Bill Bowerman and Phil Knight first founded Nike Inc. in 1964 as “Blue Ribbon Sports.” In 1971, it was re-named “Nike” after the Greek winged goddess of victory, strength, speed, glory, and fame. The Nike “swoosh” is meant to represent the wings of the goddess Nike, as she was often depicted in mythology with. The iconic swoosh was created by Caroline Davidson, an advertising student at Portland University. She was a freelancer asked to design a graphic logo that could fit on the side of a shoe by Phil Knight; she was paid $35 for her design.
The first interaction between the founders of Nike was in 1959, when track coach Bill Bowerman met Phil Knight; who was a runner at the University of Oregon where he was coaching. The need for the company arose out of Bill’s desire to find lighter, more durable racing shoes for his university track team, and Phil’s desire to find a way to make a living without having to give up his love of sports. The two put their heads together, and the end product was a company that now dominates the market in its sportswear segment, despite having begun as a small distributing outfit from the back of Phil’s car.
While Phil was obtaining his MBA degree at Stanford in the 60’s, Professor Frank Shallenberger assigned his students with a project; the goal of which was to devise a small business and a marketing plan for its success. Building on his earlier brainstorms, Phil’s project consisted of the idea that quality running shoes could be produced at low cost in Asian countries like Japan, and shipped to the U.S. for distribution. In 1963, Phil actually traveled to Japan, and scheduled an interview with a Japanese businessman affiliated with Onitsuka Corporation and its subsidiary Tiger; to whom he presented himself as an American distributor with an interest in selling Tiger shoes to American runners. The boardroom executives liked what they heard; and Blue Ribbon Sports (BRS) was born. By 1964, BRS had sold 8,000 pairs of Tiger running shoes and had added salesman Jeff Johnson to the team. By 1971, the trademarked swoosh was implemented, BRS officially became Nike Inc., and the company hit $1 million in sales. Later into the 70’s, Nike went from $10 million in sales to $270 million in sales and was hugely benefiting from (if not leading) America’s craze towards popularized fitness; a revolution that caused the idea of exercise and game-playing to transcend from an extracurricular that the average American did for fun, into a cultural signifier of status for health and wealth. Nike’s brand prosperity is clearly evidenced in a quote from 1996 in Advertising Age (a magazine that analyzes data on marketing and the media), “the ubiquitous swoosh was more recognized and coveted by consumers than any other sports brand.” That same year, Nike’s revenues were $6.74 billion, with $8 billion expected in the upcoming year, and a target of $12 billion by the millennium.
With all that said however, Nike was still mindful of its competitors and the risks they pose on its global stage. For example, Nike is the main leader in its industry of sportswear (footwear, apparel, equipment and accessories) and is valued at 10.7 billion, but it does have a hefty amount of competition. Nike’s main four competitors are Reebok, Adidas, Fila, and New Balance. Nike is the industry leader with a 47% market share, Reebok is in second place at 16%, and Adidas comes in third at 6%.
The biggest contributor to Nike’s edge over its competitors is its marketing and global business strategy. Nike relocated all of its factories overseas where it could utilize a more inexpensive workforce to fabricate its shoes, and 86% of its total products are now produced in either Taiwan or South Korea. With Nike cutting costs on the labor and production expenses, more capital was freed up and put towards increasing their advertising budget. For example, Nike spent four and a half times as much in advertising expenses as Adidas in 2003. This helped Nike gain much more awareness in the regions where they were marketing their product by demographic statistics.
A tactic Nike has also relied on heavily to hold and increase their market share is the practice of expanding into foreign