Chat with us, powered by LiveChat How has Nike's brand equity changed as a result of its Kaepernick campaing? please be detailed and give case study examples 2) Who gained more from the campaign, Nike or Kaepernick? Why | WriteDen

How has Nike’s brand equity changed as a result of its Kaepernick campaing? please be detailed and give case study examples 2) Who gained more from the campaign, Nike or Kaepernick? Why

Read the case study attached and answer the 2 questions below:

1)How has Nike's brand equity changed as a result of its Kaepernick campaing? please be detailed and give case study examples

2) Who gained more from the campaign, Nike or Kaepernick? Why?

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HBS Senior Lecturer Jill Avery and Professor Koen Pauwels (Northeastern University) prepared this case. This case was developed from published sources. Funding for the development of this case was provided by Harvard Business School and not by the company. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2018, 2019 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545- 7685, write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu. This publication may not be digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.

J I L L A V E R Y

K O E N P A U W E L S

Brand Activism: Nike and Colin Kaepernick

On Monday, September 3, 2018, a simple social media post on Instagram introduced the world to Nike’s newest advertising campaign. The post was authored by the central face of the new campaign, former National Football League (NFL) quarterback Colin Kaepernick. Accompanied by a dramatic, extreme close-up of his stoic face staring directly into the eyes of the viewer, the post read, “Believe in something. Even if it means sacrificing everything. #JustDoIt”.1 In an instant, Kaepernick’s more than 2 million followers were the first to catch a glimpse of the new campaign, which was created by Nike’s longstanding advertising agency partner, Wieden+Kennedy to celebrate the 30th anniversary of the brand’s original “Just Do It” campaign. Within minutes, the ad (see Exhibit 1) was trending on social media. Within hours, Kaepernick’s post attracted more than 1 million responses across social media platforms.2 Within 24 hours, more than 2.7 million social media posts were referencing the Nike brand.3

The ad’s headline referenced Kaepernick’s position at the center of a political firestorm that began when he played for the NFL’s San Francisco 49ers. Before the start of a game in 2016, Kaepernick did not stand but kneeled down on one knee during the singing of the national anthem as a silent demonstration to protest police brutality, racism, and social injustice. This action made him highly polarizing; a YouGov poll indicated that 34% of Americans had a positive opinion of him, while 31% had a negative one.4 Explained a sportswriter, “The former San Francisco 49ers’ quarterback to some is a beacon of free speech and a civil rights activist, and to those who have refused to accept the motives of his decision to kneel in protest during the pre-game national anthem he is an un-American traitor.”5 Standing during the national anthem was considered to be a sign of respect and many Americans interpreted his #TakeaKnee protest movement, which quickly spread to other players in the NFL, to be disrespectful to the flag, the country, and to servicemen and women who fought bravely to defend its freedoms. Conversely, others viewed his protest as the exercise of a cherished American freedom: the freedom of expression, codified in the First Amendment to the United States Constitution.

Nike’s selection of Kaepernick as its new spokesperson catapulted it into the media spotlight and made the brand a flashpoint for consumers. As the campaign rolled out over the next few weeks, Nike’s management team watched pro- and anti-Kaepernick supporters take to social media to vociferously proclaim their support or to boycott the brand. Marketing pundits wondered whether the choice of Kaepernick would positively or negatively affect Nike’s business results or just generate a lot of social

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media chatter. After all, on social media, it was easy to say that one would boycott or buycotta a brand due to one’s political beliefs; but in the marketplace, other purchase criteria often mattered. Some claimed that Nike was putting its $30 billion brand asset6 at risk, while others contended that this would grow Nike’s brand equity. Was inserting the Nike brand into the middle of a heated political debate the right thing to do or one of the more reckless actions Nike’s brand managers had ever taken?

