ADVERTISING, SALES PROMOTION, AND PUBLIC RELATIONS



Advertising, Sales Promotion, and Public Relations

WATCH OUT COKE. PEPSI-COLA’S MOUNTAIN DEW IS MAKING A SPLASH WITH TEENAGERS AND SENDING THE BRAND’S SALES SOARING.

Pepsi-Cola over the years has transformed Mountain Dew, its neon lemon-lime drink with a caffeine kick, from a soft-drink with a hillbilly theme to a |cutting-edge brand that’s grown faster than any other. In 1997, Mountain Dew’s sales volume shot up 13 percent, far outpacing the overall sales growth of about 3 percent in the carbonated soft-drink segment.

Industry experts have contributed Mountain Dew’s stellar growth to its far-sighted promotional strategy and a consistent promotional message that has changed with the times without radical shifts in positioning. The image that Mountain Dew has portrayed over the years in its advertising is a tight link between thirst quenching and teens having an outrageous time with the brand outdoors. Although Pepsi has made subtle changes to contemporize the brand over the last twenty years, it has not deviated far from its core market of fun-loving, high-energy teens.

Mountain Dew’s advertising shows why the soft drink is the most popular brand among teenagers and college kids. Dedicating about $40 million a year in media advertising, Mountain Dew spots feature hip-looking youths watching or participating in daredevil stunts and extreme sports. Mountain Dew ads have been wildly popular with teen-agers and young adults, with 31 percent giving the ads high popularity marks. One such television ad shows a teenage boy and a teenage girl skysurfing off opposite mountains, meeting in mid-air to share a Mountain Dew. The girl seductively whispers in the boy’s ear, “Let’s be friends,” as she pulls the cord on his parachute while swiping his Mountain Dew. Two other popular spots feature Olympic Gold Medal track star Michael Johnson in a spoof on time travel and a boy and a girl snowboarding to a tune from the musical West Side Story. Both spots use the theme: “Do the Dew.”

Mountain Dew’s sales promotion activities are not to be overshadowed by its high-budget advertising counterpart. In one of the most innovative promotions ever, Mountain Dew gave out over 250,000 pagers to teenagers who sent in ten proofs of purchase plus $29.99. Besides the pagers, consumers received six months of free airtime. In addition to normal paging functions, the pagers were programmed to receive Extreme Network announcements once a week alerting teens to special offers and giveaways worth $50 million in merchandise from Mountain Dew and twenty-six other “Extreme” partners including MTV, ESPN, Burton Snowboards, Killer Loop sunglasses, and Sony Music. Not only did the pagers tap into a teen trend, they also enabled Mountain Dew to create and wire its own teen network directly.

Complementing Mountain Dew’s traditional media advertising and sales promotion is a savvy public relations plan designed to influence those free-spirited youths it targets. Mountain Dew’s long-standing association with extreme sports, such as its sponsorship of the ESPN’s X Games, has made it a favorite of the high-energy set. Mountain Dew also is the sponsor of an extreme mountain biking team that routinely competes in the X Games.

Although Mountain Dew now enjoys a prominent rank in the soft-drink market, it faces the enviable challenge of keeping momentum in the face of new competition from Coca-Cola’s Surge, which was rolled out to most of the country in 1997 and 1998. Although Surge is still a long way from catching up with Mountain Dew’s impressive growth and market share, the introduction of Surge has helped build the segment for caffein-ated soft drinks. See the latest promotional efforts from Mountain Dew at Pepsi’s Web site, .1

How do advertisers like Pepsi-Cola decide what type of message should be conveyed to promote Mountain Dew to teenagers? What types of appeals and executional styles are most effective? How does Pepsi-Cola decide which media to use for Mountain Dew to reach its target consumers? What are the benefits of sales promotion and public relations to advertisers such as Pepsi-Cola? Answers to these questions and many more will be found as you read through this chapter.

Global Perspectives

Global Challenges for Advertisers

One of the hottest debates for global advertising professionals today is whether to customize or standardize advertising. On one side of the fence are those who believe the advertisement’s appeals and execution style should be tailored to each country or region to be most effective. Because cultures perceive and react to advertising differently, this school of thought advocates that the advertiser must know something about the intended audiences’ culture in order to communicate effectively.

