Business Model Canvas Nike – The Nike swoosh has become a symbol of success and success around the world. Standing tall among industry competitors, this undisputed giant has built itself up through larger-than-life marketing campaigns, high-profile endorsements and stylish designs.
With famous brand ambassadors such as Lebron James, Tiger Woods, and Michael Jordan, the Nike brand is estimated to be worth about 34.8 billion US dollars in 2020. Named after the goddess ‘the Greek victory, Nike has been the first sports shoe for decades.
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But this high level of success does not come from anywhere. In fact, Nike had rather humble beginnings but what was clear from the beginning was to offer better shoes to athletes. This basic principle has been the basis of all Nike designs from 1962 until today.
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So how did Nike become so successful? What challenges did he face, and what set him apart from other athletic shoe manufacturers? Let’s go back to the era of bell bottoms, lace t-shirts and walking shoes.
It’s 1960, and University of Oregon shortstop Phil Knight has graduated and is looking for his next opportunity. As part of the game team, he was coached by Bill Bowerman, who was famous for producing star athletes.
Bill had one special skill that was crucial to the birth of Nike. He was fascinated by the idea of adjusting and customizing runners’ shoes for optimal performance. He learned this skill from a local hunter. Bowerman was obsessed with the relationship between design and speed in all of his improvements. His students love his style, and Knight is one of them.
Knight enrolled at Stanford University for the MBA Program and wrote a paper analyzing the cost of manufacturing running shoes in Germany. His proposal was based on the theory that production should be moved to Japan, where labor is cheaper.
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He noticed that Japanese camera manufacturers had made significant improvements in their products. These improvements made Japanese cameras so popular that they began to take a large share of the American market from the famous German camera brands. Knight believed that Japanese athletic shoes could have the same effect as Adidas which dominated the US market at the time.
After graduating from Stanford, the ideas in his paper continued to haunt him. He wrote several letters to various Asian manufacturers with a proposal to become the sole distributor in the United States but received no response.
As soon as he finished, he jumped on a plane to a small city called Kobe in Japan, where he found Onitsuka Co. This company produced quality and popular shoes called Tiger. Knight knew he had to present a professional front so when he spoke to the owner he lied that he already owned a company called Blue Ribbon Sports. His plan worked and the owner agreed to make him the sole distributor of the shoes in the United States.
After returning to America in November 1962 with only 12 pairs of Onitsuka Tiger, Knight began traveling to various sporting events to sell the shoes from his car. He had some success but soon realized that he needed help to make his ideas acceptable.
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He approached his former coach Bill Bowerman and pitched his idea. Bowerman was immediately hired and worked out a 50-50 deal for a distribution company called Blue Ribbon Sports.
In January 1964, Blue Ribbon Sports was officially incorporated. Bowerman and Knight invested $500 each for the first order and received about 300 shoes. They know there is a market for these cheaper high quality options. However, the market was still dominated by popular brands such as Adidas and Puma.
Knight and Bowerman did not have enough capital to import the shoes they needed from Japan, so Knight got a loan from his father. Later that year, the two managed to secure their first business loan of $3,000 from the First National Bank of Oregon. This capital helped them to order enough shoes to meet the demand.
Meanwhile, Bowerman decided to put his interest in speed and design to good use. When their first order came in, they tore apart Tiger shoes to find ways to make them better and lighter. He used the University of Oregon track runner to test his project.
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Despite these formidable competitors, Blue Ribbon Sports sold 1,300 pairs of the Tiger by the end of 1964.
Knight and Bowerman found that their idea took root. But both of them were working so hard that they needed someone to run Blue Ribbon Sports. They stayed with Jeff Johnson, who was at Stanford with Knight. Johnson is also a runner, so he knows the industry well. He became Blue Ribbon Sports’ first full-time employee. It turns out that he is a valuable resource for small businesses.
Meanwhile, Bowerman finally found what was missing in Tiger’s shoes. Onitsuka Co. presented a new design. it will provide more support for runners. The new shoe called the Tiger Cortez had a molded back, soft sponge rubber on the forefoot, and on the top of the heel. There was also a hard sponge rubber in the middle of the heel and a hard rubber band. All of these improvements have helped runners become more efficient.
He didn’t know it, but Bowerman was officially starting what would become one of Nike’s top offerings: customization. The founding partners hired more salespeople who would place their cars at sporting events and sell shoes to athletes. Bowerman enlisted the help of his students at the University of Oregon, who spread the word about the shoe to other runners.
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The company has always been successful as a distributor. However, they used Knight’s basement as a storage facility and ran out of space. So in 1966, they opened their first store in Santa Monica, California. The Tiger Cortez model made its official debut in 1967 and became an instant sensation. Cheaper and more comfortable than shoes produced by Adidas and Puma. Bowerman and Johnson also worked on another shoe, the Boston, in which they incorporated a wide toe strap across the length of the shoe.
Due to this success, the company expanded its sales and distribution on the East Coast, especially in Wellesley, Massachusetts. At the end of 1968, they could not meet the demand, which started a constant fight for money.
The company closed in 1968 with $150,000 in revenue. While Tiger Cortez sales began to double each year, Blue Ribbon Sports again could not keep up with demand for a number of reasons.
First, they fought conservative banks that would not lend more money. Second, Onitsuka Co. had a very slow shipping process that required Blue Ribbon Sports to pre-order a few weeks before shipping. This created a huge problem for the company.
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Knight and Bowerman continued to sell at an impressive pace and fortunately found a way to compensate for limited demand. They decided to order twice as many shoes per shipment. This strategy worked well for a while. By the end of the decade, the company had 20 employees, several stores, and annual sales revenue of $300,000.
Unfortunately, the Onitsuka shipping process began to cause too many problems for Bowerman and Knight. When the two discovered that their Japanese partners were feeding their local market first and sending the rest to America, this caused a rift between the two.
This was especially frustrating for Knight and Bowerman because the program kept them in a bad financial position. The capital he paid for the expansion was small, so he made an agreement with a Japanese trading company called Nissho Iwai Corporation, which lent him the money he needed.
This allowed Blue Ribbon Sports to build its own line using independent outside contractors. At that time, Bowerman and Knight decided to change the name, but Jeff Johnson came up with the name Nike. They paid a University of Portland student named Carolyn Davis to sketch the logo and eventually settled on the Swoosh design, for which they paid $35 (now worth $26 billion alone) .
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Johnson was responsible for Nike’s marketing campaigns which included brochures, print ads and catalogs. He was an important factor in the success of the early campaign and was very knowledgeable. He shot the photos for the catalog and designed some of Nike’s first shoes. This powerful marketing campaign was the foundation that strengthened the Nike brand.
With its own distribution channels and sufficient capital to manage its operations, Nike separated from its Japanese partner. Onitsuka Co. filed a lawsuit. claimed that Blue Ribbon Sports (now Nike) was selling their shoes without permission.
The judge ruled that both companies could sell their own versions of the shoe, and Nike focused on expanding its brand. Here comes the US Track and Field Trials, and Nike
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