Nike and the “Just Do It” Tagline In 1987, advertising executive Dan Wieden was brainstorming new advertising concepts for Nike,

one of the world’s largest athletic footwear, apparel, equipment, and accessories companies. The result was an advertising tagline that would go on to become one of the world’s most inspirational calls-to- action: “Just Do It”. Since then, Nike had consistently used the tagline in its marketing communications to inspire people to motivate themselves toward action. Jerome Conlon, who spent a decade as director of marketing insights and planning for Nike, was the author of the brand brief that inspired Wieden’s creativity. He described the strategy behind its inclusive appeal,

The original ‘Just Do It’ campaign was designed around the idea of celebrating the joy of the experience of participating in sports and fitness when they are as good as they get. It was not polarizing, it was inclusive, unifying and celebratory in tone. The original idea of celebrating the joy of all kinds of sports and fitness activities could be sympathetically interpreted for everyone, pro sports athletes to fitness amateurs, young and old, men and women, people in America, people around the world. No one was excluded.7

Thirty years later, “Just Do It” continued to be one of the world’s most recognizable and loved taglines. Industry analysts explained its wide ranging appeal and deep impact on the human psyche. Said one, “It resonates with everyone, from the person who’s never gone on a jog before to an Olympic sprinter on the final leg of a race. For Americans, it’s synonymous with the action of pulling yourself up by the bootstraps; you just have to keep moving.”8 Added another,

’Just Do It’ was once a universal appeal to the primordial human need to move. It…is a big, simple and inclusive idea packed with layers and layers of psycho-strata. It was a declaration that no matter who you are, there’s a better you inside you if only you decide to ‘do it’ too. It is articulated with utter economy: three small words strung together with tugboat pulling power. It is a karate chop to action and a symbol of pony express-like determination…Nike exhorts to us all that there are no excuses; not fear, not bad luck, not superstition, not the opponent, not the ref, not the weather or any other interference of any kind can defeat a rage and an exhilaration to move.9

“Just Do It” advertising campaigns had helped Nike grow to $36 billion in annual revenues by the end of the fiscal year ending May 2018, up 6% versus the previous year, a gross margin of 44%, and a net income of 5% (see Exhibit 2 for Nike’s financial results). Countries other than the U.S. accounted for 58% of the company’s sales and 100% of its growth that year. “Just Do It” and the more than $3 billion Nike spent on marketing each year creating demand for its brands had helped the company consistently outperform the S&P 500, providing investment returns of 147% versus the index’s 84% return between FY 2014 and FY 2018.10 It had also strongly established a particular meaning for the Nike brand in the minds of consumers, which allowed the company to sell 25 pairs of sneakers per second.11 Explained an industry analyst, “The Nike brand can be characterized as unconventional, very a “Buycotting” is a form of consumer activism where one shows support of a company’s policies by increasing one’s purchasing of the company’s brands and products. It is often initiated to counter the boycotting efforts of others. Do

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independent, edgy, opportunistic, and even rebellious. Their ‘Just Do It’ advertising supports this brand personality profile. It encourages all athletes, professional and amateurs, to push beyond their athletic boundaries and make an intense commitment to excel and achieve.”12

In its annual report, the company commented on the importance of its brand image:

Our iconic brands have worldwide recognition, and our success depends on our ability to maintain and enhance our brand image and reputation…Our brand value also depends upon our ability to maintain a positive consumer perception of our corporate integrity and brand culture. Negative claims or publicity involving us, our products or any of our key employees, endorsers, sponsors or suppliers could seriously damage our reputation and brand image…Social media, which accelerates and potentially amplifies the scope of negative publicity, can increase the challenges of responding to negative claims…If the reputation or image of any of our brands is tarnished…then our product sales, financial condition and results of operations could be materially and adversely affected.13

Despite its historical success, the past year had not been an easy one for Nike. In the midst of the #MeToo movement, a grassroots initiative to give voice to women who were victims of sexual abuse and sexual harassment, Nike was rocked by sexual harassment allegations and gender discrimination lawsuits and in early 2018, more than ten senior executives accused of inappropriate workplace behavior left the company. It was unfortunately not the first time that Nike had found itself in a media firestorm. During the 1980s and 1990s, Nike was frequently boycotted by consumers protesting labor practices in the factories that produced its goods who tarred the company with sweatshop labor labels.