Kodak, for instance, favors a customized approach to advertising in China because consumer tastes and values vary between mainland China and the more progressive |Taiwan and Hong Kong. In Taiwan and Hong Kong, which are quickly catching up to the United States and Europe in film sales volume, Kodak targets a young, innovative audience. In mainland China, which is comparatively far behind technologically except in a few urban centers, the approach will be more lifestyle oriented.

Some would disagree with this distinction, however, and would advocate a single advertising campaign for all countries. Following this standardized approach, an advertiser would develop one advertising campaign, appeal, and execution style and deliver this same message, translated into the language of each country, to all target markets. Supporters of this approach insist that consumers everywhere have the same basic needs and desires and can therefore be persuaded by universal advertising appeals. Furthermore, they say, standardized advertising campaigns create unified brand images worldwide and the advertiser eliminates the inefficiencies of trying to re- |invent the meaning of its brand in every country. Athletic shoemaker Reebok recently embarked on a $100 million global ad campaign in an attempt to make its message more cohesive throughout the world. In the past, Reebok sent out confusing messages—it was known as a running shoe in the United Kingdom and a fashion statement in the United States. Moreover, Reebok generally was seen as a women’s fitness and aerobics sneaker, not an ideal image for winning over male consumers.

Possibly the best answer to this dilemma is to use a mixture of standardization and customization—that is, standardizing the message while paying attention to local differences in the execution of the message. For example, Unilever uses a standardized appeal when promoting its Dove soap but it uses models from Australia, France, Germany, and Italy to appeal to women in those places. Although this mixture of standardization and customization seems to be successful for many global marketers, it only works as long as the message truly plays to a worldwide audience. For example, because parents around the world are deeply concerned about the welfare of their children, advertising for childrens’ products generally represents an area of universal concern or agreement. Fisher-Price, therefore, is effective using a standardized approach because no matter where they live, parents want the best for their kids. Similarly, IBM was successful with its “Solutions for a Small Planet” campaign because people all over the world have similar information and computing needs. The global imagery of the campaign is achieved through the use of the same footage in each country. The difference is the use of local subtitles to translate the “foreign” language of the commercial.

Although efficiencies can be achieved by producing a single advertising campaign and message for worldwide use, the approach only makes sense if it does not run counter to social mores, ethnic issues, or religious taboos. For example, a food commercial showing hungry kids licking their lips would be taboo in a country where exposing the tongue is considered obscene. Similarly, an ad portraying a young couple running barefoot, hand-in-hand down a beautiful, sandy beach would be offensive in a country in which naked feet are never to be seen by the public.25

Some of the marketers discussed here have been successful using a global approach to advertising, but not every product or service is suited for a unified advertising message. What types of products do you think would benefit from a standardized approach to advertising? What types would fare better using a tailored approach?

Entrepreneurial Insights

Web Ad Broker Start-up Helps Marketers Reach the College Crowd

Marketers who want to hit the college crowd in their on-line media buys but don’t know where to start have an ally. Their link to the college market lies with Future Pages College Network, the Internet’s leading collegiate advertising broker. Future Pages provides custom advertising solutions for marketers wanting to reach the 12.5 million college students age eighteen to twenty-four who access the Internet on a regular basis.

Future Pages’ core business is brokering ads for over 110 on-line college publications across the country reaching a potential student body of about two million. The St. Paul, Minnesota-based start-up partners with on-line college publications to reach students at schools such as Boston University, Duke University, Harvard University, and Stanford University. Banner ads brokered through Future Pages cost marketers $35 per thousand impressions.

Since its launch in 1996, Future Pages College Network has attracted some heavy-duty marketers. Internet music site SonicNet, for instance, recently launched an end- |of-school-year on-line effort to gain recognition among college students in its quest to top MTV’s on-line |music site. Computer software giant Microsoft recently advertised through the Future Pages College Network offering free copies of its Internet Explorer browser to students, as well as an introductory campaign for its new Windows 98 operating system. Future Pages has also completed successful campaigns for Paramount Pictures’ Star Trek and Encyclopaedia Britannica.

Advertising through on-line college newspapers is complemented by Future Pages’ partnerships with Internet sites frequented by college students and educators. Advertising placed on sites where students like to hang out helps marketers carry their message even further than on-line college newspapers alone. Some important sites in Future Pages’ network include , a virtual community of 960,000 subscribers mostly in the eighteen to twenty-four age group; TWEN, The West Education Network, an on-line learning center for law students; ; an on-line community of colleges and universities; and Virtual Stock Exchange, a destination site for college students participating in the Virtual Stock Exchange game.

