Thursday, September 30, 2010

Just Did It in India?

At the turn of the millennium, an obscure small budget film, Hyderabad Blues, that was more home video than motion picture took India by storm and announced the arrival of its talented director Nagesh Kukunoor. Coming from a stable middle class Telugu family, he took the obvious route and became an engineer. Then Nagesh went to realize the Hyderabadi dream of working the ‘States’ in an IT firm. However, by his own admission, it was a mundane existence and he eventually took a leap of faith to return to India to make films. In his own words, it was a huge decision given that “film making is not exactly revered in the educated Indian society, occupying one secure notch above prostitution.” So, what kept him going? Here’s what he says: “Half the battles you fight are in your head. I told myself this repeatedly. I had other mantras of course. One I stole - Just do it!

A tag line (albeit, arguably the most famous tag line in the world) became a mantra for a man in need. Now that’s what I call powerful branding. Forbes magazine agrees. According to the Forbes magazine, with a value of $10.7 billion, the Nike brand is the most valuable among sports businesses. The growth and profitability generated by Nike's intangible assets, like its globally recognizable swoosh logo and "Just do it" slogan are reflected in its price-to-book ratio of 3.4, which is 50% better than the overall market. Of the company's $18.4 billion in revenues last year, 90% was attributable to merchandise emblazoned with either the Nike or Nike Golf logos. The company also has the distinction of being the only sports apparel maker whose worldwide market share has increased since the start of 2008, according to industry tracker Sporting Goods Intelligence.

Back in the day: Nike was founded in 1964 with an investment of $500 by Phil Night and Bill Bowerman and was originally christened Blue Ribbon Sports (BRS). Brand Nike was launched in 1972 and the company officially changed its name to Nike, Inc in 1978. The company took its name from the Greek goddess of victory, Nike and victory has been sweet for the company. The Nike "Swoosh" is a design created in 1971 by Carolyn Davidson, a graphic design student at Portland State University. She met Phil Knight while he was teaching accounting classes and she started doing some freelance work for BRS. BRS needed a new brand for a new line of athletic footwear it was preparing to introduce in 1972. Knight approached Davidson for design ideas, and she agreed to provide them, charging a rate of $2 per hour. In June 1971, Davidson presented a number of design options to Knight and other BRS executives, and they ultimately selected the mark now known globally as the Swoosh. Davidson submitted a bill for $35 for her work. (In 1983, Knight gave Davidson a gold Swoosh ring and an envelope filled with Nike stock to express his gratitude!)

Lady Logo: The logo represents the wing of the Greek Goddess. The Nike logo is a classic case of a company gradually simplifying its corporate identity as its frame increases. The company's first logo appeared in 1971, when the word "Nike," the Greek goddess of victory, was printed in orange over the outline of a checkmark, the sign of a positive mark. Used as a motif on sports shoes since the 1970s, this checkmark is now so recognizable that the company name itself has became superfluous. The solid corporate logo design check was registered as a trademark in 1995. The Nike logo design is an abstract wing, designed by Carolyn Davidson, was an appropriate and meaningful symbol for a company that marketed running shoes. The "Just Do It" slogan and logo design campaign communicated such a strong point of view to their target market that the meaning for the logo design symbol evolved into a battle cry and the way of life for an entire generation.

Surely there cannot be more than a handful of people across the world who do not recognize the Nike Swoosh logo given its colossal arsenal of sports superstars such as LeBron James, Roger Federer, Rafael Nadal, Maria Sharapova, Tiger Woods and Wayne Rooney to name a few. The list is pretty long and exhaustive. Until recently cricket had remained outside the Nike sphere of influence, especially in India (though in the early part of the millennium, Australian legend Shane Warne had started a fashion fad by sporting a swoosh earring.)

Indi-yeah! Nike corrected that about four years ago. In November 2006, for the first time, Nike's logo appeared in connection with an "Indian" sport: cricket. (While the English claim to have invented it, us Indians have turned it into a religion and a conglomerate!) Nike wrested the rights to become the official kit sponsor for the Indian cricket team for the next five years, beating arch-rivals Reebok and Adidas; it paid Rs 196 crore to the Board of Control for Cricket in India for the privilege. The ‘swoosh’ has finally swung, and how.

The American sports footwear and apparel giant has had a presence in India for close to a decade, but it's consciously held on to its "international" image. Where Sachin Tendulkar and Dhanraj Pillai were endorsing rivals' products, Nike's ads stuck to Maria Sharapova and Ronaldinho. India didn't really figure in the company’s marketing and promotion activities. That changed in 2006 and thus changed the rules of the game of the Rs 1,100-crore Indian sports footwear and apparel market. All these years, market leadership has eluded Nike in India. This is the only market where Reebok is No. 1 (40% marketshare), followed by Adidas (20%). Nike's 15% share is a distant third (source: Technopak Advisors). The company finally figured that it is critical to connect emotionally with customers. And in a cricket-crazy nation like India, you don't need to think too hard about how to do that!

