Ellie Kaczkowski
Nike is known for supporting athletes through their career with both paraphernalia, and big endorsement deals with professional athletes worth millions of dollars. The most recent deal with Colin Kaepernick led to a major disagreement in not only the sports world but the economy as well. Nike released a commercial played during the first game of the 2018 season where Kaepernick narrated his ideology that no matter what people say you can never dream or act too crazy. Due to his recent scandal in the NFL people considered this as Nike siding with Colin’s political stance.
Before Nike could produce the controversial commercial they had to weigh the tradeoffs that this commercial would cost them; consumers that did not agree with Kaepernick's campaign would likely stop buying products from Nike out of personal opposition. While this could be a problem it is also giving them free publicity as their brand is being highlighted in the media with even the president weighing in. When the commercial was released, according to the Huffington Post, the stock plummeted in hours dropping over 3 percent, as seen in the image. The advertisement was released September 4th; people were destroying Nike products and boycotting the stores. While Nike did take an immediate hit, the consumers defacing their goods did more damage to themselves, as they lost the money they had spent on the products without getting a refund from Nike. This hurts both the producer and the consumer as the consumer stops buying the products and the company than loses the profit destroying the market.
After the initial loss of profit, Nike amassed a huge amount of free publicity both good and bad; people shared the story across all platforms and this boosted the profits with Nikes new market value being up $6 billion. People that agreed with Colin Kaepernick and Nikes political point of view used to advertisement as a reason to purchase more from the company showing their support for the cause. It also increased the amount of people wanting to have stock in the company as they shared political sides.
Nike used politics, a driving force in the United States to decide whether the commercial would be successful. They did have trade offs as they did sacrifice customers that will no longer patrion the store but in turn developed a whole new customer base. While it may have shifted the market against them temporarily it was a positive decision for their business in the long run and for the people that invested and worked for them. It will ensure that the products will stay in demand and using the political angle gave them word of mouth recognition with people that may have not normally associated with the brand.
Hershman, Brett. "Nike's New 'Dream Crazy' Ad Is Narrated By Colin Kaepernick (NYSE:NKE)." Benzinga. N.p., 15 Sept. 2018. Web. 25 Sept. 2018.
https://www.benzinga.com/news/18/09/12310279/nikes-new-dream-crazy-ad-is-narrated-by-colin-kaepernick
Mosbergen, Dominique. "Nike's Market Value Surges By $6 Billion After Controversial Kaepernick Ad." The Huffington Post. TheHuffingtonPost.com, 23 Sept. 2018. Web. 25 Sept. 2018.
https://www.huffingtonpost.com/entry/nike-market-value-colin-kaepernick_us_5ba7693ae4b0375f8f9dcb09
Rucker, Derek. "Nike - Dream Crazy - A Rich Opportunity To Learn About Brand Management In The Digital Age." Forbes. Forbes Magazine, 14 Sept. 2018. Web. 25 Sept. 2018.
https://www.forbes.com/sites/derekrucker/2018/09/06/nike-dream-crazy-a-rich-opportunity-to-learn-about-brand-management-in-the-digital-age/#5c4765db3c4b
The most important part of this post is, not only the fact that Nike's "word of mouth recognition" increased after the commercial, but the fact that people actually were setting their Nike shoes on fire in attempt to boycott a multi-million dollar corporation. By setting their shoes on fire, they were not damaging Nike in any way. They had already compensated for setting their shoes on fire by sending their money to Nike by purchasing their product. Although stocks may have dropped initially, Nike quickly got a popularity boost due to the large amount of commotion coming from the commercial, giving them even more popularity in the longer run.
ReplyDeleteNike used political view which would seem to hurt them because politics is divided in the U.S. and they shouldn’t be involved in shoe companies. When sponsoring an athlete, they shouldn’t be advertising political views in ads about shoes, but rather promoting the shoes. Although they may gain some supporters, they will definitely lose some too. Nike is a big company, and even though losing some supporters may not seem like a huge deal, there may be more people who find another brand and convince others that the brand is better to try and draw away from Nike. There honestly is no reason that political views should be involved in brand advertisements.
ReplyDeleteI agree with you that while the commercial temporarily negatively impacted Nike, in the long run it will do more good than harm for them. An article by USA Today titled “Just watch it: Nike's Colin Kaepernick TV ad is inspirational, not controversial”, also agreed with the point that you made. The article brought up the point that Nike is most likely considering who their customer will be in the next 5 or 10 years rather than who their customer is now. The customer they are thinking about is our generation (and those to come) who’ve grown up in a world where politics is a part of almost everything in our day to day lives. Nike hopes that our view of politics will be more kind and open minded than the generation before us, and if this is true Nike’s ad will hopefully resonate with this generation and generations to come, giving Nike an even greater consumer base in the near future.
