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.”
The early history of Nike
The early history of Nike is quite compelling, and it moves along three phases:
The turning point for Nike came when it mastered how to close brand partnerships with athletes.
The company paid $5,000 to distance runner Steve Prefontaine to run in the company’s shoes.
A tiny deal compared to the ones it closes now.
Steve Prefontaine represented the athlete who crystallized the approach that Nike would use later on to generate demand for its products.
Today (as I’ll show you), Nike has scaled this approach, but at the time, it had to re-invent it from scratch, as athletes didn’t know who Nike was (the Nike brand shoe was launched in 1972).
Prefontaine was also a pupil of Nike’s co-founder, Bill Bowerman.
Bill Bowerman was a coach at the University of Oregon; he was the product guy, always experimenting with new shoes and making technology a key component of the shoes.
Bill Bowerman opened the way to technology as a key component to differentiate the product, thus a key element of Nike’s marketingstrategy for decades.
Yet, the most staggering part of Nike’s demand generation is the iconic side.
In 1984 Nike closed a deal with basketball player Michael Jordan.
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.
Now, Nike has been doing it for decades, leveling up its game, but initially, it did it with minimum budgets.
Breaking down Nike’s vision statement
Nike’s vision statement can be summarized as follows:
To bring inspiration and innovation to every athlete in the world
Therefore, there are three elements to Nike’s vision and mission:
This is at the core of the Nike business model. Indeed, Nike spends billions of dollars yearly to boost product demand.
Innovation
Nike positions itself as an innovative company that is willing to innovate its products over and over.
This is another critical element, as innovation implies the substitution of the old for the new.
Thus it enhances its sales over time; this is part of Nike’s flywheel
To every athlete: Who’s an athlete for the company? According to Nike, “if you have a body, you are an athlete.” This connects to the inspirational element.
To do everything possible to expand human potential. We do that by creating groundbreaking sport 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.
In this mission, we can extract three key elements:
Human potential
Once again, Nike has to inspire, and it needs to leverage consumers’ psychology to be always on top of their minds when making the purchase of a sports item. Making a person believe it can get better by wearing the shoe is part of that strategy.
Groundbreaking sports innovations
If you innovate, you can come up with new products, and those products will generate more demand
To use the power of sport to move the world forward. We believe in a fair, sustainable future—one where everyone thrives on a healthy planet and level playing field.
It is important to remark that when I say Nike, I refer to the company which owns several brands in six categories Running, NIKE Basketball, the Jordan Brand, Football (Soccer), Training, and Sportswear (our sports-inspired lifestyle products).
To have an idea of how expensive it can be to demand generation, one of the critical strategies that Nike uses is to stipulate endorsement contracts with athletes.
As you can see from the table above, until 2023, Nike has over $10 billion planned for spending on those endorsement contracts.
Nike’s business model and strategy are based on creating demand for its products. Indeed Nike combines product development and demand creation to build a footwear empire that generated over $46 billion in revenue in 2022. Yet, this was based on a demand creation strategy, in which Nike spent over $3.8 billion in deals with athletes and demand creation to generate demand.
Those amounts might be way higher over the next years.
The amounts listed for endorsement contracts represent approximate amounts of base compensation and minimum guaranteed royalty fees we are obligated to pay athlete, public figure, sport team and league endorsers of our products. Actual payments under some contracts may be higher than the amounts listed as these contracts provide for bonuses to be paid to the endorsers based upon athletic achievements and/or royalties on product sales in future periods. Actual payments under some contracts may also be lower as these contracts include provisions for reduced payments if athletic performance declines in future periods.
Nike objectives
Like most companies, one of Nike’s primary objectives is to make a profit and ensure its long-term viability.
More broadly speaking.
However, there are certain business objectives that define results or outcomes the company endeavors to meet as it grows.
Business objectives are also dictated by a company’s particular strengths, weaknesses, opportunities, or threats and should define how it acts or behaves in the market.
In most cases, objectives do not change until a company’s circumstances change.
Let’s now return to Nike and analyze its four key objectives below to get a feel for how the company intends to position itself moving forward.
The company spends vast amounts of time liaising with professional sports athletes and consumers to increase performance and deliver a better product experience.
The Nike Sports Research Lab (NSRL) in Beaverton, Oregon, is a research and development institute that opened in 1980. It has been responsible for innovations such as:
Cold-weather running apparel that provides temperature regulation and visibility in low-light conditions.
Nike React technology that provides better cushioning to runners while also being lightweight and delivering better energy returns.
GO FlyEase sneakers are lace-free, hands-free shoes for consumers with disabilities.
Make products more sustainably
Nike’s sustainability objectives are based on more than 30 years of research into reducing its environmental impact.
A 70% reduction in greenhouse gas emissions in owned or operated facilities.
A 50% increase in the use of environmentally preferred materials across cotton, leather, rubber, and polyester.
A 10% reduction in per-unit manufacturing waste, is an ambitious goal that encompasses manufacturing, distribution, packaging, and even headquarters.