Cross-promotional opportunities are also available to Future Pages’ advertisers. With its off-line network, Future Pages provides advertisers access to alternative campus media such as campus billboards, inserts, and custom publishing, campus posters, and ads on newspaper distribution stands.

Future Pages got its start by helping small business owners create their own mini-Web sites in a small business directory. Feeling that they were not focused enough, founders and former fraternity brothers Lance Stendal, 28, and Tom Borgerding, 24, turned to Alan Fine, president of Strategic Management Solutions and professor at the Carlson School of Business, University of Minnesota. Fine encouraged Stendal and Borgerding to find a niche on the Internet in which they could excel. Knowing that almost all college students were on-line and that most college newspapers had an on-line presence, Stendal and Borgerding narrowed their focus by becoming the middleman between the advertiser and the college newspaper. Now the company brings together major marketers such as Microsoft and Sprint with on-line college newspapers such as Arizona State University’s State Press, the Harvard Crimson, and the University of Texas’s Daily Texan.

Borgerding, vice president of marketing and sales for Future Pages, feels that the benefit of their network partnership extends beyond advertisers alone. “Our mission focuses not only on providing advertisers with the best Internet tool to reach this market, but also helping to foster education to the partners we work with. We strive to create successful campaigns and at the same time help the schools by educating them about Internet advertising.”40

You can visit Future Pages’ Web site at .

Ethics in Marketing

Cigars Become the Darling of Hollywood

Tobacco has long enjoyed a comfortable relationship with Hollywood. Since the 1930s, cigarettes have been found between the lips |of sexy stars, such as Bette Davis, Humphrey Bogart, and Lauren Bacall. In Bogart’s day, cigarettes became the ultimate accessory in movies with a little financial support from big tobacco. Later, when cigarette advertising was nudged off television, the pressure for product placement on the big screen intensified. One example comes from the leaked documents of tobacco company Brown and Williamson, which apparently paid Sylvester Stallone half a million dollars for brand placements in five of his movies.

Today, however, it’s just as likely to see a cigar in a movie as a cigarette. Like their cigarette counterparts, cigar manufacturers routinely hire product-placement firms to get their products on the big screen. In the box office hit Independence Day, the pilot played by Will Smith couldn’t save the world unless he had a cigar in his pocket. Arnold Schwarzenegger, Mr. Freeze in Batman & Robin, lights up a cigar in a big cloud of blue smoke. A ci- |gar conveys status as it is placed in Tom Cruise’s mouth in the hit Jerry Maguire. Actors lit cigars in 51 of 133 movies with a domestic box-office draw of at least $5 million in the most recent film survey by the American Lung Association. In 20th Century Fox’s Independence Day, cigars appeared in twelve scenes, or once every 12.5 minutes.

How much marketing punch have cigars in the movies had on the cigar industry? Although a direct correlation can’t be made, it should be noted that after a twenty-year decline, U.S. sales of cigars have jumped 53 percent to 5.2 billion cigars since 1993—proof that the stogie of old is no longer stodgy. Although other factors have certainly helped ignite the current cigar craze, Hollywood has definitely contributed to its “coolness.” Although cigar smoking in and of itself is a choice consumers make, what alarms many is the increase in popularity of cigars with teenagers. A 1996 survey sponsored by the Centers for Disease Control and Prevention found that 27 percent of U.S. teenagers, or six million, have smoked at least one cigar.

Federal and state regulators, alarmed about booming sales of |cigars and their sudden popularity among teenagers, are about to end the decades of leniency toward the cigar industry (most tobacco bills pending in Congress are silent on cigars). The Federal Trade Commission recently ordered five cigar makers to file advertising and marketing expenditures and told three of the five to report what they spend to have their cigars featured in movies. California’s Department of Health Services recently used several hundred thousand dollars from the state’s thirty-seven-cents-a-pack tobacco tax to combat movie and television smoking and smoking sponsorship of sports and community events.

The cigar industry, meanwhile, is voluntarily restricting the practice of putting cigars in celebrities’ hands. The board of directors of the Cigar Association of America said it would “admonish” its members to stop paying Hollywood brokers for product placements in movies and television.66

Do you feel that product placement in movies and TV for controversial brands is unethical? Do you believe there should be laws governing this promotional practice?