ReplyDeleteJacob Dundon- Although the hit that Nike took affected their profits for a short time, they used that new fan base that thought they were bringing Nike down to actually build themselves back up, but once that new fan base realise's what Nike is doing it will be to late because that new fan base will be in a pickle because they already started a small revolution that isn't going to work in the long run so the only other choices would be going on Nike's side or staying neutral. There really isn't another way they can hurt Nike.
ReplyDeleteAgastya,
ReplyDeleteNike's new commercial has sparked conflict amongst both the producer and the user. It is beneficial to consider the Nike shoes are not only sold in the United States. Other people in different countries who agree with the message can replace the consumers that have been lost in the United States. For people in other countries the ad is not about Colin Kaepernick but it's about motivation to keep doing what they should. Although I have to agree that the slogan "Believe in something. Even if it means sacrificing everything" is something that a gambler might say. But it can reasonable be inferred that the slogans makes up a very little percentage of the reason against Nike products. Since people are buying products not by how they are but by their political views. In the same way they should ask when buying their new toaster, what are its views on abortion?
This was a huge internet topic for almost a month. I remember scrolling through Instagram and seeing all different posts/ memes about Nike and I was wondering what was actually going on. After reading your post, I agree with you that Nike actually profited from all this internet drama in the end. The reason being, if people were to protest, burn their shoes, post memes about the company then that would just provide more advertisement for Nike giving others the chance to explore more into this topic and give more stocks to this company. After the commercial was out, not only did Nike risk the chances of this commercial going the wrong direction towards lower stocks but they also risked the chances of getting new followers/ consumers to buy their products. As of today, Nike is at their all time highest point in business so far that their risky chance has boosted them further into the future than they ever would have imagined. My final question would be, should the risk something like this again in the future or stay put at where they are at right now?
ReplyDeleteThe Nike and Kapernick ideal has affected a lot of people’s decisions. People have been burning them and some people save them. I feel like people shouldn’t just burn them, they can still wear them even though they don’t have the same beliefs or they could donate them to someone who doesn’t have shoes. Yes there is a lot of drama but according to the blog it even says they’re at a all time high of like 8 billion dollars which a couple pairs of shoes that someone bought won’t affect them at all. They took a initial hit and now they’re better than before so burn just donate. Or if you still like the shoes or company wear them. This was a really good post and gave lots of information.
ReplyDeleteI agree with the fact that most people are now looking at Nike with two different views. Most people believe that Kaepernick is becoming an inspiration when it comes to dreaming or acting too crazy not only that most people have been destroying most of the Nike products because people are also against Kaepernick from what he did playing in the NFL (sitting and kneeling during the national anthem and protesting about police brutality) Due to the fact Kaepernick was protesting, many people were against Kaepernick and some were “with” him believing he’s making a statement and could be right about something.
ReplyDeleteI agree with you in the fact that the consumers hurt themselves more than they hurt the company. The consumers already bought the Nike shoes or apparel, so destroying it wouldn’t do anything to hurt the company. Even though Nike did take a direct hit right after this commercial, it most likely didn’t even phase them. They’re a billion dollar company, and the publicity they’re getting from this commercial can only drive in more customers. Sure, there will be customers that deface Nike and won’t buy the products anymore, but they’ve already bought the products that they’re destroying. They already gave Nike more money and there’s no way they’re getting refunds. In the end, they made more profit on this commercial that what they lost.
ReplyDeleteLuke Lochner
ReplyDeleteGoing along with the burning of Nike products, the people that do burn them cannot get the products they burn back and when this whole thing subsides most of them are bound to go out and buy more Nike gear. As it was a bad thing that Nike products are getting burned it is good for the company because it will causes people to need to repurchase some Nike items which will also boost profits. There was that slight decrease for a few days but after that the numbers began to increase and seem to be staying near that area for at least a few more weeks.
I loved reading this article because it really brought a new view to this commercial and the economic stand points. I really only thought about it on the surface level, but am now thinking about it more. I think it’s crazy how much the stock market can drop in just a few hours and how does this affect the economy. I also think it’s very interesting and kind of disappointing that something that arises so much hate and anger towards a company actually benefits them because their market value grows. Interesting how good or bad publicity can make your market values grow…
ReplyDelete-Anika
I remember seeing a lot about this when it first happened on Twitter and thinking it was really stupid that people were burning their Nike products. I think you did a great job explaining how that form of protesting not only didn’t hurt Nike, but helped them out in the long run, and only really cost the protesters.
ReplyDeleteNike’s commercial was in the hot seat for a long time, and it still is widely debatable. The fact that Nike had Kaepernick on a commercial for their company definitely turned some heads, as what Kaepernick did went against what many people believed in. I also never thought about how the consumers are hurting themselves more than the company is losing profit. All of the money they spent on those products is wasted, and even though Nike won’t get their money again, there are still plenty of people who support Kaepernick or have no major opinion, and will continue to buy from them. After the commercial was aired, the profit loss right after is assumed, as the commercial was a little risky to air after all of the controversy and debate.
