Nike, Inc. Social Media Analysis and StrategyAuthors:

Paige SchoberAlex ByalikSara BaynesNatalie Lane

December 2014

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Mark Zuckerburg founded the social networking site Facebook on January 11,

2004 during his short tenure at Harvard University. Since then the site has grown to

become the largest social network in the world with over 1.35 billion users.

        The history of Facebook begins with another one of Mark Zuckerburg’s creations

called Facemash.com. Zuckerburg hacked into the Harvard University database and

populated his site with the profiles of all the students. The site pitted two individuals side

by side in order for users to choose whether someone was hot or not. The breach in

personal data quickly caused the site to be taken down. A short time later Zuckerburg was

tasked to create a new site for Cameron Winklevoss, Tyler Winklevoss and Divya

Narendra called the HarvardConnection. Zuckerburg never completed the project and

instead focused on his own site, which he called Thefacebook.com on January 11, 2004.

Thefacebook.com was the infant version to Facebook taking aspects from both the

Facemash and Harvard Connection project. The name would later be shortened to just

Facebook.com after a $200,000 domain acquisition.

        Facebook first started off exclusively to Harvard students, but later began

expanding into other college campuses. The sites popularity grew at a rapid rate as more

colleges became connected. By December 30, 2004 Facebook had reached over one

million active users. The site later expanded access by allowing a wider range of users to

sign up for the site by removing certain age restrictions, requirement for being a college

student, and other barriers for entry. Currently the site has over 1.35 billion users

worldwide. When the site finally went public Facebook became the third highest overall

initial public offering and the highest among tech companies IPO in U.S history at the

time with a value of 38 dollars per share or 104 billion dollars.

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In order to stay relevant despite declining popularity and growth rate, Facebook

has gone on a buying spree of other high profile social sites including Instagram and

Whatsapp. Facebook purchased the photo-sharing site Instagram for $1 billion on April 9,

2012 and made greater headlines when it purchased mobile instant messaging app

WhatsApp for $19 billion on February 19, 2014. This has allowed Facebook to acquire

the user base as well as new ways to monetize its business beyond just advertising on its

site. One of the most recent big name purchases by Facebook has been the acquisition of

the virtual reality software and headset from Oculous VR for a reported $2 billion dollars.

However, the exact use of this new acquisition is still unknown.  

        Facebook’s value proposition stems from the platforms ability to allow users to

create profiles for themselves, for a business, or a group and connect with friends, family,

businesses, etc. The site uses (in most cases) the person or businesses real name and

information instead of hiding behind an anonymous avatar. People are able to find and

make connections with other people and brands from around the world. Users are about

to share personal information, thoughts, ideas, statuses, likes and other content with other

people on the site whether they are part of their inner circles, friends of friends, or even

strangers. There is a lot of personal information that people share on Facebook including

relationship status, political views, groups they are in, what’s on their minds, where they

are, what they like, and much more. Users create the social community through the

content they create and the interactions they take on the site.

The social network’s success can be measured in a variety of statistics as well as

the value of the company. In almost less than a year since its creation Facebook reached

the 1 million user mark and only 8 years later Facebook passed the 1 billion active users

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mark. The average user spends about 18-20 minutes per day on the site adding photos,

updating statuses, posting comments, etc. The site has become a daily ritual/addiction for

millions of people as one of the first things they check when they wake up.

Although many users have seen the excitement of Facebook’s early days

disappearing and have fled to other social media sites such as Twitter or Instagram

(which Facebook owns), Facebook remains the most active social network in the world.

The company is constantly updating features and acquiring new IP’s in order to create

greater value for users as well as remain relevant even as new social media sites enter the

market.

Facebook creates a number of benefits for companies when it comes to

advertising. In general, Facebook allows businesses to create profiles for themselves that

connect them to other customers, fans, and businesses. Using social media sites, like

Facebook, also help in decreasing a company’s marketing costs, while increasing their

potential profits and their search engine optimization.

