Case Study Brand Jordan: Selling a Legend

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Case Study Brand Jordan: Selling a Legend Introduction March 2006 – Larry Miller, President of The Jordan Brand, finally had a few moments to relax. He sat in his office in the Jerry Rice Building at the Nike World Campus in Beaverton, Oregon, taking in the late afternoon sun. The latest advertising campaign was a success and sales were at an all-time high. But Miller knew that now was the time to plan for tomorrow’s success. He turned to the briefs on his desk, which contained various recommendations about how to improve the Jordan Brand’s collection of athlete endorsers.
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Four potential endorsers in particular stood out, each representing a new strategic direction for the brand to take. Miller needed to decide which, if any, of these individuals he would like to pursue. He knew that Michael Jordan, who had final say on this matter, would expect a convincing argument no matter what Miller decided. He thought back to some of the key events that really defined the Jordan Brand… Shaping Brand Jordan The Shoe that Changed Everything

Nike signed Michael Jordan to an endorsement deal in 1984 out of the University of North Carolina, where his successful college basketball career had included a national championship. Jordan was an exceptional athlete known for high-flying dunks. In 1985, Nike produced a shoe called the “Air Jordan” designed in the red and black color scheme of the NBA team Jordan played for, The Chicago Bulls. The shoe was remarkable for its extreme looks (almost all basketball shoes at that time were primarily white in color) and for its use of Nike’s new compressed air cushioning technology, Nike Air™.

The NBA initially banned the shoe because its unusual red and white color scheme violated existing league dress code rules, creating a debate in the media that engendered widespread national coverage. This convergence of the shoe’s attributes, the controversy of the ban, and Jordan’s budding star power turned the Air Jordan into a very sought-after shoe. Surprised by the high level of demand, Nike produced millions of units of the Air Jordan in 23 color variants, eventually leaving retailers flooded with extra pairs.

Having learned from their mistake, in 1986 Nike released a complete redesign of the Shoe known as the Air Jordan II in carefully limited quantities. This strategy of releasing a limited number of redesigned Air Jordans each year, the same shoe in which Jordan would play, was not only an original business model, but highly successful. Nike supported the launch of every Air Jordan with memorable TV advertising campaigns that highlighted different aspects of his personality.

Famous film director Spike Lee helped make the Air Jordan a status symbol in the popular 1989 ads depicting Lee’s Mars Blackmon character pitching the Air Jordan III while proclaiming, “It’s Gotta Be the Shoes! ” Even 20 years later, every release of the new Air Jordan was anticipated by fans who eagerly snatched them up from retailers around the world. The shoe continued to be a leader in the footwear industry in terms of product design, technical features, and innovative packaging. The Seeds of the Jordan Brand The Nike employees with whom Jordan worked most closely became his allies and friends.

He trusted them to build footwear that was an authentic representation of him as a player. The closeness of these personal relationships was an asset to all involved until designer Peter Moore and marketing director Rob Strasser decided to leave Nike in1987 and appeared to be taking Jordan with them. In a tense meeting involving Jordan, his parents, and Nike founder Phil Knight, designer Tinker Hatfield unveiled the Air Jordan III. In a difficult decision between various individuals who had earned his trust, Jordan chose to stay with Nike.

Once Jordan fully committed to Nike, he was uncompromising in his loyalty. As a member of the 1992 US Olympic Basketball “Dream Team,” he famously covered up a competitor’s logo on his warm-up suit as a show of allegiance to Nike. It would eventually become clear that Jordan’s influence extended far beyond basketball fans. In 1996, he appeared in a movie called Space Jam, in which he received top billing along with cartoon character Bugs Bunny. He again proved to be a trendsetter as athletes began to appear more often in feature films and endorse more products unrelated to sports.

Certain people within Nike, among them Howard White and Tinker Hatfield, believed very early on that Jordan could be much more than an athlete who endorsed shoes. As early as 1988, there were plans to start a brand around Michael’s unique personality and wide appeal (see Appendix X). Michael Jordan Achieves Immortality Between 1991 and 1998, Jordan won six NBA titles with the Chicago Bulls and an Olympic Gold medal for the U. S. Basketball team. Having also earned five MVP awards and ten NBA scoring titles, he became one of the most decorated athletes of all time.

