Innovation First or Consumer First ? The Nike Brand Journey
Product First vs Consumer First is one of the most common quandary for a founder! Should I build the most amazing product that I know will solve my consumer’s problem or should I first take the time to identify who my consumers really are and what are their problems.
Historically companies have taken either one of the above approaches for initial success eg: Spotify took the innovation approach and built amazing recommendation algorithms for its users to discover new music.
On the other hand Invision – a design prototyping tool, was created to solve the pain points of a UX designer to get early feedback from stakeholders on a click through prototype.
“Spotify took an Innovation first approach where as Invision took a consumer first approach. Both of which gave these companies their initial success”
Although both approaches have worked for these companies for initial success, it is yet to be ascertained which strategy works in the long term.
We will however shift our focus on Nike – a goliath in the footwear industry, which has over the years cemented it’s place with not just the American buyers but also with international consumer. With a valuation of over 100 Billion dollars, Nike has stood it’s ground for 50 plus years but not without it’s fair share of ups and downs
Nike started taking shape during Phil Knight’s early days as a graduate student at Stanford with his paper about shifting shoe manufacturing to Japan from Germany.
This interest eventually led him to collaborate with his track & field coach Bill Bowerman and hence Blue Ribbon Sports was born in 1964 Initially Nike started out as a re-seller of Japanese shoes, but soon realised that that manufacturing their own shoes would be more profitable.
Nike’s Approach in the 1970s
Let’s take a look at Nike’s journey from being an innovation first shoe product to now a brand first company. In the 1970’s Nike introduced the ‘waffle outsole’ to track and field athletes, as history documents –caught like wildfire, and every athlete wanted a piece of it.
“We used to think that everything started in the lab. Now we realize that everything spins off the consumer.” –Phil Knight, founder of Nike
But the confidence of this led Nike to believe that they could also enter another very lucrative market – that of casual shoes and aerobic shoes a segment which was growing in popularity amongst American consumers, but unfortunately their entry into these segments proved unsuccessful and another player ‘Reebook’ became the shoe of choice amongst aerobics enthusiasts.
“We made an aerobics shoe that was functionally superior to Reebok’s, but we missed the styling. Reebok’s shoe was sleek and attractive” –Phil Knight, HBR Interview
Shift in Nike’s Approach
After the failure of its aerobics and casual shoe ventures, Nike decided to identify who was really it’s core customers, initially, they thought it was the top athletes of the world – be it tennis, basketball, track & field etc. But a deeper study of its sales help them realise that 60% of it’s buyers were not using the shoes for playing sports but just for wearing them outside
In the late 1980s Nike saw stupendous success with it’s “Just Do It” campaign, and a lucrative partnership with basketball superstar Michael Jordan. But something was different, Nike was no longer just looking at what the top athletes want but giving equal focus to its ‘average joe’ customer, who was equally important if not more to it’s revenue.
They started focusing on market research & user surveys, they started closely observing buying behaviour in it’s physical stores
“That (failure of casual shoes) whole experience forced us to define what the Nike brand really meant, and it taught us the importance of focus” -Phil Knight, HBR Interview
Nike’s D2C Ambitions
In order to be the brand of choice for GenZ who buy digitally, Nike has made a big push to focus on it’s D2C offering! By improving it’s global supply chain network and it’s core web platform experience Nike has continued to be a brand of choice amongst young and athletic. It was able to hit close to 16 Billion USD in sales in 2021 and is projected to atleast double that in 2022 despite the global economic slowdown.
“Nike continues to see amazing growth in digital retail, minting close 16 Billion USD in 2021 with an aim to double that number in 2022
The Nike story and it’s continued success is owed heavily to it’s powerful brand story of being not just a ‘shoe brand’ but a ‘fitness brand’ – with a conscious effort to make human emotion the centre of it’s story, Nike has maintained numero uno position in the shoes & fitness space!
