guide brand-building efforts. Once the
American experience has been covered to the degree desired, discussion
can switch to the European market. A good opening question here is to ask
students how brands should be built in a different geographical market. The
answer, of course, is that they must be built from the bottom up just as
had been the case in the original domestic market. The actual means by
which they will built, however, may differ. In other words, the strategy will
be the same awareness first and image next but the actual tactics in
terms of the three main ways to build brand equity may differ. With this
backdrop, students can then be asked what challenges existed for building
brand equity in the European market in 1992. Perhaps the most important
challenges were that: 1) the brand did not have the history nor heritage in
the market and was starting more from scratch and 2) European consumers
may vary in significant ways from Americans in terms of their sports
experience. Students can be probed as to the severity of these challenges.
Students from Europe may want to be asked to comment on attitudes
towards sports over there.
Next, students can be asked how Nike changed its formula from the U.S.
market. As the case points out, they over-relied on their current U.S.
marketing program, mainly for budget reasons. A key lesson for students is
that just because an ad campaign or some other aspect of the marketing
program seems to work in an overseas market doesnt mean that it the
right thing to do to build brand equity. Europeans may have liked and been
entertained by Nikes advertising but not reached the level of
understanding about the brand that Nike would have desired. In particular,

the mantra of authentic athletic performance needs to be translated in a

meaningful way. Nike had to change its sponsorship approach, making
soccer a big part of this shift. Nike also had to change its advertising,
making it less aggressive and more representative of consumer tastes in
Europe. It also had to become more involved on a grassroots level with club
sports, school teams, and local events. Students should be probed as to
what building the brand from the bottom up or with a grassroots
approach entails. Nikes approach in Asia was similar, with similar results.
The case discussion can be extended with a look at Nikes image problems
in the late 1990s. Students can identify the various contributors to these
problems, such as labor relations, swoosh ubiquity, endorsement
proliferation, and aggressive marketing. Nike became a lighting rod for
criticism from various citizens groups, both domestically and abroad. Here,
a discussion of the challenges of becoming a global brand in the 21st century
can be useful. A global economy enables brands to vastly expand their reach
geographically, yet at the same time accountability increases as well.
Students can discuss Nikes steps to remedy its various image problems,
evaluating them for their effectiveness. Also, the topic of global marketing
can be addressed here. Students can enumerate the pros (e.g., economies of
scale in production and distribution, lower marketing costs, consistency in
brand image, scope, etc.) and cons (e.g., differences in: consumer behavior,
consumer response to marketing, brand and product development,
competitive environment, legal environment, etc.) of global marketing.
Nikes marketing activities can be evaluated in terms of how they dealt with
these benefits and drawbacks. Chapter 14 contains much information on
managing international brands.
Complicating Nikes ability to grow its brand was a global economic
downturn in the late 1990s. Regardless of the prevailing economic
conditions, Nike faced many challenges achieving growth with its brand. In
many markets, demand for its footwear was not as high as it had historically
been. Nike made successful moves into apparel, but its equipment business
was still a small piece of the business. Students can discuss the benefits and
hazards of leveraging Nikes brand equity over a wide range of nonfootwear products. International growth continued to be strong, however,
particularly in Europe and Asia. Discussion can include an evaluation of
Nikes future prospects for growth in international markets. Latin America,
Africa, and Asia, especially China, could be thoroughly analyzed. Also,
Nikes brand portfolio expansion through acquisitions is an interesting issue
to debate and analyze..
As a high profile brand, Nike is always in the news, and students always like
to talk about the brand. The key to guiding this discussion is to make sure
students are applying course concepts to do so.

Key Lessons

Importance of creating a strong foundation for brand equity

o Depth/breadth, rich, cohesive brand image
Advantages of brand mantra for brand focus
Importance of proper positioning
Value of strong corporate brand
Dangers in taking short-cuts in building a strong global brand