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NIKE DESN1658 Faahion Brand Analysis Kalifa Okezie 201017716 Estelle Rice 201011056 Florence Foster 201027095 Nina Mary Jackson 201049554 Georgia Simmonds 201052402
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CONTENTS Page 3: Introduction Pages 4-10: Theoretical underpinnings of branding Pages 10-14: Issues Pages: 15-17: Resolution Pages: 18-24: Brand identity
Branding is paramount in relation to fashion communicators; it is important that we acknowledge management issues, i.e. the buildup of trust with employees, customers and stakeholders, services, advertising and positioning. This essay will combine different underpinnings of branding in relation to trends. The brand, Nike, will be analysed in depth, developing an understanding of the brands journey in terms of its history, target market, marketing strategy and values. Having faced serious problems in the 1990’s, the essay will also explore how Nike has overcome its issues, and maintained its relationship with customers.
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I N T R O D U C T I O N
THEORETICAL UNDERPINNINGS OF BRANDING
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A brand is “a type of product manufactured by a particular company under a particular name” (Oxford University Press, 2017). Different brands are categorised depending on their values, trademarks, touch points and equity. It is these factors that affect the positioning of the brand in today’s market and society. As global communications have evolved, it has allowed brands to enter international markets, intensifying the competition for audiences, however; according to Melissa Davis “a brand encompasses the perception of it and their reputation, as well as its tangible ‘look and feel’. It relates to the behaviour of a company as well as to the customer experience of it. Their impact is quantifiable. The brand itself applies both inside an organisation – to employees - and outside of an organisation - to customers. Successful brands are those that are dynamic and adaptable; they are able to evolve with market trends and different consumer requirements. Davis claims that a brand is not simply all about “looking good” (2009), this definition relates to one of the world’s leading brands such as Nike. Nike is recognised for their tough, strong personality, showing their powerful values through manufacturing apparel, athletic shoes and equipment.The current marketing environment has diversified, and brands need a relationship with both their target customers and employees for business to be a success.
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The marketing environment consists of a ‘micro-environment’; this “refers to the forces closely influencing the company and directly affect the organization’s relationships. The factors include the company and its current employees, its suppliers, marketing intermediaries, competitors, customers and the general public” (Oxlearn, 2017, no pagination). Employment is a key factor; the variations of skills (cross discipline teams) are paramount in relation to brand creativity, and the combination of skills and perspectives will contribute to the success of the company.
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Fig 7 Supplier relationships are crucial when branding, this determines the quality, timing and overall production. Strong branding leads to customer satisfaction, and shareholders also play a vital part by enabling the brand to grow. These relationships “need to be managed carefully, as rapid short term increases in profit could detrimentally affect the long-term success of the business” (Learn Marketing, 2017). The development of a brand is key, this can only occur when shareholders are involved and the relationship between the shareholder and the supplier is a strong one. Brands must always be conscious of the macro environment they are involved in. Effects of a macro environment on a company include “social, economic, political and legal forces” (Moth, 2013). Most importantly, an “organization cannot control these forces, it can only prepare for changes taking place” (Moth, 2013). These factors can affect the brand; for example, political forces can influence or restrict the direction of the brand through tax policies and trading agreements. Economic factors include growth rates, levels of employment, costs of raw materials e.g. energy and petrol, interest rates, exchange rates and inflation rates. The dynamics of the current global economic trends are changing. For example, the Brexit decision by UK voters to leave the EU could potentially affect trading partners like the US. It could be debated that when Nike prioritised low-cost labour over ethical rights, they were not considering how the implications of the macro environment would expose their unethical behaviour.
Social factors consist of a variety of lifestyle choices such as the distribution of wealth, social class and demographics. These factors affect attitudes, opinions and interest, resulting in the sales of products, and revenues earned. An example of this is the improvement of society’s attitude towards health. This trend has a positive impact on sports brands such as Nike, as more people are exercising and sales are increasing resulting in a high demand for sports products. On the contrary, social factors have also proved to play in Nike’s disadvantage, as if it weren’t for all the protests and social backlash, their unethical treatment of workers would never have been exposed. Fig 8
Technical factors also impact the direction of a brand, and the development of new technology is therefore emerging. In the last 20 years’ social media has evolved and is a consuming trend; the dynamics of the consumer trends impact on the direction the brand takes and media is a key factor. To keep up with customer trends, brands must take into consideration the understanding of consumer behavior. The use of new media to successfully manage customer interactions for example Facebook, Instagram and Twitter play a pivotal part in promoting their brand. It is a way for brands to advertise and compete against one another. Nike categorises each sport on social media; for example, a football page on Facebook features Cristiano Ronaldo and other product related posts. Support accounts are also current; these allow interaction between Nike and their customers, including training advice, product information and encouragement to other users. Experian Hitwise explains how Nike “achieved a 6% growth” in Facebook supporters, and a “77% boost in engagement on its Facebook page compared to 2% and 59% respectively for Adidas.” (Moth, 2013.) Flexibility and adaptability are the underpinnings of branding in the current marketing environment. Global economic trends and consumer trends are main attributes due to the macro and microenvironments, and new and emerging technologies contribute towards the direction and future of a brand.