After winning three consecutive NBA championships concluding with the 1992-93 season, Jordan retired from basketball in order to compete as a professional baseball player. After a short and mediocre baseball career, he returned to play for the Chicago Bulls in 1995. Every bit as much the leader and competitor he had been before, Jordan won another three consecutive NBA championships before retiring once again after the 1997-98 season. Jordan also accumulated many famous moments such as game winning shots and extraordinarily athletic plays that helped to define his reputation.

His game-winning shot in the final game of the 1998 NBA Finals against the Utah Jazz left a final, indelible impression of his clutch play, killer instinct and remarkable skill in earning his team victories. Individuals of all races, classes, ages, and genders could seemingly identify with him. The Jordan name became synonymous with dominance, excellence and respect. Even in 2006, eight years after his retirement from the Bulls, it was still very common for an exceptional athlete to be praised as “the next Michael Jordan” or “the Michael Jordan” of their sport.

Brand Jordan Director of Marketing, Cliff Torng, calls this “keeping the Michael Jordan-ness” in society alive. Torng’s Marketing team even tracks how many times Jordan’s name is used in popular media as a way to gauge the value of the Jordan Brand. He reasons that “when people use Michael to epitomize something that is the best, they keep Michael and the brand relevant. ” Air Jordan Survives a Test Many within Nike thought the ride was over when Jordan surprisingly retired in 1993. It was widely assumed that the Air Jordan IX, which was being designed at that time, had no future.

Without the validation of having Jordan wear the shoes on the basketball court, critics argued, no one would buy the product. It was only through the faith of those Nike employees who believed that Jordan’s influence was greater than his on-court performance that the shoe was completed and released. The success of that shoe despite Michael never playing in it gave credence to the viability of Michael Jordan as a brand, rather than just a player. During this period, the way in which Nike marketed Jordan evolved too.

Rather than ignore the retirement, Nike faced it head on with the Johnny Kilroy ad campaign. Since so many people found it unbelievable that Jordan would retire at the apex of his career, the ads portrayed him secretly playing basketball under an assumed name. The ads were extremely popular, again proving Jordan’s relevance even when not playing basketball. After his remarkable return, Nike ran ads that accentuated Jordan’s mythic status by showing him perform basketball moves in slow motion as observers stand in awe. Brand Jordan Comes to Life

When Jordan again retired at the top of his game in 1998, Nike was prepared. Now believing that the “Jordan” name was powerful enough to become more than a Nike shoe, Nike launched The Jordan Brand as a subsidiary of Nike, Inc in 1999. Having already replaced the Nike Swoosh™ on Air Jordan shoes in 1991, the Jumpman logo now appeared on luxury athletic apparel as well. The launch of the Jordan brand was highlighted by the “Overjoyed” ad campaign, in which Jordan was shown in a suit rather than a basketball uniform, serving as inspiration for a group of hand-selected athlete endorsers of the

Jordan Brand. Among these athletes were basketball player Ray Allen, baseball player Derek Jeter, and boxer Roy Jones, Jr. The process of emphasizing Jordan as a mentor rather than as a player had really just begun in 2001 when Jordan returned to the NBA as a player for the Washington Wizards. Brand Jordan executives were concerned that this move would harm the brand or confuse consumers. After two years of play that was less-than-Jordan-like, he retired for the third and final time. Far from being harmed, Brand Jordan was surprisingly unaffected.

As fans, individuals were grateful to have one last chance to see Jordan play. But as consumers, they seemed to recognize that Brand Jordan was independent from the on-court play of its namesake. Torng rationalized the situation in this way: Of course Michael isn’t on the court inspiring us with new achievements, but if you take a look at [Jordan’s] career accomplishments in totality, there’s a reason why he’s the most respected, sought after, inspiring sports athlete of the 20th century.

Current State of Brand Jordan More than just Michael’s Shoes Until Jordan’s 1998 retirement from the Chicago Bulls and the Brand’s launch as a separate operating unit within Nike the following year, the product line was very limited in both footwear and apparel offerings. The footwear line consisted of the signature Air Jordan basketball shoe which Michael himself wore on the court every game. Apparel product offerings were also narrow, with basketball shorts, tank tops, and Air Jordan t-shirts among the top sellers.

In the wake of Jordan’s 1998 retirement and following the launch of the Jordan Brand, Miller decided to expand the product line across footwear, apparel, and accessories. The experiment did not start off with success. The upscale Two3 line represented the Brand’s first venture into the Lifestyle category and featured premium-priced men’s leather jackets, stylish jeans and dress shirts competing against high-end fashion brands like Kenneth Cole and Hugo Boss. Despite a well-publicized 2002 launch held at boxing promoter Don King’s estate in Las Vegas, the Two3 line was discontinued two years later.

