ADVERTISING

In 1982, Nike aired its first national television ads, created by newly formed ad agency Wieden,Kennedy (W+K), during the broadcast of the New York Marathon. The Cannes Advertising Festival has named Nike its Advertiser of the Year in 1994 and 2003, making it the first company to receive that honor twice.

Nike also has earned the Emmy Award for best commercial twice since the award was first created in the 1990s. The first was for "The Morning After," a satirical look at what a runner might face on the morning of January 1, 2000 if every dire prediction about the Y2K problem came to fruition. The second was for a 2002 spot called "Move," which featured a series of famous and everyday athletes in a variety of athletic pursuits.

Nike remains the clear leader in the global sportswear market, and has if anything strengthened its position in recent years, especially in the global football (soccer) market, where it had traditionally lagged behind rival Adidas. With general approval of the sportswear market in general and Nike in particular at an all-time high there seems little evidence of any likely future downgrade in performance. The only significant clouds on the horizon could be rising costs of manufacturing or raw materials, and any extraordinary surge in performance by merging competitors.

Nike is the world's #1 manufacturer and marketer of athletic footwear and apparel. The group operates a broad collection of separate divisions, and produces footwear and sportswear for just about every conceivable sport within its main range. Combined sales for the Nike brand were $28.7bn in the year to May 2015, up 10%.

The business is now structured as eight key segments of running, basketball, football (soccer), men's training (including American football), women's training, action sports, general sportswear and golf. It is the clear market leader in running, training and basketball (the latter mostly under the Jordan brand), all of which reflect its powerbase in the US, where it now has around 60% share of the branded athletic footwear market, up from just 36% in 2005. Equivalent wholesale revenues from running were $4.85bn in fiscal 2015, with $3.72bn from basketball, $2.54bn from men's training, $2.25bn from football (soccer) and $1.28bn from women's training. However general sportswear is the brand's biggest category, contributing $6.60bn. The fastest growing segment in both 2014 and 2015 was basketball, up more than 40% in two years, roughly double or more any other segment.

Traditionally Nike was less all-conquering in other sports, but has caught up very quickly indeed with its traditional European rival. In soccer, for example, Nike had traditionally held 2nd place to Adidas, but the Air Zoom Total 90 soccer boot launched in 2003 was extremely successful in Europe's main football markets, giving Nike the edge over its rival in soccer footwear for the first time. It continues to hold onto the leading position in football footwear in Europe, although Adidas has the edge in overall apparel and equipment. Soccer alone contributed revenues of around $1.7bn to Nike in fiscal 2010, compared to just $40m in 1994. In 2008, Nike agreed a stunning deal to replace Adidas as official sponsor of the French national team from 2011 to 2018, offering a total fee of around E320m. (The shine came off that deal somewhat because of France's disastrous performance in the 2010 World Cup).

In 2007, Nike attempted unsuccessfully to wrest the contract to sponsor the kit for German national football team from Adidas (it will try again in 2017), and subsequently announced a $291m takeover of UK-based sportswear manufacturer Umbro, best known as the official manufacturer of the England football team's kit. Umbro retained standalone status within the group as an affiliate brand, generating sales of $262m in 2012. However the group put that business up for sale during the year, and a deal was eventually agreed with Iconix Brand Group to acquire the business for $225m. Nike retains the England football team contract (until 2018). Football remains one of the brand's key segments, although it was also the only one to record a decline at constant exchange rates between 2014 and 2015, falling by 2% from highs encouraged by the build-up to the 2014 World Cup.

German firm PR Marketing estimated that Nike had an overall 36% share of the total football market in 2012, just behind Adidas at 38%. Globally Nike has around 33% share of the athletic footwear market. In the US it is more like 48%.

In running and training, Nike has strengthened its position with a range of innovative add-ons, most notably, Nike+, a partnership with Apple to integrate its iPod technology with footwear and apparel. As a result, Nike+ running shoes are able to transmit performance data wirelessly to the Nano, including distance run, pace and calories burned. The accompanying apparel has a special pocket to house the iPod. Along similar lines, the group introduced the Nike+ Fuelband in 2012, a digital bracelet that tracks daily activity and calories burned.

Key to the marketing of its main brand is the group's huge portfolio of endorsement agreements with leading sportsmen and women. The most celebrated such arrangements have been the original precedent-setting deal with Michael Jordan in 1985 (then worth a little more than $4m), and a later gamble on golfer Tiger Woods which turned into an ongoing $105m endorsement contract, the reigning record for a solo sportsman. In 2005, Nike dipped deep into its wallet again to sign up teenage golfing phenomenon Michelle Wie to a contract estimated to be worth at least $5m a year. In the US, Nike was able in 2010 to poach the prestigious contract to become official uniform supplier to the NFL from Reebok from 2012. In soccer, the group has a deal with the Brazilian national football squad worth $695m over 10 years to 2018. It also supplies the French, US and Chinese teams. Other football endorsements in Europe include kit sponsorship deals with Barcelona, Paris St-Germain, Internazionale and 24 other top European clubs, though it lost Manchester United to Adidas in 2015, and Juventus from 2016. Individual players include England striker Wayne Rooney and Brazil's Ronaldinho. (French soccer star Thierry Henry controversially quit Nike in 2006 to sign with rival Reebok). At the beginning of 2013, the group signed what is thought to be its richest deal to-date, securing a 10-year partnership with golfer Rory McIlroy for a rumoured $250m. That deal proved something of a disappointment as McIlroy's performance slumped dramatically during the course of the year, though it has since improved significantly. The group now pays out at least $1bn a year to its various endorsement partners, and even without new deals or renewals, Nike's outstanding financial commitments under existing endorsement contracts at the end of May 2015 totalled $6.2bn.