Closing 5

Try making up a crossword puzzle for the key terms in this part. Writing the clues will help you remember the definitions and the context of each concept. Check your progress by using the Grademaker Study Guide.

marketing miscues

Advertising Abroad Can Create Headaches for Multinationals

Advertising in foreign countries often leads to embarrassing situations for U.S. multinational marketers. In a spot that ran briefly on Peruvian television, Africans are seen getting ready to devour some white tourists until they are appeased by Nabisco’s Royal Pudding. Nabisco initially responded that although the commercial was “inconsistent” with company values, the Peruvian audience saw it as “a fantasy situation that was humorous in nature, and effectively communicated people’s preference for Royal Desserts over all else.”

After realizing that its explanation of local taste tests as justification for a racially insensitive ad was, to say the least, weak, Nabisco quickly moved to consolidate control of its international advertising under Foote, Cone & Belding in New York in an effort to keep ad campaigns more uniform. In a statement from Ann Smith, Nabisco’s director of marketing and communications, the company wanted to “ensure that the quality of our ads meet the standards we set for our brands.” The spot, she adds, was “a mistake.”

In a separate but similar incident, a sketch on a popular Peruvian television show featured a Michael Jackson character complaining that his “son,” played in black face and having a tail, looks “too black,” prompting him to beg a doctor to bleach the boy’s skin and cut off his tail. The show was sponsored by such major corporations as Chesebrough-Ponds, Procter & Gamble, PepsiCo, and Quaker Oats. To add to the insult, the characters of the popular show are featured in a commercial for Goodyear Tire & Rubber Co. shuffling around and stating that “Goodyear tires are as strong as a black man’s lips.” Good-year quickly pulled the ad after its U.S. executives saw it and fired the Lima, Peru, agency that produced the tire ad. It also promptly issued an unsolicited apology to the NAACP even though the ad ran only in Peru for one week. Although the company determined it would be impractical to impose central review of all international advertising from its U.S. base, as Nabisco did, it stepped up sensitivity training for local managers and suppliers around the world.

Like a number of multinational companies, Nabisco and Goodyear were forced to address concerns about how to adapt sales pitches to foreign markets without violating domestic sensibilities. Such situations shed light not only on how far some ad agencies will go to create striking messages but also on how a lack of internal controls at agencies can cause problems. Because local units of international ad agencies aren’t typically required to consult with parent companies when creating ads for domestic audiences, racially insensitive or otherwise controversial ads, such as those for Nabisco’s Royal Pudding and Goodyear tires, sometimes slip through.

Questions:

1. What steps can a multinational company take, in addition to issuing ad guidelines, to ensure that embarrassing promotional situations like those discussed |do not occur?

2. Assume that you are the international advertising manager for a large consumer products company. Write a brief list of ad standards pertaining to creative and media selection to which your foreign ad agencies would be required to adhere.

SOURCES: “1997: Ad Follies,” Advertising Age, 22 December 1997, p. 14. “Tire Maker’s Racist TV Ad Causes International Blowout,” Michigan Chronicle, 22 December 1997, p. 6-A. Pichayaporn Utumporn, “Ad with Hitler Causes a Furor in Thailand,” Wall Street Journal, 5 June 1998, p. B8. Leon E. Wynter, “Global Marketers Learn to Say No to Bad Ads,” Wall Street Journal, 1 April 1998, p. B1.

critical thinking case

Nike, Inc.

The year 1998 will be remembered in the athletic footwear industry as the end of one marketing era and the beginning of another. In that year, consumers caught the world’s leading sport-shoe maker Nike off-guard with a sudden fashion shift away from the flashy basketball shoes the company made famous, as well as a cultural rejection of the brash athletes that wore them and promoted them. As a result, Nike was faced with a difficult dilemma: how to reinvent the meaning of Nike.

The Nike Story

In 1957, the future cofounders of Nike, track coach Mike Bowerman and student Phil Knight, met for the first time at the University of Oregon in Eugene and began what would become a lifelong relationship. Five years later, after completing his MBA, Knight speculated that low-priced, high-tech, well-merchandised athletic shoes from Japan could end Germany’s domination of the U.S. athletic shoe industry. Contracting with a Japanese company, Onitsuka Tiger, to supply the shoes, Bowerman and Knight formed a partnership with $500 each and started Blue Ribbon Sports, the progenitor to Nike.

