Nike - Comparative Advantage

Introduction

In 1996, Nike set up a separate unit, Nike Golf. Nike marketing executives were asked to look into the future for the company's next big sponsorship. Everyone was waiting for who Nike would sponsor, following their success with Michael Jordan. They decided to sponsor a young top amateur by the name of Tiger Woods. Tiger had just won the NCAA individual golf championship and became the first golfer to win three consecutive U.S. Amateur titles. Tiger Woods saw that he had a great future ahead of him in the golf world and dropped out of Stanford University and turned pro. At the time Tiger Woods joined Nike, the company was a $120 million business that was primarily based on apparel and footwear sales (Card, pp. 133-139). Today, Nike golf has become a full line golfing company and with 2008 annual revenue of $720 million. Nike believed the idea to tag on to a promising new athlete was extremely successful with Michael Jordan, and wanted to build a similar image with Tiger Woods and golf. Tiger's first contract with Nike was for $40 million dollars, more than he had ever won playing golf. It was a 5- year contract but by 1997 Tiger proved his worth by winning the Masters. After that Nike had found its image (Brown, pp. 326-336).

Brand Image

Golf was a very traditionalist sport and even the world's most recognizable sports brand was not guaranteed success. Golf was not a sport where people walked around in sneakers and sweat suits. Consumers were not interested in wearing the latest edition of golf shoes in a bright new color way. Nike's usual formula of footwear and apparel did not apply. Technology was the key to success in the sport. Golfers were serious sportsmen who were only interested in products that could aid them in their game. Nike was a company with a household name but no technology as of yet. Nike did have great marketing and the money to back it up and so they made the decision to step on to the market hand in hand with a new face and once again Nike made yet another smart move (Bradshaw, pp. 45-8-56).

One of the first Nike commercials featuring Tiger Woods was a montage of old family videos and clips of his amateur career featuring a repetition of the phrase: “Hello World.” Throughout the commercials they featured all his achievements and a remark about how he was still not allowed to play some golf courses due to the color of skin. The marketing implications were genius for Tiger and for Nike. They were declaring themselves but also setting themselves apart. Nike knew this was necessary since it wasn't a traditional golf company like Titleist and needed to bank on its innovativeness. They were attracting amateur golfers that would be willing to buy their apparel and building on their well-known brand image while simultaneously attaching themselves to professionals. When Tiger won the Masters, the following year, Nike knew they were ...