Nike's vast range of clothing and footwear is manufactured by independent suppliers in more than 450 factories around the world (mostly in Asia), and sold in nearly 160 countries. Most Nike-branded merchandise is designed and developed by Nike, but several lines including swimwear, sports bras and maternity exercise clothing, children's clothing and timepieces are licensed to other manufacturers. There are also several specialist lines including the Jordan Jumpman 23 sportswear brand; Nike All Conditions Gear (ACG), producing footwear and apparel "infused with the flavor and attitude of the outdoor athlete"; and Nike Team Sports, which manufactures custom-designed uniforms for amateur and college sports teams. Nike NSW is a newer line of premium sportswear introduced in 2010.

The group also produces a range of golf apparel and equipment under Nike Golf brand. That unit is perhaps best-known for its endorsement partnership with Tiger Woods, and it was Woods' most vocal supporter during his recent marital troubles. The relationship with Woods has been maintained, but the veteran golfer is being gradually retired in favour of better-performing Rory McIlroy. The golf unit contributed revenues of $789m in 2013. In 2002 the group acquired Hurley, producing premium clothing and footwear for surfing, skate and snowboarding. It is now the main operating unit within the Nike Action Sports segment. Nike Golf, Hurley and Jordan are all included under the umbrella of the Nike brand.

In the 1990s and 2000s the group also diversified, adding subsidiary brand divisions, which were grouped under the general umbrella title of Nike Affiliate Brands. The most significant of these is rival US sportswear brand Converse, maker of the All Star basketball sneaker, acquired in 2003 for about $305m. Converse continues to operate as a standalone business, under its existing management team. Established by Marquis Converse in 1908, Converse is in fact America's oldest sporting brand. All Star was the first sports performance shoe when introduced in 1917, and was later endorsed by legendary basketball player Chuck Taylor in the 1920s. Converse has had a mercurial corporate history, bought and sold by one owner after another for most of the 20th century. Its owner from 1986 onwards, furniture and clothing company Interco, collapsed in 1991 in what was then one of the biggest ever US corporate bankruptcies. Established as a separate public business in 1994, Converse struggled through that decade before itself declaring Chapter 11 in 2001. It was acquired by private investors who agreed the sale to Nike in July 2003. For ye 2015, Converse contributed sales of $1.98bn, up 18% on the year before.

Other brands in Nike's affiliate portfolio have not lasted the distance. The group acquired ice hockey equipment manufacturer Bauer in 1995 for $430m, but despite its best attempts was unable to develop the business beyond its core sport. It agreed to sell Bauer in 2008 for just $200m to a private investment group. The group also owned Cole Haan for several years. That company markets casual non-sports footwear under the Cole Haan and Bragano brands through its own chain of more than 160 stores. It generated revenues of $535m in 2012. The business was put up sale during the year, and was eventually acquired by investment company Apax for $561m.

In 2004 the group established a new division, Exeter Brands Group, to develop footwear and apparel for "value" retail channels. Previously it had barred its branded products from sale through mass-market discount outlets. The new division allowed Nike to exploit this enormously valuable retail sector without compromising the values of its lead brand. Exeter was originally built around Starter, a minor brand acquired in 2004 which supplied sports shoes to mass-discounters under the Shaq brand (under license from basketball star Shaquille O'Neal). Nike continued to produce Starter as an exclusive brand for sale through Wal-Mart, where Nike was not otherwise available, and Tailwind was launched in early 2007 for sale though PayLess ShoeSource. The shoes are priced well below other Nike-made brands, but at a premium to other discount trainer brands. Other brands introduced under the Exeter umbrella include Asphalt and Dunkman. Nevertheless there were signs of a change of heart at Nike over this strategy by the end of 2007. Starter was sold to smaller apparel manufacturer Iconix in November, and the rest of the Exeter group was eventually shut down. In 2005, the group quietly reintroduced the Blue Ribbon Sports brand - actually Nike Inc's original name - for a range of upscale urban clothing, including jeans, pullovers and shirts. Despite its "sports" branding the range was quite far removed from traditional sportswear and puts Nike into much closer competition to casual retailers such as Gap. The experiment failed to take off, and was just as quietly discontinued in 2006.

The group sells through a variety of third-party retailers, as well as its own network of over 930 outlets by May 2015. Three-quarters of these are factory outlets selling discontinued lines, but the most prestigious outlets are the NikeTown superstores (mostly in the US, but also other major markets such as Germany and the UK), extravagant giant outlets designed to celebrate all aspects of the brand. The group also has its own fast-expanding e-commerce business. Direct-to-consumer sales from its own retail network and online totalled $6.6bn in fiscal 2015. The group's single biggest retail customer is global chain Foot Locker, which accounted for 8% of Nike's sales in 2010 or around $1.5bn. Nike in return provides more than half of Foot Locker's sales. In 2007, Nike launched a small network of specialist outlets in a partnership with Foot Locker to concentrate exclusively on the basketball market. Trading as House of Hoops by Foot Locker, the chain sells only Nike footwear, as well as basketball clothing and equipment.