With the constant growth of Facebook, it is a better way for companies to increase

their inbound traffic as well as their brand awareness with constant promotion of their

news, products, events, and themes. Creating an interactive Facebook page lets customers

humanize the brand. Customers are able to relate to brands on a more personal level,

because social media can be an intimate and open setting, brands on social media are

viewed more like a person than they are a company. Facebook creates the ability to

receive real-time user feedback and open communication between companies and their

customers, improving and strengthening their brand loyalty.  (DeMers, 2014)

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The majority of a company’s advertising budget is dedicated to Facebook. In

2014, it was estimated that North America contributes to 48.9% of the ad spending, more

than doubling the secondary region, Western Europe, and generating around $11.87

billion. Companies dedicate, on average, 57% of their advertising budgets to Facebook.

(Social Media Advertising, 2013). Although a benefit of Facebook advertising is the price

when compared to other forms of advertising, Facebook can still be costly. According to

The Content Factory, “To set up a new Facebook account and provide limited ongoing

training to business partners, online PR agencies charge an average of $2,500-$5,000 per

month, with some going as high as $9,000” (How Much Does Social Media Marketing

Cost, n.d.). Prices can be even higher depending on what kind of extra efforts companies

are willing to pay to boost their advertisements and campaigns.

For a company to effectively excel in Facebook advertising, Jeff Rajeck suggests

some interesting practices that can boost their chances. His first suggestion is to use

Facebook’s professional ad-editing tool. This is a great feature for companies to use

because it “gives you far greater control over your ads and a detailed, but useful interface

for managing your campaigns” (Rajeck, 2014). His second suggestion is to tag your ad

URLs in order to evaluate your advertisement’s performances with Google Analytics. An

additional suggestion is to program your Facebook to run your campaigns only at times

that are most popular for your targeted audience. Along with running campaigns at the

most beneficial times, creating posts that are more frequent give you a greater chance of

being seen, one post on a customer’s timeline can become lost among all the other posts

(Marrs, 2014).

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A new feature, still in a testing stage, could be added to Facebook, the “Buy” button. This

button will create a completely new feature that will allow businesses the ability for their

customers to buy the products directly “through Facebook from the News Feed and on

Pages” (Facebook for Business, 2014). Customers can click the “Buy” button through the

ads and they will be directed to a completely safe payment process that never leaves

Facebook. According to Laura Entis, “adding an ecommerce component could attract

advertisers who want a more tangible return-on-investment from their social media

efforts than ‘likes’ and followers” (Entis, 2014).

A recent survey has shown Facebook that people feel that “there are some

consistent traits that make organic posts feel too promotional:

1. Posts that solely push people to buy a product or install an app

2. Posts that push people to enter promotions and sweepstakes with no real context

3. Posts that reuse the exact same content from ads” (An Update to News Feed,

2014)

At the start of 2015, Facebook will change their News Feeds to show less of these types

of advertisements. However, Facebook feels that by doing this, they are giving businesses

an improved environment that allows them to strengthen the relationships they have with

their current customers as well as gaining new customers.

Facebook helps improve a company’s brand awareness by creating a more

accessible and welcoming line of communication to their customers. To complement the

existing advertising and promotions that a company has, they are able to post their

campaigns on their Facebook page, informing more customers of their promotions.

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Companies can also post videos on their Facebook, allowing them to post their television

ads. If a customer sees the ad on Facebook first, once they see it on television, they will

remember where they saw it and give that commercial an even stronger impression.

Facebook can be used to help promote and boost all aspects of advertising just by

updating posts and increasing their awareness.

II. Company-Specific Information

According to Hoover’s Company Records, Nike is named after the Greek goddess

of victory and is the #1 shoe and apparel company (LexisNexis: Nike, 2014).   Where did

this #1 shoe and Apparel Company all begin, one might ask?  Well, it all began in 1972

where the name Nike was first formed and released to the public. Company creator’s Phil

Knight and Bill Bowerman strived to deliver high quality American running shoes, and

happened to be successful in doing this during the early years of the company. In 1985,

Nike expanded their product line to not just running shoes, but to creating special shoes

for sports. For instance, Nike decided to put their foot-in-the-door in the sport of

basketball. Here, Nike designed a shoe called the Air Jordan basketball shoe, which was

named after the famous basketball player, Michael Jordan (LexisNexis, 2014). This shoe

was a huge success with the public and is still worn till this day. Soon after, Nike wanted

to expand their product line even more by offering a line of athletic electronics, including

heart monitors and MP3 players in the year 2000 (LexisNexis, 2014).