Build a creative and diverse global team
Nike believes that diversity and creativity in the workplace are intertwined and accelerate innovation.
The company also uses its love of sports to overcome cultural barriers and bring people together.
This is particularly important for Nike as a global company whose teams share and work toward a singular goal.
To help Nike become a leader in diversity and inclusivity, it has set the following 2025 targets:
At least 45% of global VP positions and above are occupied by women.
At least 35% of the U.S. corporate workforce is occupied by racial and ethnic minorities.
30% representation of racial and ethnic minorities at the Director level and above in the United States. Minorities include American, Indian or Alaskan Native, Asian, Black or African American, Hispanic/Latino, Native Hawaiian, or Other Pacific Islander.
Make a positive impact on communities
Nike serves local communities all over the world through the power of sport.
The Nike Community Impact Fund (NCIF) funds local programs to get kids active in communities where employees live, work, and play.
In Portland, Oregon, where Nike headquarters is located, this number increases to $25,000.
Grants are awarded to local organizations that make a positive impact on the community via sports, play, and other initiatives.
The NCFI also operates in the southern states of Tennessee, Mississippi, and Arkansas to allow children from disadvantaged areas to realize their potential through sports.
The Jordan Brand made Nike over $5 billion in revenues in 2022.
Jordan is one of the most influential brands within Nike. Indeed, the Jordan brand passed $5.1 billion in revenue in 2022, compared to almost $4.8 billion in 2021. The Jordan brand represents 10% of Nike’s total revenue; this has become 1/10 the size of Nike’s business model, which also comprises Converse as a separate brand.
Nike invented influencer marketing way before social media.
And the way Nike did it with the Jordan Brand really creates a business impact.
It’s a cultural phenomenon that defines various generations of our times.
This is what demand generation is about.
When you build up a business model from scratch, the most important element to start with, and the element that will work as a glue for your overall business, is value.
And value is comprised of two critical elements: one is about how you help me practically solve an issue, and another one is about perception and desire.
At a commercial level, the latter is as important as the former to enable a brand that survives in the long run.
Key takeaways
Like most companies, one of Nike’s primary objectives is to profit and ensure its long-term viability. However, business objectives define results or outcomes the company endeavors to meet as it grows.
One of Nike’s key objectives is to create innovation in sports which it does in the Nike Sport Research Lab (NSRL). The company has also set several ambitious environmental targets to meet its sustainability objectives.
With a global workforce, Nike also realizes the importance of diversity and inclusivity in the workplace. Moreover, the company seeks to positively impact communities and improve outcomes for children through sportss and play.
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 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 leverages both a wholesale and direct distributionstrategy. 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 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 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’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.”
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 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 distributionstrategy, 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.
Adidas’ mission is “To be the best sports brand in the world.” Adidas AG is a German multinational initially founded in 1924 by Adolf Dassler who developed spiked running shoes out of his mother’s house. Today, the company is the largest sportswear producer in Europe and the second largest globally behind rival Nike.
Tesla’s vision is to “create the most compelling car company of the 21st century by driving the world’s transition to electric vehicles,” while its mission is “to accelerate the advent of sustainable transport by bringing compelling mass-market electric cars to market as soon as possible.” Tesla used a transitional business model as its ecosystem grows.
Amazon’s mission statement is to “serve consumers through online and physical stores and focus on selection, price, and convenience.” Amazon’s vision statement is “to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices.”
Apple’s mission is “to bring the best user experience to its customers through its innovative hardware, software, and services.” And in a manifesto dated 2019 Tim Cook set the vision specified as “We believe that we are on the face of the earth to make great products and that’s not changing.”
Netflix’s core mission, strategy, and vision are that of “improving its members’ experience by expanding the streaming content with a focus on a programming mix of content that delights members and attracts new members.”
Coca-Cola’s Purpose is to “refresh the world. make a difference.” Its vision and mission are to “craft the brands and choice of drinks that people love, to refresh them in body & spirit. And done in ways that create a more sustainable business and better-shared future that makes a difference in people’s lives, communities, and our planet.”
Starbucks highlights its mission as “to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.” And its vision is to “treat people like family, and they will be loyal and give their all.”
Microsoft’s mission is to empower every person and every organization on the planet to achieve more. With over $110 billion in revenues in 2018, Office Products and Windows are still the main products. Yet the company also operates in Gaming (Xbox), Search Advertising (Bing), Hardware, LinkedIn, Cloud, and more.
Walmart’smission can be summarized as “helping people around the world save money and live better – anytime and anywhere – in retail stores and through eCommerce.” While its vision is to “make every day easier for busy families.” Walmart defines “busy families” as the bull’s eye of its business strategy.
Nike vision is “to bring inspiration and innovation to every athlete in the world.” While its mission statement is to “do everything possible to expand human potential. We do that by creating groundbreaking sport 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.”
Google mission statement is to “organize the world’s information and make it universally accessible and useful.” Its vision statement is to “provide an important service to the world-instantly delivering relevant information on virtually any topic.” In 2019, Sundar Pichai emphasized a renewed mission to allow people “to get things done!”
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