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ISSUES
Life Magazine exposed a photo of a 12-year-old boy stitching together a Nike soccer ball for a mere 60 cents. News of the photo escalated creating global hostility towards the brand, and human rights activist movements were hosted outside of Nike outlets. (Wilsely, 2011)Nike came across severe backlash from the media in 1996 concerning the labour conditions of the company’s factory workers. Accusations of ‘child labour’ were made against the leading sports retailer; particularly regarding the production processes of the firm’s soccer balls in Pakistan. In this part of the world labour is cheap, and there is an impotent emphasis on human rights laws in order to maximise the firm’s profits.
The scandal arose due to the lack of regulation by Nike for their subcontracted brand SAGA sports; their heavy fixation on the minimisation of overheads consequently resulted in illegal labour practices. A significant number of people saw this as the essence of uncaring capitalism (Mallen Baker, 2016). There is some evidence that the photo was staged, since it showed inflated footballs while in reality the balls were shipped uninflated. It didn’t matter. The picture was a powerful visual for a situation that was shown to genuinely exist. The company’s reputation suffered and the first of many protests began to take place; Nike and child labour had become indelibly linked in the public consciousness. (Mallen Baker, 2016).
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les of Nike’s products Consequently, in 1999, sa with stock prices falling plummeted by 8% along ncerning didn’t end here by 15%. The problems co 01, Nike issued a report for Nike. In February 20 er 's role in facilitating work confessing the company al xu the exchange of se exploitation. It uncovered s in Indonesia (Wazir, favours for jobs at factorie nese breaches of ethical co 2001, no pagination). Th e identity of Nike, which th duct tarnished the brand rebuild. More breaches brand had to take years to to surface a decade later of ethical conduct began 2001. than the original crisis in
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Employees at the sportswear brand’s converse factories made reports of both physical and mental abuse by their superiors. Workers at the Sukabumi plant, in Taiwan argued that supervisors frequently threw shoes at them, slapped them in the face, kicked them and call them dogs and pigs. Workers felt defenseless and were unable to speak up about their situations due to the lack of trade unions and staff representation within the factories. One worker at the Taiwanese-operated Pou Chen plant in Sukabumi said a supervisor kicked her last year after making a mistake while cutting rubber for soles. The victim commented: “We're powerless� (Mail Online, 2011), who like several others interviewed spoke on condition of anonymity out of fear of reprisals. Nike admitted the abusive practices, which had been revealed to be occurring for years; despite this, Nike did little to improve the situations of the workers. (Mail Online, 2011.)
Fig 18 Environmental factors such as limitation of natural resources, waste disposal and recycling can also have an impact on the brand. Greenpeace, for example, is an “independent organization campaigning to ensure a peaceful and sustainable world for future generations” (Greenpeace, 2017). According to Greenpeace and its Detox campaign, Nike is “failing to take individual responsibility for their supply chains hazardous chemical pollution.” (Greenpeace, 2017) furthermore “Nike does not ensure its suppliers report their hazardous chemical discharge data and has not made a commitment to do so.” (Greenpeace, 2017) The attitude that Nike has on the environment can lead to further consequence’s in the future which can have an impact on the brand.
