How NIKE uses CONTROVERSY to Market itself & make Billions? (Business STRATEGY Case Study)

Hi everybody. Nike is one of the greatest brands in the
world. And time and again, Nike has established new
benchmarks with its iconic marketing campaigns. But on third of September 2018, Nike had a
campaign that literally broke the internet in the wrong way. This commercial became so controversial that
President Donald Trump himself put out a tweet bashing Nike for their commercial, people
started burning Nike shoes and what followed next was a series of catastrophe with boycott
Nike trending on Twitter.

On top of this, the media started covering
all this drama, which again led to a tonne of bad publicity. But you know what, guys? While all this drama was going on, just when
everybody thought that Nike sales were going down the drain, the world was shocked to know
that after this controversial ad, Nike sales actually shot up by 31%, and their quarterly
earnings shot up by $129 million. And when this news broke out, the stock price
shot up by 36% and Nike gained a market cap of $6 billion. The question is, what exactly was this commercial? How did Nike use this controversy to make
$100 million extra, and most importantly, as students of marketing, what are the lessons
that we need to learn from Nikes genius marketing strategy.

This video is brought to you by KuKu FM but
more on this at the end of the video. This is a story that dates back to 2016, America. And just like the George Floyd case in 2020,
even back then, there was several instances of police brutality on black men. So an NFL player named Colin Kaepernick kneeled
during the national anthem as a gesture of protest against this police brutality. And this gesture, took the black lives matter
to another level. Millions of people started posting on social
media to both support and criticise Colin Kaepernick. And this became such a burning issue that
even President Donald Trump tweeted about it. However, within some time, Kaepernick was
left unemployed with none of the 32 teams willing to sign in for the 2017 season.

Soon enough, many other players started protesting
in their own ways, as the Black Lives Matter movement started catching fire. And that is when on third of September 2018,
Nike introduced the world to the iconic dream crazy commercial. And this commercial had the voice of Colin
Kaepernick himself. Within just a few hours, this commercial was
trending on every single social media platform. And within some time, there were more than
2.7 million posts referring to the Nike brand. This led to a massive social media outrage,
we saw people burning Nike shoes, and the President again tweeted about it. Now the question is when this commercial was
meant for such a noble purpose, and so many people resonated with it. Why were people burning Nike shoes? And why was there so much hate for the Nike
brand? As it turns out, this was a result of something
called Bipolarisation wherein one segment of people saw this as a gesture of courage
and support for the minority of the United States, whereas the second segment of people
saw Kaepernick's kneeling down as an insult to the national flag of America.

So when Nike supported Colin Kaepernick, Nike
was seen as an anti national brand by this particular segment of people. And these were the people who started the
boycott Nike trend on Twitter. As a result, when the sentiment analysis was
done for the conversations around Nike, they were absolutely terrible. According to brandwatch, immediately after
the ad went live, the sentiment ratio around Nike drawn from 90% positive to more than
60% in the negative. And as soon as the ad rolled out, the online
conversation about Nike went from 72% positive to 65% in the negative. This was the disastrous impact of the dream
crazy commercial. Then the burning question is that when so
many people were boycotting Nike, and there was so much backlash? How is it even possible that Nike sales actually
shot up by $100 million dollars? Well, the first part of this answer comes
from this wonderful book written by a Nobel laureate called Daniel Kahneman. In this book, Daniel describes our human brain
as a function of two systems, that is system one and system two, while system two is a
scientist who can do all the mathematical and complex calculations, system one or the
limbic brain is the monkey brain.

And this brain is involved in your behavioural
and emotional responses. And the catch here is that if you emotionally
appeal to the limbic brain, you can command the trust of the humans. And the major driver of this trust is the
purpose of your action. If you can resonate with the purpose of the
opposite person, then that person or that group will automatically begin to trust you.

And Simon Sinek phrased it very beautifully
when he said, People don't buy what you sell, they buy why you sell it. And this is where Nikes dream crazy campaign
comes in. The Dream crazy campaign was a purpose driven
campaign that stood by a purpose. That is the dignity, the respect and the safety
of the black minority in the United States. And as soon as people saw it, every single
person who resonated with the Nike's message, started sharing the video resulting into extreme
virality. Now on the outside, although it looked like
a majority of the Americans were against Nike. If you look at the intricacies of the numbers,
it reveals a completely different story. While market research shows that 13% of Americans
identify as African American, 18% of Nike buyers are black, while Hispanics or people
from Spanish speaking countries account for 16% of US population. They represent 19% of Nike buyers, and Asians
account for 3% of the population, but 5% of Nikes customers, whereas the white population
in the US is 75%, but they comprise only 67% of Nikes customers.