Miller was upfront about Two3’s demise, saying: Two3 wasn’t quite right for our core consumer. The product was targeted at an older, wealthier and more sophisticated consumer and the Brand’s core customer wasn’t quite ready to go there with us yet. Miller was resolute in his belief that the long-term future of Brand Jordan hinged on its ability to connect with a broader array of consumers across multiple sports. Having learned from the Two3 failure, Brand Jordan launched the Jordan Sport casual line with items like denim jeans, woven shirts and a fashionable work boot.

Jordan Sport found success in markets outside its traditional young, male urban crowd. Miller rationalized Jordan’s Lifestyle success in this way: People are just as comfortable seeing Michael on the cover of GQ as on the cover of SI. He has that mix of style and sport, and that means we can take the brand to other categories. [1] By 2006, Brand Jordan had significantly expanded its apparel and accessories business into six distinct categories: Game, Legacy, Melo (named for Denver Nuggets star Carmelo Anthony), Basketball, Sport, and Casual.

In 2004-2005 alone, the Brand introduced 933 unique styles to support its push into Lifestyle, the Women’s market and other sports (see Exhibit I). Despite expanding the product line, Brand revenues were still very disproportionate between footwear and apparel sales (see Exhibit II). Instead of the current 80% footwear/20% apparel split, Miller envisioned a day when that fraction would fall to 60% footwear/40% apparel. Brand Jordan continued to offer a retro line of previously released Air Jordans in both original and new color schemes.

The Air Jordan XXI was released during NBA All-Star Weekend in February of 2006. Despite their high price tag (retro versions cost around $120 and new releases around $175), Air Jordans continue to sell out and have become collector’s items. A new segment of the Brand’s footwear business, Basketball Team product, is distinct from Jordan signature (i. e. Air Jordan) but retains a high element of fashion and performance. Team product gives consumers a slightly more cost-effective way to buy into the Brand, retailing for around $100 a pair.

Further extending footwear offerings, the Brand’s Training line complements the apparel side and addresses the training and performance needs of athletes across all sports. In totality, the Brand has produced more than 100 new footwear styles since 2004. Brand Jordan Goes International Though less than 10% of the Jordan Brand’s sales occurred outside the United States, Michael Jordan’s reputation was worldwide. Miller had big plans to expand the Brand’s presence into both Europe and Asia in the near future.

On the Asian front, Miller poured most of his efforts into China. Michael Jordan was arguably the most recognized and revered American to the people in China because he amazingly floated through the air as both an athlete and as a pitchman for Nike (later Air Jordan) shoes in commercials, which the children avidly followed on television. With this thought in mind, Larry Miller, Gentry Humphrey, and Cliff Torng accompanied Jordan in March 2004 on an eye-opening tour of Taiwan, China, and Hong Kong to promote the upcoming release of the Air Jordan XX.

The group was shocked by the massive number of people who showed up at the Taiwan airport to try to catch a glimpse of Michael Jordan. The crowd was so immense that the terminal was at a standstill. During the China portion of the trip, the group was scarcely let out of their hotel because the crowds swelled to uncontrollable levels in anticipation of every planned event. When the group took a supposedly secret trip to the Great Wall of China, about 1000 people were waiting for them, having somehow discovered the plan.

The whole experience left Larry wondering how he could more fully take advantage of Jordan’s international reputation. In Europe, Michael Jordan also enjoyed a sterling brand name and reputation that did not necessarily translate into solid sales for the company. Less than half of the Brand’s 10% international sales derived from Europe. Despite the overwhelming presence and popularity of soccer all over the continent, however, many European remembered Jordan’s six NBA titles and, important for this market, his domination in the 1992 Olympics in Barcelona, Spain with the “Dream Team. Miller had a promotional tour of Europe planned for Fall 2006 in which Michael Jordan would visit at least four different countries to promote the Air Jordan XXI and engage in some media appearances. In search of fresh growth opportunities, Miller needed a carefully planned strategy to make noise in the soccer-crazed European market and create a buzz around the entire line of Brand Jordan products there. Athlete Selection at Brand Jordan

As they had been at Nike, athlete endorsements were a big part of Brand Jordan because they lent authenticity to the products and created an emotional connection with the consumer (see Exhibit III for explanation of endorsements). As of 2006, the group of athlete endorsers known collectively as Team Jordan consisted of thirteen individuals (see Exhibit IV). They consisted of seven basketball players, two football players, two baseball players, one boxer and one musician. All were American except baseball player Andruw Jones, who was from the Netherlands Antilles.

