Nike’s Newest Unique Marketing Venture: BIKETOWN PDX

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Starting today, Portlanders are going to start seeing orange bikes everywhere. In a partnership with the Portland Bureau of Transportation, Nike is placing 100 new bike racks with 1,000 orange bicycles all over Portland. This new bike-sharing program, called BIKETOWN PDX, already has 1,000 people signed up for their annual membership.Nike_BIKETOWN_det_001_native_1600

This a huge marketing venture for Nike. The model has been tested and been successful in other cities. The largest bike sharing system in the US is called Citibike and is sponsored by Citi Bank. Nike is spending $10 million to sponsor the Portland program for the next 5 years.

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The bikes are bright orange, reminding consumers of the bright orange boxes on the shelves of their local shoe store. All of the bikes have swooshes. 100 of the bikes are colored to look like some of Nike’s most famous shoe brands: Nike Air Max 95, Nike Air Trainer 1, and the Nike Air Safari.

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How does it work?

1) First you join on your smartphone through a mobile app or on your computer through their website.

2) Choose your plan (see below)

3) They will send you a 6-digit account number and a 4-digit pin that you use to unlock the bike.

4) Then you ride around town.

5) Return to any Biketown bike rack, or you can lock it at any rack for a $2 fee.

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Cost:

A single ride is $2.50

A day pass is $12.00

Annual membership (90 mins of daily ride time, unlimited trips) is $12 a month.

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Also check out:

Steph Curry and Kevin Durant Can Play on the Same Team and Still Sell Sneakers

Pictures and Sources:

http://www.oregonlive.com/commuting/index.ssf/2016/07/nike_dressing_up_some_biketown.html

http://koin.com/2016/07/19/biketown-rolls-out-on-portland-streets/

http://news.nike.com/news/portland-bike-share

Steph Curry and Kevin Durant Can Play on the Same Team and Still Sell Sneakers

Currently, one of the biggest sports news stories is Kevin Durant’s decision to leave the Oklahoma City Thunder and join the Golden State Warriors. The Warriors, coming off a record setting 73-win season, just added one of the best 5 players in the NBA to already stacked roster.

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Art: Bailey Brautigan, Forbes http://www.forbes.com/sites/kurtbadenhausen/2016/02/14/the-nbas-endorsement-all-stars-2016/#2db05ded5096

Durant just signed a maximum contract with the warriors worth $54.3 million for two years. Durant also makes an amazing amount of money off the court: $36 million a year in endorsements. In 2014 he signed a 10-year deal with Nike to create a signature shoe worth about $300 million. Nike pitched to Steph Curry in 2013, but funny enough, they forgot to change the name of the presentation from Kevin Durant. Curry’s father Dell was quoted by ESPN talking about that Nike pitch meeting:

“I stopped paying attention after that… They have certain tiers of athletes. They have Kobe, LeBron and Durant, who were their three main guys. If he signed back with them, we’re on that second tier.” (Strauss, 2015)

Nike offered Curry less than $4 million a year. Curry signed with Under Armour (UA) and his signature shoe became the bestselling signature shoe other than Michael Jordan (Strauss, 2015). Curry has also signed many endorsement deals Including JBL, Brita, and Degree. His off the court earnings topped $12 million for the last season (Badenhausen, 2016).

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Art: Bailey Brautigan, Forbes http://www.forbes.com/sites/kurtbadenhausen/2016/02/14/the-nbas-endorsement-all-stars-2016/#2db05ded5096

Basically immediately after the news of Kevin Durant signing with the Golden State Warriors, speculation on how it would affect their shoe endorsement’s started flying.  For example, Yahoo NBA insider Adrian Wojnarowski tweeted:

I’m going to argue this isn’t true. The KDs and SCs operate in separate spheres, appealing to different segments, and are going to work together to sell a lot of sneakers and make a lot of money. The signature market can be broken into four segments by how they use basketball shoes.

