Nike founders Phil Knight and Bill Bowerman were athletes themselves. For athletes, shoes are a critical element. Having spent time extensively with a lot of budding athletes, Bowerman had developed a good knowledge about the needs, pain points of athletes with respect to shoes. So, they began to design shoes to meet the needs of those athletes and sold under the brand name ‘Tiger’ in the early 1960s.
But Phil Knight had a challenge in his hand. How to grow the business? Targeting ‘Athletes’ was a small market.
Red Ocean or Blue Ocean? -Shoe market for athletes was already dominated by big German giants. For Phil, if he was looking to increase the market share in the existing market, he would have to try to attract the customers away from the sports giants. In that case, he would be spending his scarce valuable resources in fighting those big competitors. It was not a viable idea. The best option would be to look for a Strategy to grow the market rather than just aiming to grow the company’s market share in the existing market.
Non-Customers -The first step to expanding your market boundary is to shift your focus from your “Existing Customers” to “Non-Customers”. When you are targeting new customers who had never thought about your product or service, you are no more fighting any incumbent or your present competitor, you are fighting against “Non-Consumption”.
As Michael Porter pointed out that the first step for “Competitive Advantage” is to look at a market segment where competitive forces are weak.
Fighting Non-Consumption -To overcome the ‘Non-Consumption’, the first step was to really care for your customers and think about what is best for them and help them to achieve it through your product or service. It is not about talking about the benefits of our product or service but to help customers do what they wanted to to do and help them to do it better than before. It is about helping a customer to become a better version of themselves. It is about teaching them the best practices in the field and sharing knowledge. It is called ‘Educating customers’.
Educating customers is about building relationships with customers. An engaged customer assures brand loyalty.
Nike’s Customer Education
In the early 1960s, running for fitness wasn’t popular. It was believed that only weirdos or crazy people would run for pleasure or exercise. Runners were mocked at that time. People threw soda or beers at runners. It was not a pleasant time.
Nike’s original founders Bowerman and Phil Knight firmly believed that people could live a healthier and longer life if they could run for a few miles every day. Their mission was not to earn profits but to educate customers about the joy of running.
Bowerman thought that people mistake that only elite Olympians are athletes. For him, everyone’s an athlete. He firmly believed that if a person has a body then he is an athlete.
Phil and his colleagues talked about sports at every opportunity. They loved to spend hours with anyone who had a genuine interest in learning about the world of running. They allayed the fears the customers had regarding athletic sports. This attitude spread to others in the company.
Jogging Culture -Bowerman promoted the concept of running as a fitness routine, including people of an advanced age through writing articles in magazines. He also created a running program in Eugene that became a national model for fitness programs. In 1966, he wrote a book titled ‘Jogging’, which preached the benefits of jogging and the techniques. The book became a massive hit and millions of copies were sold. The concept of running for fitness spread like wildfire. In that book, Bowerman never spoke about ‘Tiger’ brand’ or its shoes. He spoke what was important for the readers. But the book brought enough publicity for the company. Because of the book, ‘running’ was no longer just for weirdos or crazy people but for everyone. It became trendy and cool. The market for shoes expanded beyond athletes.
Jeff Johnson -One of Phil’s earlier hires, Johnson was also a runner. He believed that runners are God’s chosen people and that running if done right, in the right spirit and proper form would be a mystical exercise, similar to the spiritual experience a person would get in meditation or in prayer. He kept inviting many people to take up running.
Knowledge Of Injuries -In the 1960s, it was tough to find information about sports injuries. Johnson bought so many books, learnt a lot and shared that knowledge about injuries with every runner. He offered advises regarding ways to avoid injuries, the ways to take rest and recuperate.
Phil Knight’s company was not just teaching customers about running but also showing them how to enjoy it.
By educating customers, Nike created a new market where the competition was literally non-existent. By the time, the competitor entered the market, Nike had already laid a strong foundation in the minds of people.
Despite having better shoe than any other brand, Nike would have remained a very small niche player or would have vanished from the market if it had not invested in consumer education.
Starbucks’ original founders Jerry Baldwin, Zev Siegel and Gordon Bowker opened the first ‘Starbucks’ store in Seattle to sell authentic coffee beans to a tiny niche of gourmet coffee lovers who were looking for a naturally processed, authentic coffee beverage & was willing to grind the beans in their home.
Educating Customers -The Starbucks original founders were passionate about the coffee. They never aspired to build a business empire. They strongly believed that Starbucks coffee beans were the best in the market. They wished customers should get the best value and taste from those coffee beans. So, they began to educate the customers about the joy of world-class coffee, about the way of roasting & brewing the coffee and about maximizing the quality of the coffee. The roasting process plays a vital part in providing quality coffee and particularly, the ‘dark roast’ will bring out full flavours of coffee. It is also a difficult part of the whole coffee preparation process. The founders loved sharing and demonstrating those best practises.
The new knowledge helped customers to gain full value from the product and their product experience improved dramatically. They began to promote brand experience among their friends. Starbucks made rapid strides in the market.
Baristas of the Starbucks stores were also motivated to develop a deep knowledge of coffee. Their vital role was not to sell the beans but to help consumers make decisions on beans, grinding, coffee making and the making of espressos. It was about building a long-term relationship.
If you care about your customers, they would care about your product.
Howard Schultz, former Chairman and CEO, Starbucks, is of the view that if we offer something that a customer is not accustomed to, something far superior to what they had imagined, then it would take time to develop their palettes. Through education, we could slowly create a sense of discovery and excitement and loyalty that would bond them to our brand.
“To mean something to customers, you should assume intelligence and sophistication and inform those who are eager to learn, If you do, what may seem to be a niche market could very well appeal to far more people than you imagine” -Howard Schultz
Customer education improved each customer’s experience of the Starbucks’ product, which in turn increased customer engagement with the brand.
References: ‘Shoe Dog’ by Phil Knight, Pour Your Heart Into It by Howard Schultz.
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