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RESOLUTION
Nike was and still is a very successful global brand, a brand that was able to grow quickly using the model of outsourcing production to a network of suppliers in parts of the world where costs were lower (Baker, 2016). A successful brand involves building of trust with employees, customers and stakeholders, and letting potential consumers and clients know what to expect before they buy. However, for well over a decade, Nike became defined by the term ‘sweatshop labour’ because of an issue that broke the existing trust of the brand. This also caused a temporary loss in money for the company, which could have permanently ruined their building success. With Nikes reputation being repeatedly damaged by multiple negative accusations, by the time 1998 came around, the company had to lay off staff due to the decline in their sales. Ex CEO, Phil Knight, finally started to realize change had to be made in order to turn his company around, and build up Nike’s once worthy reputation. In a public address in 1998, Knight stated that the “Nike product has become synonymous with slave wages, forced overtime, and arbitrary abuse,” (Knight, cited in Nisen, 2013) finally recognizing that the American consumer would not be willing to buy a product made under poor and abusive conditions. Nisen states in his article that Nike would also “raise the minimum age of workers whilst also significantly increasing monitoring in factories in order to make it a safer and more efficient place to work” (Knight, cited in Nisen 2013)n order to solve the toxic fume issue, Knight agreed to adapt U.S OSHA clean air standards in all factories (Nisen, 2013). It is clear here that the key to Nikes turn around was to be honest about the issues they had faced so that they can personally recognize and solve these issues. In his 98’ speech Knight proceeded to aggressively and publicly make changes within the company. (Knight, cited by Nisen, 2013) Fig 21
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In 1999, the promises Knight made in his 1998 speech started to come to fruition when Nike created the ‘Fair Labour Association’. (Nike, 2009) The FLA creates lasting solutions to abusive labor practices by offering tools and resources to companies, delivering training to factory workers and management, conducting due diligence through independent assessments, and advocating for greater accountability and transparency from companies, manufacturers, factories and others involved in global supply chains. (FLA, 2017) For Nike, this non profit group established independent monitoring and code of conduct, whilst implying a minimum age for workers and a 60-hour work week (Nike, 2009) Nike also encouraged other brands to join the act – consequently displaying that Knight was not only concerned about Nikes welfare, but genuinely was attentive to the well-being of all factory workers. In order to prevent themselves from any further allegations, Nike decided to employ around one hundred staff to inspect a selection of their factories throughout the years of 2002-2006. An estimated six hundred audits were performed, with the employees repeatedly visiting those most problematic factories. (Nisen and Luts. 2002) The FLA was also granted permission from Nike to perform random inspections too. In 2005, Nike became the first company in its industry to publish a complete list of the factories it contracted their work to. When visiting the Nike website now, it clearly states ‘We are transforming manufacturing at every level by changing the way we work, who we work with and what we expect of our partners. We know that real progress happens when factory management understands that a lean, green, equitable and empowered workplace is a productive, profitable and successful business model.’ (Nike, 2017) These admissions and changes throughout the years have helped public sentiment toward Nike turn more positive, and in many ways, made the company more transparent than its competitors consequently shaking off its bad reputation, helping to improve and solve any issues they may face.
BRAND IDENTITY
Nike has had multiple hurdles to tackle throughout their time as a brand. But there are multiple qualities that we can observe to realise just how strong the organisation has become. Figures show how consumers are continuously choosing Nike over competing brands, but why is this? Nike has continued to successfully communicate its strong brand image and values through the company’s established relationship with the public. Goldman and Papson believe that we see Nike as something more than just a brand; that we respect and trust the company as its philosophy is “cemented in consumers” (Goldman and Papson, 1998, p.19). The ‘Just do it’ slogan is more than just a slogan to Nike; it has become a symbolic conceptualization of the brand alongside the iconic ‘swoosh’ logo. This confident brand identity “provides a language of self-empowerment” (Goldman and Papson, 1998, p.19) and is perhaps the core to the brands established relationship with the public. Fig 24
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Nike’s success could debatably be due to their philosophical technique towards sale as they are selling a “way of life” (Goldman and Papson, 1998, p.19) instead of a product. This has not only built a sustainable backbone to the company, but widened their market to almost everyone in society. Nike has raised their platform through strategic public relations tools like celebrity endorsement. By putting their products into celebrity context Nike: “Encourages viewers to identify with heroes and athletic superstars.” (Goldman and Papson, 1998, pp46). Not only does a celebrity involvement benefit customers by motivating them into becoming passionate about sport and embracing “the language of individualism”, it benefits Nike as an organisation. Michael Jordan’s contract with Nike lead to over $100 million in sales from his first ever Air Jordans line (Goldman and Papson, 1998).
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Jordan’s involvement since 1984 has helped transform Nike from a company selling sports products to a company selling a lifestyle; Goldman and Papson claim that in adverts Jordan “replaces athleticism with regal wisdom” (1998, p.49). Advertising has always been a strong point for Nike in maintaining their brand identity; the passion evoked through some of Nike’s celebrity ambassadors allows consumers to be exposed to emotion, thus helping them to differentiate Nike as a brand and help shape a perceptive brand image.
Fig 28 The work of Jean-Noël Kapferer can help determine Nike’s brand identity through an identity prism. Kapferer believed that brands “must not be hollow, but have a deep inner inspiration” (2012, pp158). Analysing Nike using this method allows us to recognise that the brand has a well-established identity through Kapferer’s: “six facets of brand identity” (2012, p.158).
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Nike has managed to maintain their respectful position in society through supporting a number of campaigns. In 2005, the iconic football player Thierry Henry partnered with Nike to form the Stand Up Speak Up campaign; raising awareness about the continuing issue of racism in football. Nike was responsible for the publicity of the campaign and released wristbands as well as commercials. Over 2.5 million interlocking black and white wristbands were made available to the public so that people could ‘stand up’ and ‘speak up’. Nike’s position in the campaign highlights to consumers that this is a brand signaling responsibility, and a passion for the industry that they supply products for (Nike, 2005). Nike’s marketing strategies and core brand values have defined them as more than just a high-street store, and more so a reliable, sustainable organisation. Maintaining a relationship with the customer is something Nike recognised to be more important that cheap labour; their bump in the road in the 1990’s made the brand learn from their mistakes, and may be partly the reason why the brand is so strong today.
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