Therefore, when Nike released a minority supporting
campaign, 43% of Nikes customers were more likely to relate and resonate with Nikes campaign. And Nike's reports even say that a major chunk
of Nike's white customers also supported Colin kapernick. Secondly, the research done by the best marketing
agencies in the world states that purpose driven marketing is by far the most powerful
marketing strategy among the millennials and the Gen Z.

And the fun fact is that this is what Nike's
customer segment looks like. 15% of Nike buyers are less than 18 years
old, 41% are 18 to 24 years old, and 19% are 25 to 34 years old, which means what 75% of
Nikes customers are less than 34 years old, who are extremely likely to resonate with
a purpose driven marketing strategy of Nike. And this is where the magic happened. While most people saw the general American
reaction and felt that Nike's brand was going down the drain Nikes own customers actually
became even more loyal to the Nike brand, because to them. Now, Nike was not just a shoe company, it
was something way more than that. It was a representation of their opinion,
and an icon that stood for their dignity. This is the reason why many many celebrities
who resonated with the campaign started sharing Nike's commercial on their social media accounts. And this included legends like Serena Williams,
LeBron James, and even the Black Panther star Michael B.

Jordan. Eventually, all of this together led to an
extraordinary level of brand perception, leading to spike in sales by more than 100 million
dollars. And I don't know how many of you have seen
this, but then This usually happens the case of politicians or Apple products, that is
when people around them criticise their favourite politician or their Apple product. These people often tend to passionately defend
their product or their favourite politician, sometimes even illogically. Nonetheless, because of the criticism, they
tend to find even more ways to support their Apple product or their favourite politician.

You see, this is the byproduct of Bipolarisation. And because of this, there was a cherry on
the cake for Nike. In this process, Nike actually achieved the
super powerful golden loop of publicity with the media, which says that anything that is
sensational, gets covered by media, and anything that gets covered by media becomes sensational. In this case, the raging reaction to the Nike
ad turned it into a sensation, which is why national media channels started writing about
it. And this turned it into a national issue inviting
more publicity. As a result, the President himself tweeted
about it. And this again turned it into an even bigger
sensation, which eventually resulted into more media publicity.

And guess what, because of all these drama,
Nike ended up getting $163.5 million worth of media buzz at zero cost. This is how Nike established a benchmark for
viral marketing in the 21st century. And this brings me to the most important part
of the episode and that are the lessons from the case study and the study materials to
help you read further. Meanwhile, if you're someone who genuinely
wants to know more about Nike and its revolutionary strategies, you should definitely read this
book called shoe dog by Phil Knight.

And if you don't have the time to read the
entire book, you can listen to the audio book in your own reason language using the Kuku
FM app. Kuku FM is India's leading vernacular audio
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So if you want to quickly get the knowledge
of shoe dog and other wonderful books, download the Kuku FM app from the link in the description. Moving on, there are three very very important
business lessons that we need to learn from Nike's dream crazy campaign. Lesson number one, the 21st century branding
is no longer about just sales and discounts. And marketing is no longer just a nudge to
sell your product. Today, they're about establishing a deeper
connection with your customers and standing up for something that's way beyond conventional
standards. In this case, it was Nike's courageous standard
to sponsor Colin Kaepernick to support the right cause and use their advertisement as
a symbolic representation of the dignity and safety of African Americans. Lesson number two, if you're someone who wants
to excel in marketing, it is extremely important that you have an in depth understanding of
three important subjects. And these objects are consumer psychology,
behavioural economics and human centred design. And the best books to start with these objects
are hooked by Nir Eyal, Richard thaler's Misbehaving and Daniel Kahneman, Thinking Fast and Slow. And last and most importantly, always remember
controversial marketing, although it looks very lucrative on paper, it is a double edged
sword.

When done right, it will put you on a pedestal
but if done wrong, it can make an irreversible damage to your brand. A classic example of the same is the Gillette's
we believe commercial. So always study the failures as carefully
as you study the success. That's all from my side for today guys, if
you learn something valuable, please make sure to hit the like button in order to make
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political case studies, please subscribe to our channel. Thank you so much for watching. I will see you in the next one. Bye bye.

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