Incidentally, Nike had signed with All India Football Federation in 2005, a year earlier than the BCCI deal. Globally, football is the biggest category for Nike and the company had seen a very high growth rate of this category in India also. That was the basic reason they tried finding a person like me who could grow the brand’s visibility in the football domain. Effectively, Nike’s objective was to create growth for football while cricket was an opportunity to be leveraged.

MS = E & S: Today the company has a host of Cricketers on its roll including Zaheer Khan, Virat Kohli, Dinesh Karthik, Murali Vijay and Sreesanth along with top Footballers including Bhaichung Bhutia, Sunil Chetri) and Renedy Singh. This is in line with its traditional Marketing Strategy – globally Nike depends heavily on its Endorsements and Sponsorships to promote itself. According to Reuters, Adidas has the second largest budget for sponsorships among sports gear companies, but spends about 25% less on it than Nike does. A Reuters report estimated Nike spent $260 million on sponsorships in 2008.

Celebrity Endorsement: By tying its products to successful athletes in many sports, Nike has succeeded in boosting its image and creating the impression that the shoes or the clothes play a role in the success of the athlete. Nike went quickly to the lead in basketball shoes following its connection to Michael Jordan and the 1984 Air Jordan shoe line. The company vaulted itself into the top ranks of golf equipment manufacturers when it built its complete product line around Tiger Woods.

The MO was identical when Nike's first cricket shoes were introduced. The Air Zoom Yorker was launched in September 2006 by pace bowlers S Sreesanth and New Zealand's Shane Bond, who were also been signed on brand ambassadors for the product. A shoe for batsmen, the Air Zoom Opener, followed.

Besides, the BCCI deal allows Nike to launch official cricket merchandise such as replica team T-shirts and jerseys, kit bags and backpacks. That's not just a huge branding opportunity, it's a potential money-spinner: retail consultants estimate the licensed merchandise business could bring in more than $20 million in the first year itself.

Sponsorships: Nike takes its sponsorships to a personal level through the sponsorship of clinics and camps. The company sponsors youth golf schools, basketball camps and track and field events as a way of making its name synonymous with sports success in the eyes of the young participants. These grass roots events are the company's way of taking its products out to the consumer.

In India too, since December 2005, it tied up with coaching schools like the BCCI's National Cricket Academy. The academies will work with Nike to understand the product requirements of the players. It's a win-win situation for both the company and the academies. While Nike creates brand awareness and has a shot at creating loyalists at a young, impressionable age, the academies' need for equipment such as shoes and training gear is looked after by the company.

Strategy Risks: However, there is a risk when companies like Nike attach themselves to celebrities. When one of its athletes makes a mistake either on the field or off, the company's reputation can take a hit too. The issue came up in 2009 when Woods was involved in a major personal scandal. Other sponsors dropped the golfer but Nike chose to continue to sponsor him. In India too while Sreesanth’s controversies may have damaged the brand appeal somewhat.

Target audience: Catch 'em young! In India, players like Reebok and Puma are looking at extending the sports product line as a lifestyle brand for the 17-35 years age group. Also, Reebok is looking at increasing its exclusive women's stores (it also has Bollywood star Bipasha Basu as its brand ambassador – it’s got its cricket covered too in the form of Captain Courageous Dhoni), 70% of the merchandise in Puma stores is lifestyle and not sport-related and Adidas too has a lifestyle variant store format.

But when Nike talks of young customers, it means young. Across the world, its core audience is between 12 and17 years, and it sees no reason why India should be any different. It continues to target this age group teeming with sports acolytes of cricket and football with its sports offerings – in fact, it has also introduced the Tiger Woods and Roger Federer exclusive lines in India too – Sporty Spice, eh? Also, it has taken its brand to the audience on social media sites such as Facebook with exclusive aps such as the Jersey creator.

My take: How big is the brand in India? Well instead of boring you with more numbers, consider this. Aamir Khan’s branding acumen is legendary in Bollywood and his “autorickshaw branding” concept for his movie 3 Idiots was widely hailed as innovative. The film cleverly used the auto rickshaws in Mumbai to display the slogan "Only for 3 Idiots" denoting the capacity of the carriage – truly ingenious? Well, the power of the Nike brand ensures that the company achieves the same without spending a paisa and moving a muscle. In Mumbai, where nearly 90,000 taxis roam the streets and the drivers often go to great artistic lengths to make their cabs stand out. Brightly colored graphics, hand-cut from reflective adhesive material, liven up taxis’ exteriors throughout the city, reports the hip graphic-design magazine Creative Review, in the form of favorite gods, elaborate geometric patterns and the logos of aspirational brands such as Nike.

Still not convinced? Well remember the old saying ‘imitation is the sincerest form of flattery’? Take a walk down Linking Road or Fashion Street in Mumbai (and their equivalent locales in other cities) – the abundance of fake Nike shirts and shoes and ‘replica’ Team India and EPL/Football Jerseys would be an apt metric of the brand’s popularity – else the pirates would not waste their time on making’em!

With shoe flinging now in vogue (just ask Omar!), all I can say is, if you chuck one at me (perhaps after reading this post), just make sure it is Nike!