ReplyDeleteThroughout the last few months, Nike has really been the headline of all sport outfitters. I agree that even though this hurt Nike at first and acquired a lot of backlash, in the next few years it won’t really hurt them and isn’t hurting them now. Nike is more focusing on the future generation of customers rather than the customer base right now. All of the shoe burning and public attention really just boosted the company and didn’t affect them at all. Nike will continue to be one of the most recognised sports brands. My question is will these risky decisions help or hurt Nike in the future as they are inevitably going to have to make more trend based choices.
ReplyDeleteAlthough Kaepernick and nike have made consumers change their minds about the brand, but the consumers have already spent their money on the products made from the brand. There basically is no purpose of burning the shoe or clothing in which their money has already gone towards nike. In this instance they are just looking foolish and burning their own stuff. The main part of nike of a brand is to invest money to gain a profit, they did that well and by people burning clothes is just sparking anger between consumers.
ReplyDeleteWith the argument and topic that was written about Nike, people believe that starting a campaign that praised Colin Kaepernick was morally wrong. He hasn't acted the best in the past in terms of kneeling for the national anthem which gives people the idea the Nike supported that ideology and not the actual campaign slogan or idea. This post is really insightful because it gives information about a national topic that is involved in every corner of the USA. The fact that people are destroying their Nike equipment over this commercial also astonishes me. All the lengths people go to, just to prove a point that doesn't even get across. Nike knows that they grabbed the attention of new customers and lost some old ones, however they are going to have to live with that trade-off.
ReplyDeleteWhen Nike came out with this ad, it gave me goosebumps to see how such a popular company could support such an unpopular decision in America. The way the commercial was able to move so many people, I think played a huge role in its success. Nike must have done a cost/benefit analysis to determine how many customers would stop buying the products, and how many would keep/start buying these products. I still find it very interesting that it went down 3% right away, then skyrocketed into making 6 billion dollars. I’m still interested to see if any NFL team will sign Colin Kaepernick after this whole situation.
ReplyDeleteI do not believe that nike was endorsing Colin Keapernick to side with him and not the NFL because nike is responsible for making products like jerseys and what not for the nfl so I do not think they would purposely cause conflict directly towards the nfl. But i do believe that they did sponsor keapernick because they knew it would be controversial and end up good in the long run for themselves.
ReplyDeleteBesides the fact that Nike used the campaign to eventually get new costumers who agree with their campaign, they also used it as a way to further support their company motto, "Just Do It". With the campaign and quote that Kaepernick did for Nike, it was a very similar mindset to what their company believes in, just trying your best and pushing through no matter what, and you will successful. Even thought the company took a huge risk on the add, and its initial response was not good, the aftermath was a complete success. The company has boosted sales, with new supporters for their brand, and a more cemented legacy that their company continues to improve.
ReplyDeleteI believe that Nike made a wise decision to send out this campaign even though they knew they were going to get backlash. It must have been a very difficult decision because of all the tradeoffs they had to think about but in the end it really did benefit the company more than some consumers. For me, I believe what Colin had done during his time in the NFL was disrespectful but just because he was in a Nike campaign, I wouldn’t burn my Nike shoes or cut of the swoosh off of my socks. I agree that this really is affecting the consumer in a negative way since they might have wasted their own money if they overreacted but it seriously gave more revenue to Nike itself as now more people are talking and debating about the issue. Do you think Nike’s choice to send this campaign was a good idea since it had gotten more publicity or do you think it was a bad idea since sales had dropped so significantly.
ReplyDeleteWhile I agree that Nike made a very bold move with this ad I don’t believe that the trade offs could be considered trade offs. Nike is main brand company and have been making millions of dollars for years and that’s simply just their main goal now, to keep making more money. From a business point of view you never want to suggest your companies opinion on curtain points because not all of your customers share the same beliefs and will ultimately lose business. Now this is exactly what happened with Nike but could they have done this on purpose? They’ve been a company for years and most likely have a good team of consultants to go over their decisions, so what I’m trying to say was Nike was expecting/wanted this to happen. They knew they would lose some customers but also knew a lot of them would agree with the ad and love Nike even more it would also bring in new customers who follow Kaepernick's point of view and would see that Nike is as well. Yes there were technically trade offs but the amount of support they are receiving from past customers and new ones now highly outweigh the negatives. Also let’s be honest this is already dying down and everyone will forget about before Christmas is even here, Nike will recover because of how successful they are.