On the consumer front, in North America, sales were down 2% and earnings down 7% in FY2018 and Nike was losing ground to competitors, despite increasing its global marketing budget by 7% in the past year.14 The athletic footwear and sportswear categories were highly competitive and Adidas, in particular, was aggressively courting U.S. consumers. Adidas had achieved double-digit growth in the U.S. for several quarters, nearly doubling its market share from 6.3% to 11.3% between 2016 and 2017.15 For the first time in a decade, in 2016, Nike, the market leader with a share that hovered around 35%, lost the title of the bestselling shoe in America to Adidas’s Superstar16 and Adidas had recently surpassed Nike as the most shared logo on social media.17 Declared an industry analyst, “[Nike’s] courting of controversy appears to have been a commercial calculation for a company that has lost its grip on the teen demographic, which no longer sees it as the arbiter of cutting-edge sneaker style.”18

However, the first quarter of FY 2019 (ending August 2018) had started strong, with global revenues up 10% versus the prior year spurred by a 13% increase in the marketing budget. North American revenue growth was softer, up only 5.6%.19 In an earnings call with analysts, Nike chief executive officer Mark Parker declared, “We’re motivated to inspire our consumer to connect and engage and inspire…Our brand strength…is a key dimension that contributes to the ongoing momentum that we’re building across the Nike portfolio…that’s really how we look at it…how do we connect and engage in a way that’s relevant and inspiring to the consumers that we are here to serve?”20

Colin Kaepernick and the #TakeaKnee Protest Movement

Kaepernick was chosen by the San Francisco 49ers during the second round of NFL draft in 2011 after he became the first player in NCAA Division I history to generate 10,000 passing yards and 4,000 rushing yards. That same year, Nike signed him to an endorsement deal. After the 49ers starting quarterback suffered a concussion in the middle of the 2012 season, Kaepernick stepped in and brought the team to the Super Bowl where they lost to the Baltimore Ravens. The following year, he led the Do

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team to the NFC Championship Game after which he signed a six-year, $126 million contract extension. Over the next three seasons, the team struggled, failing to make the playoffs each year, while Kaepernick won and lost the starting quarterback position while battling a shoulder injury.

In 2016, Kaepernick began his protest, first by sitting down, rather than standing as was customary during the national anthem, and later by taking a knee. He explained, “I am not going to show pride in a flag for a country that oppresses black people and people of color.”21 Kaepernick’s protest was part of a larger movement sweeping the country. Black Lives Matter was created in 2013 in response to the acquittal of George Zimmerman, a white man accused of murdering a black teenager, Trayvon Martin, and gained momentum after a police officer in Ferguson, Missouri shot and killed an unarmed black teenager, Mike Brown, in 2014. According to the movement’s website, its mission was to:

Build local power and to intervene in violence inflicted on Black communities by the state and vigilantes…We are working for a world where Black lives are no longer systematically targeted for demise…We affirm our humanity, our contributions to this society, and our resilience in the face of deadly oppression. The call for Black lives to matter is a rallying cry for ALL Black lives striving for liberation.22

Kaepernick’s protest gained momentum and attention, as other NFL, college, and high school football players joined in. Time magazine featured Kaepernick on its cover in October 2016 under the headline “The Perilous Fight”.23 It also caught the attention of Republican President Donald Trump who tweeted, “If a player wants the privilege of making millions of dollars in the NFL, or other leagues, he or she should not be allowed to disrespect our Great American Flag (or Country) and should stand for the National Anthem.”24 Liberal Supreme Court Justice Ruth Bader Ginsburg, a champion of the Democrats, dubbed Kaepernick’s actions “dumb and disrespectful” and proclaimed, “I would have the same answer if you asked me about flag burning. I think it’s a terrible thing to do, but I wouldn’t lock a person up for doing it. I would point out how ridiculous it seems to me to do such an act.”25

Kaepernick’s protest proved to be highly polarizing along racial, generational, and political lines. A poll conducted during the NFL’s 2016 season named him the most disliked player in the league; 37% of Caucasians proclaimed that they disliked him a lot, while 42% of African Americans indicated that they liked him a lot.26 Nike’s recent customers (those who had purchased the brand within the past three months) were more positive, with 46% viewing him favorably and 23% not favorably.27 CNN reported that 59% of white Americans were against the protests, while 82% of black Americans supported them. 56% of Americans under age 45 thought it was the right thing to do, while 59% of those 45+ claimed that it was wrong. 87% of Republicans were opposed, while 72% of Democrats were in favor.28 See Exhibits 3 and 4 for a summary of Nike’s customer demographics.