By 1971, Bowerman and Knight decided to end their relationship with Tiger to manufacture their own line of athletic shoes that would push the boundaries of comfort and lightness. What emerged was a brash, young, entrepreneurial company named after Nike, the Greek goddess of victory. Less than a de-cade later, Nike claimed 50 percent of the U.S. running shoe market.

The introduction in 1979 of Nike-Air cushioning, a patented gas pressurized inside a tough, flexible urethane shell to cushion impact, represented a major revolution in athletic footwear design. Sales shot upward as Nike continued to improve on the air-cushioned shoe, introducing the Air Max in 1987 that provided a see-through window in the sidewall of the outsole and ending 1990 with more than $2 billion in revenue. No longer a small company, Nike now sold shoes in more than forty countries across the globe.

Nike’s Marketing Machine

Nike’s marketing and advertising evolved along with its innovations in more comfortable and lighter sport shoes. Pairing with Portland, Oregan, advertising agency Wieden & Kennedy in 1982, the two companies generated the kind of creative fireworks that made Nike’s swoosh a cultural icon and its irreverent “Just Do It” theme synonymous with the sporting experience and athletic competition all around the world. The campaign, which debuted in 1987, is considered one of the best ad campaigns in history, taking Nike from an 18 percent share of the domestic sport-shoe business to 43 percent.

A large part of Nike’s marketing strength lies in its lucrative athletic superstar endorsements with the likes of Michael Jordan, Charles Barkley, Bo Jackson, and John McEnroe over the last two decades. In exchange for endorsement money, star players sport the company’s trademark swoosh on the game floor and in television commercials, increasing Nike’s “coolness” factor among its many fans.

Nike’s fiscal 1997 global marketing budget, which included athlete endorsements and media advertising, was an estimated $891 million. Measured media advertising, such as print and television, commanded $159 million of this figure. Nike produces some one hundred fifty to two hundred television commercials every year.

The Sport-Shoe Market Cools

From 1994 to 1997, Nike experienced phenomenal growth and soaring revenues. Sales grew almost two and a half times from $3.8 billion in 1994 to an astonishing $9.2 billion in 1997. At the end of 1997, Nike’s market share of the athletic shoe market was 47 percent, three times that of its nearest competitor, Reebok International, with 15 percent. The ranks of Nike employees also ballooned from 9,500 employees to 21,800 employees worldwide.

Then, the bottom fell out in 1998. Although the entire athletic shoe industry took a hit as casual and “athleisure” footwear gained in popularity, Nike was hit especially hard. The industry leader posted fiscal 1998 sales of $9.6 billion, up 4 percent, but its fourth-quarter footwear sales plunged 11 percent in the United States. Sales in the United States plunged another 13 percent in its first quarter of the 1999 fiscal year. Nike was left reeling, with millions of boxes of unsold athletic shoes and apparel. Nike CEO Knight blamed an oversaturation of signature products (those products endorsed by star athletes) combined with consumer dismay about athletes’ antics for sluggish sales industry-wide of basketball and cross-training shoes, the biggest segments.

Consumer aggravation with the bad-boy behavior of professional athletes, those stars who provided the backbone to Nike’s cool image, certainly contributed to the company’s sales decline. Sports professionals’ antics, like Dennis Rodman’s insolent behavior on and off the court, Charles Barkley’s legal troubles, Allen Iverson’s drug problems, Latrell Sprewell’s alleged assault of his coach, and sportscaster Marv Albert’s sex scandal, eroded the effectiveness of sports star endorsements. Sports star misbehavior even invaded the college level with the gambling scandals at Arizona State University.

Further, experts believe Nike’s brand ubiquity contributed to the hit. Consumers, saturated with Nike products and Nike-endorsed sports stars, were burned out on the swoosh. The company, which for so long had reveled in its underdog status, was now the top dog and could be found everywhere.

Nike’s stumble can also be blamed partly on its misjudgment of America’s youth, who traditionally drive the footwear market. College students railed against Nike for its alleged exploitation of child labor in Asia and for its overcommercialization of sports. Teens into extreme sports resented Nike’s intrusion into their sports. Kids knew Nike not as the rebel it once was but as the establishment. Nike had lost its “coolness” with America’s youth market, who were turning to brown shoes—hiking boots and walking shoes—over Nike’s flashy sneakers. Brown shoes now make up about 10 percent of the athletic footwear market and this segment continues to grow.