Ten were African-American, with the remaining three being either Hispanic or of mixed racial background. Some were just beginning their careers and some were nearing the end. In conjunction with Brand personnel, Michael Jordan handpicked each athlete based on shared personality traits and unique features that Jordan believed differentiated them from other pro athletes. In addition to the athletes of Team Jordan, Brand Jordan enjoyed unofficial and unpaid endorsements from a handful of celebrities and artists, among them rappers Eminem and Fat Joe.

These endorsements involved Brand Jordan sending footwear and apparel to the celebrity free of charge, in exchange for that person sporting the gear in highly visible public places, such as Eminem wearing Brand Jordan product head-to-toe at the 2003 Grammy Awards. Torng likes to describe these as “non-commercial transactions borne out of mutual respect” between the celebrity and the Brand. Emblematic of the Brand’s message reaching sports beyond basketball, Miller recalled reading a 2004 interview in Sports Illustrated for Kids with a University of Virginia lacrosse player.

The reporter asked the player about his career goals five years from now, and he responded by saying he wanted to be the first lacrosse player represented on Team Jordan. Miller commented, Team Jordan is about excellence and being part of this selected group of athletes. For this kid who is not a basketball player, not even a football player, saying ‘I want to be a part of Team Jordan’ tells me our message is getting out there in terms of what the Brand stands for and how we’ve evolved over the years. The Candidates

Larry Miller had to consider which of the following four athletes and entertainers fit the key Brand Jordan attributes and captured the key elements and themes that have made the Brand so successful. Each potential new Team Jordan candidate offered an attractive mix of ability and promise for future growth in their respective profession. Based on the following profiles, Miller had to decide which ones, if any he should attempt to sign. David Beckham Some within Nike believed that Brand Jordan had a shot at luring David Beckham away from rival adidas at the conclusion of his current contract.

Already a successful soccer player at age 14, Beckham was signed by English Premier League club Manchester United to their youth training program. He made his first appearance for Manchester United in 1992. In the 1998–99 season, he was part of the United team that won the “treble,” the championships of the Premier League, FA Cup and Champions League, a unique feat in English football. Arguably the biggest name in world soccer, Beckham is known for his crosses, free-kicks, and marriage to a former Spice Girl. He even has a free-kick technique named after him.

Larry thought signing Beckham would be a way of entering the world of soccer with a bang. He knew that Beckham himself was a fan of Jordan and had worn the number 23 in homage to Jordan. He wondered whether signing this Caucasian English soccer star would be too radical a departure from the core brand. He also knew that signing Beckham would be very expensive. The cost was particularly important considering Beckham was in his mid thirties and may have been nearing the end of his career. Jamie Foxx Jamie Foxx is an American Academy Award winning actor, Grammy Award nominated multi-platinum selling R singer, and comedian.

He is the fourth person in history to have had a #1 album and won an Academy Award. Raised by his grandmother from a very early age, Foxx was held to a very high standard, which placed him in the Boy Scouts, the church choir, and practicing at the piano. He was also the quarterback of his football team in high school. He attended Julliard where he studied classical piano. In 2006 Foxx’s popularity was at an all time high. Foxx is an attractive, athletic African-American who Miller thought Foxx was a good fit for the lifestyle products.

He wondered if he should approach Foxx with the kind of low-profile endorsement such as the one with Mike Phillips or whether signing too many non-athletes would detract from the brand. Michele Wie At just 17 years of age, professional golfer Michelle Wie already stood at over 6-feet tall and drove the ball 20-40 yards past the majority of professional women golfers. Wie was born in Honolulu, Hawaii on Oct. 11, 1989, to parents of Korean descent. In 2003, she played in her first LPGA major at the age of 13 and at age 14, missed the cut for the PGA Tour by one stroke as she took 47th out of a field of 97 men.

