history-of-nike

History of Nike

Nike, Inc. is an American multinational corporation best known for the marketing and sales of footwear, sports equipment, apparel, and related accessories and services.

The company is also actively engaged in research and development in the aforementioned areas.

Nike was the brainchild of Phil Knight. While studying at the University of Oregon, Knight was a keen middle-distance runner and competed on the university track and field team.

Knight’s coach was Bill Bowerman, an intensely competitive man with a passion for tinkering with running shoes to optimize performance.

After graduating, Knight studied for an MBA at Stanford.

There, he wrote a paper arguing that running shoe manufacturing should move from Germany to Japan where labor was cheaper.

To put his idea to the test, Knight then traveled to Japan and struck a deal with Onitsuka Co. (now known as Asics) to export shoes to the United States.

Blue Ribbon Sports

As part of the deal, Knight founded Blue Ribbon Sports in 1964 to become the official U.S. distributor of Japanese running shoes.

Bowerman also supported the new venture by providing product design ideas in exchange for 50% ownership of the company.

Knight started by selling shoes from the trunk of his Plymouth Valiant at track meets.

Initial demand was promising, with many athletes preferring his shoes over the more expensive alternatives from Adidas or Puma.

Excellent sales results allowed the pair to hire their first full-time employee in 1965.

The first Blue Ribbon Sports retail store opened the following year in Santa Monica, California.

The ever-inquisitive Bowerman then proposed a new shoe design to Onitsuka that provided better support to runners.

Named the Tiger Cortez, the shoe became instantly recognized for its sturdiness, stylishness, and comfort.

Nike rebranding

Despite the success of the Tiger Cortez, relations between Blue Ribbon Sports and Onitsuka soured some years later.

Knight claimed the Japanese company was trying to wriggle out of an exclusivity deal to destroy his company.

Onitsuka responded by claiming Knight was selling his own version of the Tiger Cortez under a new line called “Nike”.

Perhaps inevitably, the two companies parted ways in 1971.

A subsequent lawsuit allowed both parties to sell essentially the same shoes under two different brand names.

Blue Ribbon Sports was then renamed Nike after the Greek goddess of victory.

The idea for the name came from Jeff Johnson, the first employee Knight and Bowerman had hired six years previously.

The trio then reached out to Carolyn Davidson, a design student at Portland State University.

She created the now infamous Nike swoosh logo for $35, which Knight was initially ambivalent about.

Twelve years later, Knight grew to love the logo and decided to hold a luncheon to honor Davidson’s contribution to the company.

He awarded her a gold Swoosh ring and an undisclosed amount of Nike stock as proper payment for services rendered.

Innovation, expansion, and endorsements

Nike continued to grow steadily during the 70s and 80s, with Bowerman developing the iconic, high-traction Waffle Trainer after noticing the grooves in his waffles during breakfast one morning.

Growth was also supported by clever advertising, with the 1988 “Just Do It” campaign becoming a household slogan.

In 1994, Nike struck a deal with NBA player Michael Jordan before he became one of the greatest basketballers of all time.

Despite being released in 1985, the Nike Air Jordans continue to be popular around the world.

In fact, the shoes netted the company $2.8 billion in 2018 alone.

Nike similarly maintains brand relevance today, partnering with high-profile sports stars in basketball, golf, football, baseball, and athletics.

Key takeaways

  • Nike was founded as Blue Ribbon Sports in 1965 by Phil Knight and Bill Bowerman. Knight was a former student of Bowerman’s on the University of Oregon track and field team.
  • Nike as a company name was suggested by the first employee Jeff Johnson, who claimed the idea came to him in a dream.
  • The Nike swoosh logo was developed in 1971 by college student Carolyn Davidson for the princely sum of $35. Knight was ambivalent about the logo at first but properly rewarded Davidson for her contribution to the success of the company in 1983.

Related to Nike

Who Owns Nike

who-owns-nike
The Knight family owns Nike. Indeed, the top individual shareholder is Travis A. Knight, son of Philip Knight, co-founder of Nike, with a 7% stake in Class A stocks and a 2.7% stake in Class B stocks. On the other hand, the Knight family also controls the company tightly through their Trusts and an LLC called Swoosh (the Nike logo’s shape is a “swoosh”). Through individual shares, Swoosh LLC, and Travis Knight’s irrevocable trust, the Knight family controls over 97.1% of Class A and 21.4% of Class B stocks.

Nike Business Model

nike-business-model
Nike follows a wholesale strategy combined with a very strong direct distribution. The company makes money primarily from footwear. As of 2022, over 62% of revenues came from footwear and 29% from apparel. The most successful Nike brand is the Jordan Brand, which in 2022 generated $5.2 billion in revenue. Nike is the master of demand creation and generation through its influencer campaigns, where athletes become an inspiration for everyday people.

Nike Strategy

nike-strategy
Nike leverages both a wholesale and direct distribution strategy. Indeed, while still in 2022, most sales come from wholesale distribution, in reality, since 2020, Nike has been ramping up its direct distribution through its NIKE stores and e-commerce platform (SNKRS).

Nike Revenue

nike-revenue-breakdown
Nike generated most of its revenue from footwear. Indeed, in 2022, Nike generated over $29 billion in revenue from footwear, over $13.5 billion in apparel, $2.35 billion in equipment, and over $1.6 billion from the Converse brand.

Nike Financials

nike-financials
Nike generated over $47.7 billion in revenue and over $6 billion in net profits in 2022, compared to over $44.5 billion in revenue and almost $5.8 billion in 2021.

Nike Mission Statement

nike-vision-statement-mission-statement
Nike’s vision is “To bring inspiration and innovation to every athlete in the world.” At the same time, its mission statement is to “do everything possible to expand human potential. We do that by creating groundbreaking sports innovations, by making our products more sustainably, by building a creative and diverse global team, and by making a positive impact in communities where we live and work.”

Nike SWOT Analysis

nike-swot-analysis

Nike Competitors

nike-competitors

Jordan Business Model

jordan-business-model
Jordan follows a demand generation business model, where its iconic brand works as a propeller for the sale of its footwear and apparel, that in 2022 generated more than $5 billion in revenue for Nike or more than 10% of its total revenue.

Converse Business Model

converse-business-model
Converse is an independent brand part of Nike’s family of brands. Indeed, Converse generated $2.35 billion in revenue in 2022. And like Nike, it follows an heave Wholesale distribution strategy, where most of its sales are made, through footwear. However, Converse follows also a direct distribution approach where it sells directly via its monobrand stores.

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