Nike’s Response

The marketing formula that worked for Nike in the past—athlete endorsers, flashy shoes, and brash advertising—was crumbling. The company quickly launched the kinder and gentler “I can” advertising campaign, which broke away from the deified-athletic-endorser model that elevates star athletes to the status of the gods. Instead, the “I can” campaign encompassed messages about products, new technology, community involvement, and athletes—professional and everyday—on a more human scale. The swoosh was noticeably absent from the ads. After a few months, though, the softer “I can” ads faded away, with Knight calling the effort “ineffective.” The campaign was followed with the “What are you getting ready for?” campaign that positioned sports training as integral to the average person’s lifestyle, focusing on running instead of basketball.

As a result of the downturn, Nike slashed its global marketing budget by $100 million, including athlete endorsement money. Although Nike has let some athlete endorsement contracts expire, it insists that it is not abandoning its athletes, but instead is rethinking how athletes are depicted in ads, moving away from the rhetoric that characterized past marketing campaigns in favor of lower-key approaches. In the latest “What are you getting ready for?” campaign, celebrity athletes were used sparingly, almost anonymously, fulfilling the function of making a product point or a joke that superseded their star personalities.

The Competitive Scene

Nike’s competitors did not miss the chance to gain from Nike’s slump. Ads from Reebok, the number two sport-shoe marketer, focused on technology and performance, rather than cocky sports superstars, as center stage in their athletic footwear branding campaigns. In |a gutsy move, Reebok dropped Shaquille O’Neal as an athlete spokesperson. Reebok commer-cials introducing its Icon DMX 10 running shoe featuring new cushioning technology even took a definitive anti-Nike stance. The first spot featured six thousand runners, all clones labeled with the same number—97005, the ZIP code for archrival Nike. The ads were designed to make a statement about the current athletic shoe industry in which all brands look alike and talk alike in an attempt to catch up with Nike.

New Balance, long known for its product focused and “endorsed by no one” advertising stance, tripled its ad budget to launch its ordinary-person-centered “Achieve New Balance” campaign. The ads focused on the theme that sports are important but they’re not all that people do. New Balance’s campaigns relied on running themes instead of basketball, a sport that demographic research suggests turns off teens and young adults.

The backlash against traditional sports like basketball by teens and young adults has created a market for alternative brands, such as Airwalk and Vans, to dominate. Airwalk, which straddles fashion and performance with products grounded in alternative pop culture and extreme sports, tripled its U.S. television ad budget in 1998. Airwalk and Vans have also initiated major efforts to sell and promote their shoes through their Web sites.

Future Marketing and Advertising Efforts

As Nike struggles with the vision of what its future identity should be, several marketing and advertising efforts may possibly push it further along in its quest. New advertising campaigns will focus on Nike’s latest technological advance in running shoe design—Visible Zoom Air, or VisiZoom. The innovation consists of thousands of small fibers surrounded by compressed gas that provide enhanced spring action. Because the technology occupies a thinner space, it allows for ultimate responsiveness while maintaining a low profile close to the ground.

Whereas shoe innovations have been harder to come up with in recent years, Nike is revving up its marketing machine with the introduction of the Alpha program. Under the program, Nike will market its most expensive apparel, sporting goods, and sneaker products as a unit—or under the same “halo.” For example, an ad might feature an athlete wearing a Nike watch, Nike sunglasses, a Nike jacket, and Nike sneakers. Certain “Alpha Athletes” such as Tiger Woods will be seen wearing Nike from head to toe and even have a say in the products’ designs.

Nike is also charging head-on into sports it does not currently dominate, most notably soccer. |The company poured $40 million in advertising into World Cup ’98 telecasts to increase its visibility in the sport. Six World Cup ’98 teams—Brazil, Holland, Italy, |Nigeria, South Korea, and the United States—competed in |uniforms designed by Nike.

Questions

1. Since the success of its long-running “Just Do It” advertising campaign, Nike has been struggling with a new identity. What advertising strategies and themes would you suggest Nike undertake to reconnect with its customers?

2. In the past, professional athletes were not always chosen to endorse a company’s product because of their role model behavior on and off the court. In light of consumers’ current attitudes toward the transgressions of pro athletes, what role do you feel they should play in a sport-shoe marketer’s promotional campaign?

3. With more, younger consumers turning to brown shoes and alternative sports, what promotional actions can Nike take to become “cool” to the youth market?

4. Nike’s Alpha project plans to group the company’s best products together in joint promotions. Group together several Nike products with a Nike athlete endorser and write a brief advertising creative and executional plan.

