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7 Strategies That Helped Nike Become A Billion-dollar Company From A Small Shoe Distributor

7 Strategies That Helped Nike Become A Billion-dollar Company From A Small Shoe Distributor

Sush Padhye
August 12, 2023

1. Product and Profit-led Growth

Tiger Onitsuka Corsair shoe, which ultimately became Nike Cortez

Bill Bowerman, Nike co-founder

Nike co-founder Phil Knight saw the potential of high-quality but cheap Japanese shoes overwhelming the dominant German shoes in the U.S. just like cameras.
He started selling imported Tiger Onitsuka, which became a hit because of their design and quality and were cheaper than the German shoes in the US.
Blue Ribbon Sports (BRS), as Nike was then known, sold 1,300 pairs of these grossing $8,000 in 1964 (its first year) and $20,000 in its second year.

Jogging by Bill Bowerman

Bill Bowerman -- Nike co-founder and a top track-and-field coach in the US -- learned about the concept of running from an NZ trip
He published a 90-page book titled Jogging in 1967 on his return. The book sold over a million copies and ignited a passion for jogging in the U.S.
Runners were Nike's core market, and the book's success helped increase Bill's influence on the running community, increase the size of their market, and ultimately spurred Nike's in the early years.

Blue Ribbon Sports, what Nike was previously known as

Original Nike “swoosh” logo

Blue Ribbon Sports was renamed Nike Inc in 1979.
The name was derived from the Greek Winged Goddess of Victory, with the logo representing the wings, and indicating motion and speed.
Bill asked the design student Carolyn Davidson to create a logo that denoted motion. A logo that could go well with the aesthetics of a running shoe, as Nike’s business was built on running shoes.
She created something that looked like a Woosh in the air, which became the famous “swoosh” logo.
The Nike logo looked new and fresh, and the design was simple and eye-catching.

Nike “Waffle” trainer, one of the first Nike shoes

Nike Air Jordan 1

Nike Air Max 1

Focusing only on running and athletics, Nike began to see its growth taper off in the late 70s and started branching out into other sports.
It made its foray into tennis, followed by soccer, casual shoes, basketball, golf, and other sports.
While not all its forays were successful like soccer and casual shoes, it doubled down on the sports that worked like basketball.
It also re-entered areas where it was not successful like casual shoes after applying learnings e.g. making casual shoes that looked cool rather than funny.
Thus Nike created sub-brands that allowed it to serve customers in new segments and grow its business while keeping Nike's core sports identity.

Nike’s first emotion-oriented ad

Nike’s ‘There is no finish line’ campaign ad

Nike’s famous ‘Just Do It’ campaign ad

Nike was a successful company in the early 1980s, but it made some strategic mistakes that caused it to lose its footing.
In response, Nike made an important change: it shifted its focus from the product to the consumer.
Nike shifted from creating product-driven advertising to emotion-driven advertising after the former stopped being effective.
Nike's ads often feature athletes overcoming adversity, which creates an emotional connection with its customers.
In the words of Phil Knight: "Nike is a marketing-oriented company, and the product is our most important marketing tool. What I mean is that marketing knits the whole organization together."

Steve Prefontaine, the first athlete Nike sponsored

Nike Wimbledon GTS worn by John McEnroe

Nike's first legitimately successful brand ambassador, Michael Jordan

Sam Kerr, Australia’s soccer team Matilda’s captain

Nike took a gamble by signing the rising star Michael Jordan in 1984 -- while he was still an NBA rookie -- for $500k per year, a lot of money at the time
Before him, Nike signed other sportsmen like Steve Prefontaine and John McEnroe with little success
The contract with Jordan had some steep conditions, such as Jordan having to win Rookie of the Year, be an All-Star, or be able to sell $4 million worth of shoes in his first three seasons, thereby allowing Nike to hedge their bets
Jordan surpassed all of these expectations, accomplishing them all in his first season.
He went on to have an incredible first season in the NBA, being named an All-Star, All-NBA Second Team, and becoming Rookie Of The Year. And the rest was history.
Nike has been a major sponsor of women's sports, raising the profile of the sport and attracting more fans. Sam Kerr, Australia’s women’s soccer team skipper nicknamed Matildas, has been sponsored by Nike since 2018.

Blue Ribbon Sports shop

Niketown stores, as Nike’s initial retail stores were then known

Contemporary Nike store

Nike started as a US distributor of Tiger Onitsuka in the 1960s allowing it to sell high-quality Japanese shoes while earning profits.
In the 1980s, it rebranded as Nike, Inc. as it and became a retail brand with the introduction of its iconic Nike Air technology because it couldn't design/manufacture/market the products the way it liked despite having exclusive rights to Tiger Onitsuka shoes in the U.S.
In the 2000s, Nike began to transition to a direct-to-consumer (D2C) model allowing customers to purchase products directly from Nike through its website and branded retail stores.
Nike did so to control its brand image and customer relationships better, gather customer data and be agile in responding to market trends
Nike's D2C strategy has increased sales, profits, stronger customer relationships, operational agility, and personalized experiences.

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Until next time,

Sush

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