Commonly compared to Tiger Woods and Annika Sorenstam, Wie’s potential is seemingly limitless. Miller thought Wie was an incredible athlete with a bright future. He wondered, however, if golf was not the right starting point for the Jordan Brand to reach out to women. Liu Xiang In 2002, Liu launched his career by winning the 110 meters hurdles at his first IAAF Grand Prix in Lausanne. Still just 22 years old, Liu has improved steadily, and won a gold medal at the 2004 Summer Olympics. In the final, he tied the world record of 12. 91 seconds held since 1993 by Colin Jackson of Wales.

This is the first time an athlete of non-African descent has dipped under 13 seconds for the 110 meter hurdles. As of 2006, Xiang had achieved superstar status in his home country of China. Miller knew the importance of the Chinese market to the future of the Jordan Brand. The combined reputations of Xiang and Michael Jordan would be a powerful mix in that country, perhaps diminishing the value of rival Reebok’s endorsement deal with Chinese basketball player Yao Ming. On the other hand, Xiang’s agency representation, the Chinese government, signed him to an endorsement deal in May 2006 with China’s leading cigarette brand, Baisha.

Miller wondered whether this new tobacco partnerhsip would prevent him from signing an individual of such strategic importance. Exhibit IJordan Style Counts (2004-2006) • each number represents one unique style for that year, however each style may include up to 5 different shoe/shirt/short colors • e. g. there were 14 different Basketball Sport shoes in FY 04-05 Exhibit IIJordan Revenue Figures (FY 2000 – 2006) • Brand Jordan does not publicly disclose balance sheet information • The chart depicts actual footwear and apparel revenues, but the corresponding numbers have been removed to preserve confidentiality

Exhibit IIIThe Nature of Endorsements Ever since Red Rock Cola hired Babe Ruth to endorse its soft drink brand in the 1930s, companies have utilized athletes and entertainers to pitch their products and serve as company spokespersons. It is estimated that companies spend close to $1 billion on athlete endorsements each year. The relationship works like this example: Company X signs a contract with John Smith to pay him $1,000 to endorse its products over a specific period of time (e. g. 3 years). Mr.

Smith then agrees in writing to allow Company X to use his likeness/image in Point-of-Purchase retail programs and to appear in a specified amount of television and print advertisements. The best endorsement deals manage to equate the product with the appeal of the celebrity. One familiar example includes Newman’s Own, actor Paul Newman’s brand of organic food products, where the association not only capitalizes on the nostalgia of old-school Hollywood glamour, but also falls in line with Newman’s philanthropic lifestyle (a portion of all sales are donated to charity).

Occasionally, a company will sign a person based on expectation of future celebrity status. Perhaps the biggest example of that in recent news is high school basketball player Lebron James signing a $90 million endorsement deal with Nike for a greatly anticipated future basketball career. So far, Nike has already given Mr. James his own line of footwear and apparel and used him in numerous TV, print, and Internet advertisements. The natural extension of all this pairing is when the brand actually surpasses the celebrity.

That is, one is no longer remembered for his original celebrity status, but is instead more readily recognized in association with the brand product or service. Clearly, Michael Jorda has achieved this lofty status with Brand Jordan. Studies have shown that consumers are more likely to purchase products endorsed by athletes than products not endorsed. Athletes are role models and consumers tend to believe athletes, especially those with a positive public image. However, simply having an athlete endorse a product or company is not enough.

An athlete needs to fit an organization’s image, appeal to its demographic audience, and have recognition and respect among consumers. The Q Score, developed by Marketing Evaluations Inc. in the 1960s, measures the familiarity and appeal of a celebrity to gauge their attractiveness to marketers. In sum, companies can utilize endorsers in these and other creative ways: • TV Commercials • Print Advertisements • Radio Spots • Point-of-Purchase Retail Programs • Voiceovers • Infomercials Exhibit IVTeam Jordan Roster NameSport/LeagueAge

Ray AllenBasketball/NBA31 Carmelo AnthonyBasketball/NBA22 Mike BibbyBasketball/NBA28 Michael FinleyBasketball/NBA33 Ahman GreenFootball/NFL30 Richard HamiltonBasketball/NBA28 Marvin HarrisonFootball/NFL34 Derek JeterBaseball/MLB32 Andruw JonesBaseball/MLB29 Eddie JonesBasketball/NBA34 Roy Jones, Jr. Professional Boxer37 Mike PhillipsProfessional Musician31 Quentin RichardsonBasketball/NBA26 ———————– [1] Kang, Stephanie. “Up in the Air. ” Wall Street Journal: Classroom Edition. January 2004. ———————– [pic] [pic]