5. Nike has been criticized in global markets for pushing its “bad-boy” image, as it did in its U.S. advertising. Should Nike take a standardized or a customized approach to its global advertising?

SOURCES: Nike Website at . |. Nike Inc. 1998 Annual Report. Bob Garfield, “Nike’s New ‘I Can’ Just Doesn’t Do It as Well,” Advertising Age, 19 January 1998, p. 47. Jeff Jensen, “Athletic-Shoe Marketers Look for New Formulas,” Advertising Age, 28 September 1998, pp. S-20, S-24. Jeff Jensen, “Reebok Backs New Shoe with Anti-Nike Stance,” Advertising Age, 25 May 1998, p. 4. Jeff Jensen, “Nike to Slice Marketing by $100 Mil,” Advertising Age, 23 March 1998, pp. 1, 46. Jeff Jensen, “Performance, Shoe Tech Take Ad Stage for ’98,” Advertising Age, 12 January 1998, pp. 3, 36. Bill Richards, “Tripped Up by Too Many Shoes, Nike Regroups,” Wall Street Journal, 3 March 1998, p. B1. Joan Voight and Eleftheria Parpis, “Where Did the Magic Go?” ADWEEK, 22 June 1998, p. 23.

Additional Readings

Alice Z. Cuneo and Jeff Jensen, “Fashion Trend-Setters Push to Stay ‘Hip’ with Youth Niche,” Advertising Age, 5 October 1998, pp. S-22, S-24.

Pat Sloan, “‘Keeping It Cool’ Harder Than Thought, Even on a Budget,” Advertising Age, 20 October 1997, pp. S-8, S-24.

Questions

1. Why is the company’s marketing communications of particular concern to research and development and manufacturing?

Marketers have a tendency to refer to product quality in their communications with potential customers. However, it is not the marketing department that has its hands in the development and production of the actual product. The R&D and manufacturing groups provide the physical product that marketing presents to customers. If a customer is dissatisfied with the product’s quality, then it is typically the “hands-on” groups who are blamed for the low-quality product.

2. What is manufacturing’s role in the promotion of an existing product?

In general, manufacturing’s role is one of providing the supply necessary to satisfy the demand that a marketing promotional campaign has created. However, it is imperative that marketing and manufacturing work closely to link the promotional campaign to product availability in a manner that will not increase the firm’s production costs. Also, a production shortage during a promotional period could have long-term negative ramifications on customer satisfaction.

3. How has personal selling become functionally integrated?

There are many areas in which personal selling has become functionally integrated. One major change in the salesperson’s skill set is the need to possess intimate knowledge of the products being presented to a customer. It is no longer sufficient to have great personal interacting skills—the salesperson has to clearly understand the products he or she is presenting. Another major area of integration has been the involvement of R&D and manufacturing in customer visits. Finance, accounting, and human resources are taking a much stronger role in the sales process with regard to compensation systems, cross selling, and teamwork.

Suggested Readings

Deborah Asbrand, “Why Sales Automation Is Now Succeeding,” Datamation, January 1997, pp. 80–84.

Jennifer Reese and Sally Solo, “How to Remake Your Sales Force,” Fortune, 4 May 1992, pp. 96–103.

exhibit A

Top Ten Athletic |Footwear Brands

Share of Share of Measured Measured Market Market Advertising Advertising Rank Brand 1997 (%) 1996 (%) 1997 ($ million) 1996 ($ million)

 1 Nike 47.0 45.2 159.0 149.0

 2 Reebok 15.2 16.5 55.0 84.0

 3 Adidas 6.1 5.4 21.0 14.0

 4 Fila 6.0 7.7 15.0 13.0

 5 Converse 3.5 2.7 8.0 5.0

 6 New Balance 3.3 2.8 4.0 3.0

 7 Keds 2.2 2.2 3.0 3.0

 8 Airwalk 2.2 2.8 2.0 9.0

 9 Asics 1.6 1.8 2.0 2.0

10 Foot-Joy 1.5 1.5 2.0 2.0

Total top 10 88.8 88.6 271.0 284.0

Total market sales $8,100.0 $7,200.0 $309.7 $320.4

Note: Dollars are in millions. Measured media from CMR. Market share from Sporting Goods Intelligence.

Source: Jeff Jensen, “Athletic-Shoe Marketers Look for New Formulas,” Advertising Age, 28 September 1998, p. S-20.

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