The Homa Files

Excerpted from BusinessWeek, “How Nike’s Social Network Sells to Runners”, by Jay Greene, November 6, 2008

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Nike is winning a new game that other corporations, from Coca-Cola to Verizon to General Motors, have tried unsuccessfully to play: building brand loyalty via online social networking.

In the two years since it launched Nike+, a technology that tracks data of every run and connects runners around the world at a Web site, nikeplus.com, Nike has built a legion of fans. In August, for instance, 800,000 runners logged on and signed up to run a 10K race sponsored by Nike simultaneously in 25 cities, from Chicago to São Paulo. Now the company is testing a social network to promote its basketball shoes.

Some analysts back up Nike’s claims that the site is renewing the popularity of its running shoes. SportsOneSource, a Princeton (N.J.) market research firm, says Nike accounted for 48% of all running-shoe sales in the U.S in 2006. Today, its share is 61%. “A significant amount of the growth comes from Nike+,” says Matt Powell, a SportsOneSource analyst.

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Nike’s online strategy differs from those of other companies. Most have tried to create virtual communities through a build-it-and-they-will-come approach centered on a brand or specific product. Originally, the Beaverton (Ore.) company envisioned Nike+ simply as a clever way to combine music and running, not as a prototype for a new kind of marketing.

The key to bringing runners onto the Web was the development in 2006 of a $29 Sport Kit sensor that, when synched with an iPod touch or nano, tracks runners’ speed, mileage, and calories burned. When those runners dock their iPods, nikeplus.com launches, and the run data get uploaded. More important, the site is a virtual gathering place. Runners have collectively logged 93 million miles on nikeplus.com.

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Nike now hopes to score with another group of jocks: basketballers. The company is beta-testing Ballers Network, a Facebook application that lets players organize real-world games and manage their teams online.

Edit by DAF

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Full article:
http://www.businessweek.com/magazine/content/08_46/b4108074443945.htm?chan=top+news_top+news+index+-+temp_news+%2B+analysis

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