Nike began its company small, but has grown massively over the years it has been

in operation. Today, Nike has about 48,000 employees and serves a wide range of

customers from across the world (Nike, Inc., 2014). Since Nike was able to expand its

business worldwide, the company was able to grab quick revenue, a large market share,

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and a competitive advantage. When it comes to expenses, Nike spends roughly $2.75

billion on just advertising and promotions alone in the 2013 fiscal year (LexisNexis,

2014). Advertising was spent mainly on social media, online advertising, and

endorsement contacts with celebrity athletes (LexisNexis, 2014).

In the market and industry, there are specific codes the identify products or

product lines, which are in return used for statistical data. These codes are called NAICS.

Since these codes are a must for generating data for each product classification, Nike has

quite a few codes and some include: (1) 315220- Men’s and Boy’s Cut and Sew Apparel,

(2) 315240- Women’s, Girl’s, and Infant Cut and Sew Apparel, (3) 316210- Footwear

Manufacturing, (4) 339920- Sporting and Athletic Goods Manufacturing, and (5)

454111- Electronic Shopping (LexisNexis: Nike, 2014). Generally, with a large amount

of NAICS codes, data can be more specific and more accurate to what is being measured.

For example, Nike may only want to analyze what their statistics are in Footwear

Manufacturing. Therefore with the specific NAICS code for Footwear Manufacturing,

Nike would be able to do so efficiently and effectively.   

Nike is a multinational corporation and is one of the world’s largest designers,

marketers and distributors of athletic footwear, apparel, equipment and accessories. The

company operates in North America, South America, Europe, the Middle East, Africa

and Asia. Their three main product lines are footwear, apparel and equipment. Their first

products were focused on track running shoes. In 1987, Nike introduced Nike Air Max,

which became a huge hit due to the visible air in its heel. Later additional product lines

were introduced like the Air Huarache (Nike Store, 2014). As the company continues to

grow they are now one of the world’s largest suppliers of athletic shoes for a wide variety

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of sports and fitness activities. These activities include running, lacrosse, cricket,

basketball, football, men’s training, women’s training, action sports and golf (NIKE,

2014). Recently Nike partnered with Apple Inc. to produce Nike+. These new products

are a simple way to measure performance via a radio device in the shoe that links to the

iPod. Nike+ SPORTWATCH is for avid runners, Nike+ FUELBAND SE is used to help

motivate you to move more, Nike+ TRAINING CLUB acts as a personal trainer

anywhere you are and the Nike+ RUNNING APP tracks your runs and progress

(NikeFuel, 2014). With these products it allows you to track your activities, set personal

goals, train smarter, find a better route, describe your day, challenge friends, and even

share your success with friends (NikeFuel, 2014).

The target market for Nike has a huge range, because of their wide variety of

products. Nike has been successful at targeting a specific group based on the specific

product line. They aim to appeal to all ages to reach maximum profit and to gain

maximum number of customers. Nike’s high-performance gear is mostly targeted at

professional athletes and sportsmen. Their target market is broken down into three

segments, the ultimate athlete, the athletics participant and the consumer who is

influenced by sports culture (Malhotra, 2012). Their products appeal to these people,

because they are most useful to them. The company also focuses on women customers.

The Women’s Training segment is growing faster than the Men’s Training segment. Nike

wants to guarantee future growth and recognizes that young athletes will form their future

target market, so they make young athletes a big part of its sales strategies (Soni, 2014).

Nike is in the consumer goods sector and is involved in the textile industry. Within the

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textile industry Nike is involved in apparel, footwear and accessories (Nike Industry,

2014).  

Nike has established a strong position for enhancing athletic life style. Adidas,

Puma, and Reebok are some of Nike’s biggest competitors in the industry and according

to Forbes, “Nike’s apparel sales grew at a CAGR of 12.3% during fiscal 2010-2012,

which was higher than the growth rate seen for Adidas, Puma and Asics.” (Trefis Team,

2013). Nike’s market share in the global sports apparel market is expected to grow from

4.9% in 2012 to 6.5% in 2019 (Trefis Team, 2013).  The major risk for Nike’s

positioning is the highly competitive market it is in. The global sports apparel market is

highly fragmented with competitors like Asics, Under Armour, New Balance, Columbia

Sportswear and Quicksilver (LexisNexis Academic, 2014).

