How Nike Turned Its Brand into a $35 Billion Cognitive ‘Shortcut’

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How Nike Turned Its Brand into a $35 Billion Cognitive ‘Shortcut’

Nike entered the market in 1972 with its revolutionary Air Force 1 shoe — light, breathable, and made for indoor use. 

It was unlike anything else you had ever seen. The concept of a sneaker as a fashion statement may seem obvious today, but at the time, it was an innovative idea, and Nike’s success was upended.

In the past, brands were a set of values, beliefs, and characteristics that a company wanted to communicate to its customers. Then came the Industrial Revolution, and brands became commodities. Products were no longer branded; they were named. As a result, the use of brands as a form of communication decreased significantly. Instead, brands are now focusing on how they want to communicate the brand image. 

So, Why Are Companies Focusing Their Efforts to Turn Brands into Cognitive Shortcuts?

Despite many cultural references referring to the name of a product, people don’t care about a brand’s reputation, for the most part. Instead, they care about the brand’s behavior towards the development. They want to know whether it makes them happy or not. They want to see if it feels safe or not.

For this reason, most companies are turning their brands into cognitive shortcuts that take the place of words and images. Brands are becoming intelligent and placed in consumers’ minds for their unique personalities. Therefore, an effective way of communicating with consumers is to show them what they should think, feel, or do when interacting with your products. 

Nike’s First Advertising Agency

Nike’s first advertising agency, Wieden+Kennedy, did not define Nike as it was later. ‘We said our job was to give them a lot of money,’ David Kennedy told Forbes in 2012.

Eventually, the agency wanted to push Nike further than it could go on its own, so Wieden+Kennedy turned to Nike Retail Director Mark Parker to develop an idea. After years of studying people’s bodies and how they moved, Parker had developed an insight that would send shock waves through the industry: Nike could create a product that would help athletes achieve their potential.

Read Also: Benefits of Air Conditioning When You Have Kids

BTS: Behind The Scenes 

The idea behind the ad was that Nike’s customers were not just athletes but all the people who were hungry for success. The more they pushed themselves, the faster they achieved their goals. 

Society of the Future

For Nike, it wasn’t about making financial gains in the future only but also staying true to its values alongside ethical sourcing and respect for workers. It wasn’t going to be a short-term win: Nike has won back its customers and delivered on its promises, all while earning billions in revenue from consumers who believe in the brand’s mission.

The Word “Crisis” Is in This Headline

It’s easy to see why. After all, Nike was vilified for its labor practices and its sweatshop factories. But, while the brand suffered during this time, it also learned from the experience.

The ordeal set the company up for a considerable shift: Nike decided to become more transparent about its supply chain. That led to a massive overhaul of Nike’s supply chain, improving worker conditions, labor transparency, and environmental impact statements.

Nike proved that you could use PR and advertising to get past a crisis, but you have to be willing to make the necessary changes in behavior. 

Nike is a Successful Brand

Nike is an example of a powerful brand that redeemed itself because it cares. The campaign was a global success, and the brand is now estimated at a $35 billion market cap. In addition, the company’s widely recognizable swoosh logo is often credited with helping Nike become the first shoe company to sell more than $1 billion in sneakers per year.

Brands are often forgiven for making mistakes because their audience recognizes that they’re not perfect. But it’s rare to see investors and stakeholders discounting a brand for losing millions of dollars.

Despite the $35 billion valuations, it lost $3.5 billion in market cap when it cut ties with Colin Kaepernick and tried to distance itself from the NFL’s divisive anthem protests. As a result, it took even longer than most predicted (about two weeks) before Nike’s stock recovered its value.

Why Did Investors Lose Interest? 

The answer isn’t complicated: Nike has built an enormous and loyal following by being true to its core beliefs, even when it means losing money for a brief period. And this approach is known as “cognitive shortcuts.”

Cognitive Shortcuts

A cognitive shortcut is a mental shortcut that allows us to rapidly make decisions based on our existing beliefs or cultural norms. The Nike example illustrates the power of the shortcut in shaping consumer behavior because it’s about how people make decisions based on their existing beliefs or cultural norms.

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In Conclusion 

Today’s consumers value integrity and efficiency over everything else, seeing right through cracks of duplicity and shallow messaging. Incremental changes can be good, but they don’t drive exponential results. Therefore innovation and staying ahead of market trends are crucial to growth. 

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