Kaepernick shook off the criticism, “To me, this is bigger than football and it would be selfish on my part to look the other way…I am not looking for approval. I have to stand up for people that are oppressed…If they take football away, my endorsements from me, I know that I stood up for what is right.”29 Questioned Conlon,

Kaepernick has certainly demonstrated that he has character, conviction about his beliefs, concern for social justice and he certainly has people talking about him. But, is he really a sympathetic hero? To segments of society struggling with experiences of social injustice he definitely is. However, to segments of society who honor the symbols of our national idea, identity and ceremonies he carries strong and negative emotional associations.30 Do

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At the end of the 2016 season, Kaepernick exercised an option to get out of his contract with the 49ers to become a free agent. This made him eligible to play for any team. To his dismay, none of the 32 teams signed him for the 2017 season. In November 2017, Kaepernick accused the NFL owners and the league of conspiring together to not hire him, initiating legal action. Despite this negative press, his NFL jersey was one of the top 50 bestselling items in 2017, even though he was no longer on a roster.31

In the meantime, Nike was reportedly getting restless about the unsigned athlete and was debating whether to cancel his endorsement deal. According to anonymous sources, “In the summer of 2017, a debate raged in Nike’s headquarters…over whether to cut loose the controversial, unemployed quarterback — and the company very nearly did.”32 Instead, Nike ignored him, failing to use him in any promotional activities. In April of 2018, Adidas expressed interest in signing Kaepernick to an endorsement deal, putting pressure on Nike to decide his fate.33 As his complaint wound its way through the legal system, the 2018 season approached and still no team signed him. By August 2018, the NFL’s request to the court to dismiss his case was denied and an arbitrator declared that there was sufficient evidence of collusion to support going to trial. GQ magazine anointed him its Citizen of the Year34 and Amnesty International bestowed its Ambassador of Conscience award upon him.35

Nike and the NFL

Nike had recently signed a new contract with the NFL, worth more than $1.1 billion,36 to be the official supplier of uniforms through 2028, making it one of the league’s largest sponsors. Nike’s support of Kaepernick made for awkward negotiations and dealings with the NFL. Under pressure, a Nike spokesperson made the company’s position clear, “Nike has a long-standing relationship with the NFL and works extensively with the league on all campaigns that use current players. Colin isn’t currently employed by an NFL team and has no contractual obligation to the NFL.”37 During the 2017 season, Nike had expressed its support for the protest, claiming that it “supports athletes and their right to freedom of expression on issues that are of great importance to our society.”38

Brands and Politics Many brands were experimenting with political branding as studies reported that Millennials were

a more socially conscious generation than those that had come before them and engaged in conscious capitalism, using the brands they purchased to show their support of social causes. Explained a Nielsen analyst, “Times have changed, and the zeitgeist has changed, and consumers have changed significantly. Previous generations made purchase decisions more on value, on cost, on quality. Younger generations are now making a lot of purchase decisions based on values, or some combination of the two.”39 See Exhibit 5 for results of a recent survey by Edelman, which showed that 50% of people described themselves as “belief-driven buyers.”40 A recent poll initiated by SproutSocial found that 66% of Americans claimed, “it is important for brands to take public stands on social and political issues.”41 Exhibit 6 summarizes results of this study.

However, chief marketing officers largely disagreed. Only 21% believed brands should take a stand on politically charged issues, stating that this would have a negative effect on the ability to acquire and retain customers, make their company stand out in a way that was unwanted, and demonstrate that their company was wasting resources on non-core business activities.42 Stated a New York Times analyst, “In an era rife with divisive political discourse, most major public companies try to avoid taking stances that could make customers angry, particularly when rapid social media campaigns can cast any decision into a larger social statement.”43 Warned Russ Klein, CEO of the American Marketing Association and former CMO of Burger King, Arby’s, 7-Eleven, and Dr. Pepper/7UP: Do

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For many brands today, the blurry line between purpose and profit presents a knotty management issue… I would generally advise against positioning a brand around issues where there are otherwise legitimate and divergent points of view. The opportunity to grow a brand is maximized when bringing many different-minded people together who can be satisfied by a powerful and unifying solution for something in their lives…Like Nike, I agree there are times when it is more important to be provocative than pleasant. However, from a marketing point of view, it is my counsel to brand owners that it is unnecessarily dangerous, commercially or morally, to drape a politically incendiary cape around your brand and delude yourself into thinking it makes you a superhero.44