Nike uses Facebook for many different reasons and objectives. These reasons and

objectives are the power source to establishing a strong strategy for dominating in the

world of advertising on social media. A reason why Nike uses Facebook is to get fans or

consumers to engage in getting to know their products rather than just recognizing the

signature Nike swoosh. For instance, Nike, Inc. has generated a Facebook page for each

and every product category, ranging from apparel to sports to the new Apple application

(i.e. Nike+).  In return, Nike expands their brand name across the world, not just being

acknowledged by their company as a whole, but by pinpointing every individual aspect of

their company to the cyber world of Facebook. Moreover, according to John Cashman,

Nike “…uses public social media channels like Facebook and Twitter to raise awareness,

answer people’s questions, show videos, and allow people to share their results, but they

keep those results under lock and key in the Nike+ website so they can offer consumers

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more Nike gear…”(Cashman, 2013).  This statement by Cashman reveals that Nike has

established their objectives on Facebook and also shows that Nike has the “want” to get

to know every single consumer and potential consumer. Lastly, Cashman mentions that

Nike uses Facebook to get personal information about that individual by tracking their

performance on Nike+. Then, Nike would find a way to personalize their marketing

strategy or selling behavior to tailor-fit that individual’s need based on their activity

(Cashman, 2013).  Another example of how Nike uses Facebook is by creating Facebook

pages for sports—more specifically Nike Football. The Nike Football page on Facebook

has 6,456,386 million ‘likes’ and is still growing (Nike Football Facebook, 2014). This

popular page consists of highlights of football games from across the NFL and the NCAA

league and also posts status of specific players doing something important, different and

unique, where then Nike generates a statement on that individual or individual’s

performance. For example, on November 23rd of this year, Nike posted a status on the

Nike Football page mentioning Richard Sherman from the Seattle Seahawks in their

inspiration quote saying, “Don’t just step up under pressure. Create it” (Nike Football

Page, 2014). By creating these inspirational quotes, Nike attracts and motivates people to

“want to be the best person they can be” and inadvertently persuades people to want to

invest. With success comes measurements. Metrics are extremely beneficial to a

company and can help gauge their success with just a few simple steps. These metrics

include—but are not limited to—(1) analyzing trends across the customer base, (2) the

percentage of the market share a company holds, (3) their net profit, (4) inventory

turnover, (5) how much people are investing in their company via stocks, and (6)

Conversion rate-how many people took action. In terms of conversion rate, Nike should

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use an appropriate analytics program to measure web traffic to their main sites. The data

should analyze how many people are transferring to their main site after going on

Facebook. In addition, Nike should also measure how many users were transferred to

their site who were not the original recipients of Nike content, but were lured through the

use of share options. After analyzing the flow of traffic from Facebook, Nike should

measure how many of those users made a purchase from their online site. With the use of

these metrics, Nike can determine where the company stands in terms of their success as

a company and their success in the market for athletic apparel and footwear as a whole.

By using metrics to gauge success and setting reachable goals, success comes more

frequently.

One reason Nike is so successful relative to competitors is their constant

motivation for innovation. Nike recognized the growing industry for wearable fitness

trackers and produced the FuelBand, which accounted for 10% of the market (Statt,

2014). Jack Welch once said, “If the rate of change outside your organization is greater

than the rate of change inside your organization, the end is in sight.” Nike recognizes that

constant innovation is the key to success. Although Nike does an excellent job using

Facebook to reach consumers, they could expand and enhance how they interact with

customers. The first recommendation is to increase engagement with fans. One way

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would be to upload more contests and promotions via the Facebook page. Not only would

this generate more viewers daily, but it would also be a way to build brand recognition.

Giving away a few Nike products a day would not be costly to the company and it would

motivate people to go to the Nike Facebook page and website more frequently. The

winners would then rock Nike gear, which would help promote the brand and build brand

loyalty. This would also help target younger athletes, which goes along with the

company’s future plan. On Facebook, fans favor Adidas rather than Nike mainly because

Adidas trumps Nike’s post frequency on Facebook. The more frequent you post, the

greater your chances are for reaching more consumers.  A second recommendation to

strengthen the communication with fans is to promote customers successes when using

the FuelBand. Customers could begin posting their goals to Facebook, allowing Nike to

keep track of how well they are doing. Once a customer reaches a certain goal, Nike

responds by giving them shout outs and recognition through Facebook. Creating this

atmosphere of open communication with their customers will help them to strengthen

customer loyalty as well as spread brand awareness.

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