ReplyDelete- Noah Schlaikowski
I personally think that Nike did a good job weighing out the trade offs with the benefits because while they may have lost a few customers, the publicity they gained most likely brought in many more new customers to the brand. Nike knew that taking a risk such as this one would either strongly benefit them or hurt them and lucky for them the risk payed off. I agree with you that people burning their Nike products only hurts themselves, as a couple people burning their shoes and filming it isn’t gonna do much to hurt a multi-billion dollar company.
ReplyDeleteDespite the backlash and possible decrease in the demand on Nike products, I believe Nike make the right decision to side with Kaepernick because their sales did eventually increase and the consumers who had already bought Nike products were burning products which didn't actually affect Nike because they didn't receive any money back, it would affect Nike in the long run if those consumers no longer purchase Nike products, however there could be a potential increase in sales with the people who support Kaepernick.
ReplyDeletePersonally, I feel like the move made by Nike was expertly handled, as it kind of seemed like they were expecting it, or that they wanted it to happen. There is still backlash from this ad reveal: fans telling colleges to drop Nike endorsement from their sports programs, people burning their Nike shoes, and multiple memes on the subject. There were a lot of people who disagreed with this campaign because they looked at this from a political perspective. From a marketing perspective, I believe that Nike realized that the backlash was imminent and that the trade-off for stock prices, revenue, and paraphernalia would be worth in the end.
ReplyDeleteI agree on the basis of more business. While being slammed by the other side of the controversial ideas, Nike gained more publicity, on top of having a lot of publicity already. By doing this they gained more support from previous supporters, which in turn, would generate them more revenue. In a free market, the producers want to have as much surplus as possible, and Nike maximizes their producer surplus right now by doing so. On the other hand, I was concerned when the Kaepernick advertisement came out, because I thought they would lose revenue by siding with a portion of their customers, and not all of them. I thought that Nike should produce merchandise and not get into politics. But, after taking the hit, the support that they are getting may end up being for the better indeed.
ReplyDeleteThis is an interesting story, especially from an economic standpoint, as Nike had to assess how their brand would economically be affected by releasing a controversial campaign. The amount of backlash and how the company suffered as a result is almost shocking, but I'm also surprised that Nike hadn't anticipated a harsh reaction.
ReplyDeleteI found it very intriguing that Nike decided to make an advertisement with Colin Kapernick as he has been such a controversial player for the NFL. Based off of the data, I don't think Nike should have made this advertisement as it hurt their stocks and lots of people stopped buying Nike's products. In this case, the opportunity cost was too high which is why they should not have aired the ad on tv and websites world wide.
ReplyDeleteI agree that Nike made the right business choice by using Colin Kapernick in their ads. Nike calculated their opportunity cost well; while they aligned themselves with a "controversial" figure, they alienated only a small portion of their customers. Nike knew that by utilizing Colin Kapernick, they could gain support from his supporters, and that that would outweigh the customers they may have lost. Therefore, the advertisement would do more good than it would do harm in the long run. For this reason, I believe that this was a smart business move by the Nike brand, and again reflects how the company understood their opportunity cost in creating an ad like this one.
ReplyDeleteBy taking the risk of advertising their product using the controversial figure of Colin Kaepernick,Nike showed great understanding of their opportunity cost. Nike knew that the part of their consumer market who have complete conservative beliefs wouldn't just not approve the commercial, but would boycott their brand by not buying products, and even burning owned products. But the commercial, as they know, would appeal to their most recent target markets who are around 30 and under, and support the action of athletes standing up for their political views.
ReplyDeleteThe saying all publicity is good publicity definitely applies here. Of course Nike knew they were taking a risk with this campaign based on the political toxicity in our country right now, and of course with Colin Kaepernick being so controversial. This campaign got attention from everybody because even those who do not wear Nike still spoke up and voiced their opinion on the ads. While at first this may have seemed like a poor choice due to the initial backlash they obviously knew this would be included in their opportunity cost and still pursued the ad. With so much competition in the market bold moves like this one are sometimes the only way to bring a brand to the front of peoples attention.
ReplyDeleteNike should have known that something like this was going to occur. By creating publicity,they only hurt themselves. I can agree that using a famous athlete is a great way to advertise a business, especially Nike, but when you make a statement that will no doubt start conflict, that can hurt everyone. It messed with peoples opinions, Nike's production, and the opinionated people even lost money from burning their Nike wear.
ReplyDeleteEllie Reyes
This is a really good example of opportunity cost where Nike weighed both their gains and losses before releasing the controversial commercial to its audience. However, they ultimately came to the conclusion that the benefits outweighed the losses. Although they are also losing customers that disagree with Kaepernick’s opinion, using politics to promote their brand name allowed them to relate to the customer and create a more loyal consumer basis with the percentage that shared a similar opinion. Nike took a big risk, and by considering the opportunity cost and how the benefits would outweigh the losses, it paid off.
ReplyDelete