While industry analysts saw the potential of political branding, they also urged caution. Said one, “[Truly socially conscious branding needs to be] longitudinal in length, have deep roots, and be true to the core. [Without these commitments], it’s better to stay on the sidelines.”45 Finally, some pundits were cynical about a generation that used their consumer behavior to express their politics,

In an era when almost nothing escapes politicization…corporations increasingly assume they have to tiptoe beyond milquetoast social-responsibility platitudes to take edgier stands. Like callers on sports talk radio, they’re supposed to have a hot take. Hence, we are now asked, as consumers, questions of ever greater political specificity: Where does my light beer stand on immigration reform? Should I fly with a domestic carrier that’s in favor of background checks for gun purchases? Does this Whopper support net neutrality?…It is utterly ridiculous that brand culture has subsumed so much of our public space — and mental space– that it becomes the crucible for political participation, especially when practices such as, you know, actual voting limp along.46

Others pointed to political fatigue. A recent study found that 67% of Americans could be categorized as part of the “exhausted majority,” a segment that was tired of America’s political polarization and looking to find common ground rather than provoking heated debates. Explained the author of the study, “There’s tremendous anxiety about the division and a sense with the majority of people that their voice isn’t being heard. That [instead] it’s these strident, hateful, often uncompromising us versus them voices…There is a tendency I think for a whole nature of the political polarization to become so distasteful that there’s a large number of people who are just stepping back from it altogether and just sort of don’t want to choose a side.”47

Nike’s Brand Activism

Nike was no stranger to political branding. Explained an industry insider, “Nike from Day 1 has really been a brand that has stood up to and stood for things that were important to them and important to their athletes, so I think there is a little precedence there.”48 Nike was the first brand to feature a HIV positive athlete in the midst of the AIDS crisis, the first brand to feature an amputee athlete, and the first brand to feature a LGBT athlete. Its “Let Me Play” campaign waded into debates about Title IX, a federal civil rights law that disallowed discrimination based on gender in education programs that received federal financial assistance, which greatly impacted college athletic programs, where, prior to the passage of Title IX, male sports programs received an unfair share of resources. Nike had also long supported African American athletes and ran “Equality” campaigns in 2016 and 2017 to celebrate Black History Month that promoted equality in athletics and in society more broadly. In 2017, Nike addressed anti-Muslim sentiment in the U.S. with its “What Will They Say About You?” campaign, which featured Muslim women engaging in athletics wearing hijabs as others looked on with disdain.

The brand was also loyal to its sponsored athletes, even in the midst of their own personal controversies. For example, Nike stood by basketball player Kobe Bryant during his rape trial, golfer Do

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Tiger Woods following his marital infidelities, and tennis player Maria Sharapova after she failed a drug test. Said Matt Powell, sports industry analyst for NPD Group, “If you think about Nike as a marketing company, they’ve always been provocative…They tend to stick with their athletes through thick and thin.”49

Brands and Black Lives Matter

However, engaging with racial issues and connecting with the Black Lives Matter movement was proving tricky for brands. Explained an industry analyst, “Race and racial tension – especially in the context of continued violence against people of color in the United States, an issue on which the public is deeply divided – are not quite as easy to simply commodify and brand.”50 Expressed another, “Today the average consumer is smarter, more suspicious of manipulative advertising, and more highly networked. And in the current political climate, the stakes are higher than ever. Political ads that might’ve passed the smell test this time last year are going to be scrutinized more intensely than ever.”51

Two recent examples demonstrated the danger in linking a brand to a political cause like Black Lives Matter. Pepsi’s 2017 ad featuring white model and reality television star Kendall Jenner at a Black Lives Matter demonstration where she attempts to solve racial tensions between the largely African American protesters and white policemen by sharing a Pepsi, was highly ridiculed and quickly pulled from the air after public uproar. Said an industry analyst, “Many people criticized the tone-deafness of the ad. It even prompted Bernice King [daughter of Martin Luther King] to tweet, ‘If only daddy would have known about the power of #pepsi.’”52 Declared another,

The problem with Pepsi’s approach to authenticity is emblematic of a failure to comprehend what authenticity actually means. Authenticity is Patagonia spending decades funding wildlife and environment conservation. It’s MAC Cosmetics boldly supporting LGBT causes at least a decade before the rest of the corporate world became comfortable with the idea…Brands can buy authenticity, but it doesn’t happen overnight, and funding programs must also be coupled with respect and understanding for the social movements with

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