How Nike used Brand Equity to become the Best Sports Apparel Brand Ever
How does a company that started as a distributor of Japanese footwear become arguably one of the biggest apparel brands in the world? The answer to this question may have a lot to do with brand equity. David Aker, a specialist in marketing with a focus on brand strategy, defines brand equity as a set of brand assets and liabilities linked to a brand name and symbol, which add or subtract from the value provided by a product or service (Aaker, 2013).So let’s look at how the apparel and footwear mega-brand Nike built it brand equity to become what some regard as “the best sports brand ever”.
Brand Loyalty
One of the biggest elements in creating a valuable brand is developing brand loyalty. To strengthen brand loyalty, the relationship between the brand and the customer needs to be rich, meaningful and consistent over time (Aaker, 2014). How has Nike mastered this relationship?
Nike has done so by inspiring customers. Nike doesn’t just sell sports gear; it sells a lifestyle, a mindset, a belief. This inspiration has been an intricate part of the company since it began. Nike Co-founder, Bill Bowerman emphasized this idea even more when he stated, “If you have a body, you are an athlete”. Nike’s advertising often incorporates this statement with the common theme of heroism (Westwood, 2015). It inspires customers to compete not with others but with themselves. That could manifest itself in a customer as competing with laziness to become more active or pushing the limits internally to become a better athlete. Because of this marketing, customers are inspired to improve themselves and they see the Nike brand as a way to do that. This type of connection with a brand fosters brand loyalty.
Brand Awareness
Brand Awareness is all about how familiar consumers are with your brand. Nike undoubtedly possesses this element of brand equity (Aaker, 2014). The Nike brand name is often top of mind when thinking about sports apparel, footwear and gear. Personally, when I think of athleticism and sports, the first brand that comes to my mind is Nike followed by Adidas and Under Armour. Nike has carved out this coveted space amongst its competitors in large part by the endorsements and partnerships it has developed over the years. For example, when you think about the greatest basketball player of all time, Michael Jordan may come to mind. The thought of Michael Jordan may lead one to think of the Chicago Bulls or UNC Chapel Hill. However, I would argue that one of the first thoughts that come to mind is the Air Jordan shoe. Thus, ultimately leading you back to Nike.
Brand Associations
With brand awareness comes brand associations. Brand associations include a variety of things like product attributes, design, social programs, imagery and symbols (Aaker, 2014). Brand associations are all about what customers think of when they see a brand or when it’s mentioned. Some of the brand associations for Nike include the Swoosh symbol, the “Just Do It” tagline and athlete endorsers like LeBron James. While Nike has many positive brand associations, the brand has not been immune to unfavorable ones. Negative associations such as sweatshops have been somewhat of a dark cloud over the brand. Poor working conditions and low wages in factories where Nike’s products were produced were brought to light in the early 1990’s (Nisen, 2013). Although Nike has made advancements in improving the working conditions and wages of its factories overseas, the company still faces backlash and is often plagued with the sweatshop association.
Competitors
After reading all about why Nike may be the best sports brand ever you may be thinking, well how do companies like Adidas, Under Armour, Reebok, and Puma compare?
As the athleisure trend continues to gain momentum athletic brands are reaping the benefits. Although Nike remains the market leader in retail sneaker sales, the company should keep an eye on competitors like Adidas and Puma (Tuttle, 2016). With the athleisure trend, customers are looking more for sneakers that make a fashion statement and less for a running shoe (Tuttle, 2016). According to Tuttle (2016), the sales for Adidas’ “Originals” line was up 60% in the first half of 2016 which contributed to the brand being 2016’s fastest growing brand in North America. Although the Adidas brand is reemerging as a top competitor, Nike still has LeBron James, Serena Williams and Michael Jordan as celebrity endorsers to help with the sneaker trend. With that being said, Adidas, Under Armour and Puma are using celebrity endorsers as well. Celebrities like Kanye West and Pharrell Williams boosts Adidas portfolio while two-time NBA MVP Stephen Curry boosts Under Armour’s and Worldwide Superstar Rihanna boosts Puma’s.
Even with competitors trying to close the gap, Nike continues to come out on top. As of 2017 Nike’s brand value is estimated to be $29.6 billion ranking it 16th in Forbes list of the World’s Most Valuable Brands of 2017. Nike was the only sportswear brand listed in the ranking showcasing its high brand equity.
Nike uses a combination of its inspirational advertisements, active lifestyle mentality, rich athletic history, highly recognizable symbols and tagline, athletic endorsers/partnerships and constant innovation to differentiate itself from competitors. These attributes turn Nike sportswear into something greater than the whole of its parts.
References
Aaker, D. (2013, -09–04T17:15:25+00:00). What is brand equity and why is it valuable? | aaker on brands. Retrieved from https://www.prophet.com/thinking/2013/09/156-what-is-brand-equity-and-why-is-it-valuable/
Aaker, D. (2013). Aaker on Branding 20 principles that drive success. [PDF document]. Retrieved from https://www.prophet.com/downloads/books/AakerOnBranding_web.pdf
Nisen, M. (2013). How Nike solved its sweatshop problem. Retrieved from http://www.businessinsider.com/how-nike-solved-its-sweatshop-problem-2013-5
Tuttle, B. (2016). Why Nike is losing its foothold on America’s sneaker market. Retrieved from http://time.com/money/4511580/nike-sneakers-sales-adidas-puma/
Westwood, R. (2015). Three ways to build brand loyalty. Retrieved from https://www.forbes.com/sites/ryanwestwood/2015/07/30/three-ways-to-build-brand-loyalty/
