In an Harvard Business Review Article (from the Magazine Dated July-August 1992) Phil Knight explains how Nike discovered the importance of marketing and what difference that discovery has made.
This interview was conducted at Nike, Inc.’s Beaverton, Oregon offices by HBR associate editor Geraldine E. Willigan.
While the article is very elaborate, I have picked up 5 questions and their answers that resonated with me the most.
It’s been 29 years since this article was published, but the marketing principles articulated by Phil Knight are still so relevant.
I have highlighted them below:
- Your product is the most important marketing tool.
- Marketing knits the whole organisation together.
- We have to innovate for a specific reason, and that reason comes from the market.
- Focusing on your core customers is crucial but you got to cater to the top, middle and bottom of your customer pyramid for growth. Else your sales will plateau over time.
- To understand the customer pyramid, you have to do a lot of work at the grass-roots level.
- You can’t create an emotional tie to a bad product because it’s not honest, it doesn’t have any meaning and people will find that out eventually.
- You have to convey what your company is really all about.
With that said lets now dive into the 5 questions.
1.
HBR:
Nike transformed the athletic shoe industry with technological innovations, but today many people know the company by its flashy ads and sports celebrities. Is Nike a technology company or a marketing company?
Phil Knight:
I’d answer that question very differently today than I would have ten years ago.
For years, we thought of ourselves as a production-oriented company, meaning we put all our emphasis on designing and manufacturing the product.
But now we understand that the most important thing we do is market the product. We’ve come around to saying that Nike is a marketing-oriented company, and the product is our most important marketing tool.
What I mean is that marketing knits the whole organization together.
The design elements and functional characteristics of the product itself are just part of the overall marketing process.
We used to think that everything started in the lab.
Now we realize that everything spins off the consumer. And while technology is still important, the consumer has to lead innovation.
We have to innovate for a specific reason, and that reason comes from the market.
Otherwise, we’ll end up making museum pieces.
2.
HBR:
Didn’t Nike understand the consumer right from the start?
Phil Knight:
In the early days, when we were just a running shoe company and almost all our employees were runners, we understood the consumer very well. There is no shoe school, so where do you recruit people for a company that develops and markets running shoes? The running track. It made sense, and it worked. We and the consumer were one and the same.
When we started making shoes for basketball, tennis, and football, we did essentially the same thing we had done in running. We got to know the players at the top of the game and did everything we could to understand what they needed, both from a technological and a design perspective. Our engineers and designers spent a lot of time talking to the athletes about what they needed both functionally and aesthetically.
It was effective—to a point. But we were missing something. Despite great products and great ad campaigns, sales just stayed flat.
3.
HBR:
Where did your understanding fall short?
Phil Knight:
We were missing an immense group. We understood our “core consumers,” the athletes who were performing at the highest level of the sport. We saw them as being at the top of a pyramid, with weekend jocks in the middle of the pyramid, and everybody else who wore athletic shoes at the bottom. Even though about 60% of our product is bought by people who don’t use it for the actual sport, everything we did was aimed at the top. We said, if we get the people at the top, we’ll get the others because they’ll know that the shoe can perform.
But that was an oversimplification. Sure, it’s important to get the top of the pyramid, but you’ve also got to speak to the people all the way down. Just take something simple like the color of the shoe. We used to say we don’t care what the color is. If a top player like Michael Jordan liked some kind of yellow and orange jobbie, that’s what we made—even if nobody else really wanted yellow and orange. One of our great racing shoes, the Sock Racer, failed for exactly that reason: we made it bright bumble-bee yellow, and it turned everybody off.
4.
HBR:
What’s different now?
Phil Knight:
Whether you’re talking about the core consumer or the person on the street, the principle is the same: you have to come up with what the consumer wants, and you need a vehicle to understand it. To understand the rest of the pyramid, we do a lot of work at the grass-roots level. We go to amateur sports events and spend time at gyms and tennis courts talking to people.
We make sure that the product is the same functionally whether it’s for Michael Jordan or Joe American Public. We don’t just say Michael Jordan is going to wear it so therefore Joe American Public is going to wear it. We have people who tell us what colors are going to be in for 1993, for instance, and we incorporate them.
Beyond that, we do some fairly typical kinds of market research, but lots of it—spending time in stores and watching what happens across the counter, getting reports from dealers, doing focus groups, tracking responses to our ads. We just sort of factor all that information into the computer between the ears and come up with conclusions.
5.
HBR:
How do Nike’s TV ads create emotional ties with the buying public?
Phil Knight:
You have to be creative, but what really matters in the long run is that the message means something. That’s why you have to start with a good product. You can’t create an emotional tie to a bad product because it’s not honest. It doesn’t have any meaning, and people will find that out eventually. You have to convey what the company is really all about, what it is that Nike is really trying to do.
That’s something Wieden & Kennedy, our advertising agency, is very good at. Lots of people say Nike is successful because our ad agency is so good, but isn’t it funny that the agency had been around for 20 years and nobody had ever heard of it? It’s not just that they’re creative. What makes Wieden & Kennedy successful with Nike is that they take the time to grind it out. They spend countless hours trying to figure out what the product is, what the message is, what the theme is, what the athletes are all about, what emotion is involved. They try to extract something that’s meaningful, an honest message that is true to who we are. And we’re very open to that way of working, so the chemistry is good.
People at Nike believe in the power of emotion because we feel it ourselves. A while ago there was a book published about Nike, and one person who reviewed it said he was amazed that a group of intelligent, talented people could exert so much passion, imagination, and sweat over pieces of plastic and rubber. To me, it’s amazing that anyone would think it’s amazing. I can’t say I would be that passionate about cigarettes and beer, but that’s why I’m not doing cigarettes and beer.
If you would like to read the full interview, click the link below:
High-Performance Marketing: An Interview with Nike’s Phil Knight
