How Nike’s New Marketing Culture Is Positive For The Stock

by Trefis Team
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Nike (NYSE:NKE) has increasingly decided over the past couple of years to change the way it markets itself. Moving away from focusing on a core message to focusing on a ‘story-telling’ mode of marketing. With increasingly changing demographics, that consume Nike products, Nike realized along with core product changes it had to change the way its brand connected with its consumers. The most recent Colin Kaepernick ad production, which led to a sales surge, clearly shows the new way forward. Sales are believed to have surged by as much as 31% in the days after the ad. With trends in fashion  changing quickly, consumers insist on products that are inherently different to those consumed in previous decades. Nike has been on the forefront of these changes.  With slumping sales post 2010 and increasing competition, Nike decided to take risks its competitors weren’t willing to take. The strategy paid off, as sales regained momentum in the recent years. Estimates show that Nike may have brought in as much as $6 billion in sales post the Colin Kaepernick ad campaign, a campaign that had its fair share of controversy. Despite the controversy, the ad campaign worked remarkably well, with the stock rising by 5% during the weeks after the ad campaign.

We currently have a price estimate of $80 per share, which is 4% higher than the market price. You can use our interactive dashboard Nike’s Marketing Strategy to modify key drivers and visualize the impact on Nike’s price estimate.

 

Nike continued investment in key markets, taking into consideration nuances of local trends, could translate into a competitive advantage some of its peers may not be able to replicate. Competitors like Adidas and Under Armour find themselves having to play catch up. Should Nike continue to aggressively market itself, it may take away key market share from its competitors, leading to increases in the bottom line. Therefore, Nike’s marketing approach is a positive for the stock going forward.

 

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