Nike Signs Kaepernick: The Other Side of the Story

Colin Kaepernick Nike Ad

Colin Kaepernick is back. Not on the gridiron. But squarely in the public eye.

On Labor Day, Nike revealed that former San Francisco 49ers quarterback Colin Kaepernick would be among the current and former athletes featured in its 30th anniversary commemoration. (CNN)

Nike’s bold advertising move drew an angry reaction. President Trump slammed the move stating, “I think it’s a terrible message and a message that shouldn’t be sent.” (CNN Money). Other critics posted severely critical messages, including videos of their burning Nike attire, on social media. (CNN) By the end of trading on the first day following the company’s decision, Nike’s shares had declined $2.60 or 3.2% to $79.60 per share.

Did Nike lose its collective mind in signing Kaepernick, as its critics claim? Or did Nike tilt into the wind in a shrewd move that will strengthen its iconic brand and bolster its long-term industry position?

Despite the initial clamor and the sharp initial hit to its stock price, the evidence suggests the latter scenario could be the more likely one. In his book, How Brands Become Icons: The Principles of Cultural Branding (Harvard Business School Press, 2004), former Harvard Business School and Oxford University professor and founder of the Cultural Strategy Group Douglas B. Holt explained that iconic brands tap into culture and society in a way conventional brands don’t. This gives them enormous market power. He observed:

Iconic brands provide extraordinary identity value because they address the collective anxieties and desires of a nation. We experience our identities–our self-understanding and aspirations–as intensely personal quests. But when scholars examine consumer identities in the aggregate, they find that desires and anxieties linked to identity are widely shared across a large fraction of a nation’s citizens. These similarities result because people are constructing identities in response to the same historical changes that influence the entire nation…

Brands become iconic when they perform identity myths: simple fictions that address cultural anxieties from afar, from imaginary worlds rather than from the worlds that consumers regularly encounter in their everyday lives. The aspirations expressed in these myths are an imaginative, rather than literal, expression of the audience’s aspired identity.

Identity myths are useful fabrications that stitch back together otherwise damaging tears in the cultural fabric of the nation. In their everyday lives, people experience these tears as personal anxieties. Myths smooth over these tensions, helping people create purpose in their lives and cement their desired identity in place when it is under stress.

But is there any redeeming value to Nike’s move, which effectively reintroduces the controversy surrounding Kaepernick’s protests during the playing of the National Anthem prior to the kickoff to NFL games? Nike’s critics largely described the decision as an attack on the nation.

That kind of criticism is not new. Indeed, it’s an approach that was taken in during the 1990s. Then, following the Persian Gulf War, there was considerable opposition to acts of burning the American flag. Efforts were made to outlaw the practice. Those efforts ultimately failed, because the larger First Amendment right of free speech superseded the narrow act, even as it offended many, associated with its expression.

A similar argument can be made today. Even if one believes that there are better ways to express support for the social cause championed by Kaepernick, his act of defiant protest is an expression of free speech.

At a time when the Trump Administration is aggressively seeking to suppress criticism, dissenting messages, and the objective function of rule of law when it conflicts with partisan interests, through its regular attacks on the news media, the Department of Justice, the intelligence community, and NFL protesters, Nike has taken a calculated position against that approach. Nike’s ad is a bold proclamation that it is all right in a free society for people to peacefully express themselves, even if it cuts across prevailing societal or cultural expectations.

That’s what being a free individual is all about. Nike’s move is a proclamation of rebellion against the Trump Administration and its intolerance of dissent. It is an empowering message for the ordinary person, both in the United States and overseas where illiberalism has been on the rise.

But will Nike damage its market position?

A careful look at the industry data suggest that Nike is actually in a position to strengthen its market position in the long-run. Industry research by MarketLine reveals, “Preferences from younger generations and technological advancements in sole making are expected to be the major growth drivers driving the market” for the footwear industry.

A January 24-February 22, 2018 Washington Post-Kaiser Family Foundation poll revealed that younger Americans are less opposed to the ongoing NFL protests started by Kaepernick than their older counterparts. In that survey, 63% of Americans in the ages 50-64 and 65+ categories expressed the belief that protests during the National Anthem are “never appropriate.” However, just 38% of the age 18-29 group shared that belief. It is that younger demographic cohort Nike is pursuing.

Finally, Nike was not alone in seeking to enlist the services of Kaepernick. The Los Angeles Times reported:

Nike reportedly had competition for Kaepernick — Yahoo Sports reported Monday that Adidas and Puma were among “multiple” brands that had talked about signing him if Nike did not renew his sponsorship deal, which began in 2011.

Based on the market research data concerning the elevated importance of younger consumers, the fresh appeal of standing up for free expression in the face of the deeply polarizing Trump Administration, and the assumption that Nike will continue to produce quality products that its customers value, the dip in its stock price will likely prove to be temporary. In the longer-term, the value Nike provides to its shareholders from its growth in revenue and profits will determine the trajectory of its stock price.

An iconic brand can facilitate that value-creation process through the enduring power of identity-based differentiation. In signing Kaepernick, Nike made a strategic investment in renewing its iconic brand. It again stands apart from its competition in terms of taking a decisive cultural stand.

The political backlash following its embrace of Kaepernick suggests that it was a bad decision. However, the market case suggests that it could pay off, perhaps in a big way. The market case is the other side of the story that has been lost in the noisy political clamor surrounding Nike’s decision. The market case is very likely the far more important story surrounding Nike’s 30th anniversary advertising campaign.

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About Don Sutherland 83 Articles
Husband. Dad. American. Believes in America on account of its Constitution, ideals, and people. Character, principle, truth, and empirical evidence matter greatly everywhere, including politics and public policy.