User Segment:

  • Functional
    • Care about the function use of the shoes to play basketball
  • Everyday Wearers
    • Want a shoe that they can wear all the time
  • Fashion
    • Fashion forward, wear the shoes for mainly for looks and brand
  • Collectors
    • Buy lots of shoes, first releases are important, not concerned with functionality

To analyze the difference in marketing strategy from Nike and UA, let’s look at the most recent release of each player’s signature shoes: KD 9s, and Curry 2s.

Looking at Nike’s strategy for the KD 9s, they are targeting primarily functional adult users. Watch the ad Nike released July 1st 2016:

The ad shows Durant driving to the basket making defenders turn to smoke. The purpose of the ad is to try and convey how the KD 9s will help you on the court. How the shoes will make you better as a player. Wearing the KD 9s isn’t necessarily about the “KD” on the back. Nike is creating shoes that are designed by Durant to be great basketball shoes. The other video released on Nike Basketball’s YouTube page to promote the KD 9s was just a discussion between Durant and the shoe’s designer, Leo Chang. Their conversation is mainly about the functionality of the shoe and its features

In contrast UA’s approach is not about the shoe’s functionality. They market the Curry 2s only based on the brand associated with Curry’s popularity and skill. The message is more: “if you like Curry, you’ll like these shoes.”

While the first KD 9 ad had no talking, the first Curry 2 ad starred Jamie Foxx narrating as Curry shoots jumpers. He talks about how Curry changed the game of basketball. There is no mention of what makes the shoes better. No features, no claims of basketball success attributed to the shoes. Just Curry being Curry. Curry’s other breakout ad was titled “Rule Yourself.”

It depicts 1000s of Steph Curry clones practicing dribbling and ends with the tag line “You are the sum of all your training.” Again, this is a very person-centric, not a shoe-centric ad. It is about work ethic and how you as an individual have control over your destiny. UA is primarily targeting Everyday Wearers. They are trying to convince people to buy Curry 2s to look and be like Curry.

This is also apparent in how they price the shoes. KD 9s start at $150, Curry 2s are $130. UA has consistently kept Curry’s signature shoe at a lower price than many of the other signature shoes. They are targeting an audience that is buying shoes for everyday use. These consumers are budget conscious. Nike is trying to sell people on the KD 9’s functional ability. These users, if they think the shoe will be the best for them to play basketball in, will pay extra for this advantage.

Because Nike and UA are targeting very different consumers with their shoes, I wouldn’t expect a lot of cannibalization between the two. Durant moving from OKC, a small market team, to Golden State, a big market team, will probably help him increase sales. When Carmello Anthony moved from Denver to New York City he saw a jump in sales (Powell, 2016). Basketball success also helps drive revenue, and the Warriors this year have a very good chance of being good. The top 5 bestselling jerseys in the NBA last year, 4 where in the finals this year: Curry, James, Bryant, Irving, Thompson. Although Curry’s Under Armour shoes are selling like crazy, remember Nike still rules the NBA. Until Under Armour can get a few more marquee signers, it is unlikely that his success will dampen the Nike who has 75% of all NBA players under contract.

Sources:

Badenhausen, K. (2016, February 2). NBA Endorsement All-Stars. Forbes.

http://www.forbes.com/sites/kurtbadenhausen/2016/02/14/the-nbas-endorsement-all-stars-2016/#2db05ded5096

Powell, M. (2016). Sneakernomics: What Kevin Durant to the Warriors Really Means for the Sneaker Business. Maine: NPD.  https://www.npd.com/wps/portal/npd/us/blog/2016/sneakernomics-what-kevin-durant-to-the-warriors-really-means-for-the-sneaker-business/

Strauss, E. S. (2015, October 7). You won’t believe how Nike lost Steph to Under Armour. ESPN.

http://espn.go.com/nba/story/_/id/15047018/how-nike-lost-stephen-curry-armour