Nike, Inc.

Social Media Analysis and Strategy

Authors:
Paige Schober
Alex Byalik
Sara Baynes
Natalie Lane
December 2014

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 Zuckerburgs 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.

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.
Facebooks 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, whats 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 networks 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 Facebooks 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 IPs 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 companys 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 companys 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
Facebooks 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 advertisements 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 customers 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 companys 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.
Companies can also post videos on their Facebook, allowing them to post their television

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

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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- Mens and Boys Cut and Sew Apparel,
(2) 315240- Womens, Girls, and Infant Cut and Sew Apparel, (3) 316210- Footwear
Manufacturing, (4) 339920- Sporting and Athletic Goods Manufacturing, and (5) 454111Electronic 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 worlds 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 worlds largest suppliers of athletic shoes for a wide variety
of sports and fitness activities. These activities include running, lacrosse, cricket,

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basketball, football, mens training, womens 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. Nikes 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 Womens Training segment is growing faster than the Mens 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
textile industry Nike is involved in apparel, footwear and accessories (Nike Industry,
2014).

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Nike has established a strong position for enhancing athletic life style. Adidas,
Puma, and Reebok are some of Nikes biggest competitors in the industry and according
to Forbes, Nikes 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). Nikes 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 Nikes 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 peoples 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
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

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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 individuals need based on their activity
(Cashman, 2013). Another example of how Nike uses Facebook is by creating Facebook
pages for sportsmore 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 individuals
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, Dont 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 includebut
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 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

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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
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

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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
companys future plan. On Facebook, fans favor Adidas rather than Nike mainly because
Adidas trumps Nikes 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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