Communications and Technology, Fall 2016, Junior Year
To build a successful multimillion dollar business empire, one must display an immense amount of resilience and innovation. Phil Knight, Steve Jobs and Jeff Bezos have all successful built their own corporate empires, making their distinctive companies some of the most prosperous enterprises in the world. While, Knight founded Nike, Jobs built Apple and Bezos established Amazon; each individual company has a net worth consisting of billions of dollars. Nike is a global corporation that specializes in retailing athletic merchandise, supplying sporting corporations with equipment and apparel, and is currently worth $100.2 billion dollars (Forbes Magazine). Apple is a worldwide technology company that designs, develops and sells electronics, computer software and online services, all while having a net worth of $586 billion dollars (Forbes Magazine). Amazon is an e-commerce company that sells hundreds of thousands of products and services from thousands of different brands and has separate retail websites for 15 different countries, resulting in a net worth of $292.6 billion dollars (Forbes Magazine).
Although Nike, Apple and Amazon provide different services, each company can be deemed successful in terms of building a lasting business empire in their respective fields. With regards to the immense success each of these companies demonstrate, this paper will analyze how Nike, Apple and Amazon all used PR strategies to manifest resilience, thus, becoming some of the most dominate companies in their distinctive industries. By analyzing each company at a micro level, it will become apparent how a company handles negative publicity is significant in establishing and restoring a brand’s image.
NIKE
Phil Knight established a billion-dollar empire in 1971; Nike brought innovation to the sporting apparel world through new products, technologies and the role of athlete endorsement. Although Nike’s success can be attributed to many different strategies, Knight and his public relations team revolutionized the athlete-endorser business model by building an entire brand around an athlete. An athlete-endorser business model typically uses a celebrity athlete’s name and image to sell a product, where the celebrity athlete makes a significant amount of money. In 2001, celebrity athletes earned over $896 million from endorsements alone (Agrawal and Kamakura). Nike, being the forward-thinking empire that it is, refrained from using this typical type of endorsement and instead invented a new model. Nike created Brand Jordan in 1984, a distinctive brand with the image of only one athlete, Michael Jordan (Kellner 461). Michael Jordan can be considered one of the most famous and known basketball player who dominated the National Basketball Association (NBA) for 15 seasons. Nike recognized that Michael Jordan was a generation superstar and as basketball was becoming a global sport, Nike redefined the athlete endorser model by giving Jordan a percentage of the revenue brought in from Brand Jordan (Kellner 458). This partnership ensured Jordan was eternally loyal to Nike and that he would be motivated to sell.
Nike and Jordan designed a pair of shoes called Air Jordan, with the expectation that Jordan would wear this brand while playing in the NBA. However, due to specific regulations, the NBA commissioner David Stern banned the shoes and declared he would fine Michael Jordan $5,000 per game every time he wore the shoes (Andrews). In Michael Jordan’s book, For The Love of The Game, he wrote, “I kept wearing them . . . and David Stern started fining me . . .” (47). Nike told Jordan to continue wearing the shoes and that Nike would pay any fines associated with the ban. Nike recognized this publicity was generating great interest in the shoes and the fine was a small sum to pay for all the media attention.
This “stick it to the man” phenomenon produced a significant amount of publicity and ultimately sparked a new campaign. As Jordan continues in his book, "It would have cost millions of dollars to come up with a promotion that produced as much publicity as the league's ban did” (48). Knight and his PR team immediately used this publicity to its advantage by establishing Jordan’s brand image. The new campaign concept made rule-breaking sexy and the act of buying a Nike product a way of “sticking it to the man”. By running commercials with a red “X” plastered over the Air Jordan shoes, the shoes became even more popular and were selling out in major cities. Nike used this popularity to create a new brand and identity by inventing the Jumpman logo in 1987 (Andrews). Now in the 21st century, the Jumpman logo is plastered all over t-shirts, socks, hats, pants and other apparel instead of just shoes. Instead of Nike allowing this ban to taint its image, Nike proves resilience by not only recovering from the ban, but figuring out a way to use its new reputation as an innovative and revolutionary way to make revenue.
Although Nike demonstrated resilient in terms of utilizing the ban to its advantage, even the biggest and most successful brands are not immune to all negative publicity. According to an article in the Communication and Critical Studies Journal, Framing Sweatshops: Nike, Global Production and the American News Media, by Greensberg and Knight, Nike was bombarded with negative news stories in 1990 because the working conditions in its factory overseas was considered inhumane. Even though Nike does not own the factory, consumers still expect Nike to ensure conditions are safe and healthy for its employees. Greensberg and Knight’s research demonstrates that the “New York Times coverage of Nike and the sweatshop problem was most heavily concentrated in the front section of the newspaper,” (159) and the news portrayed the sweatshop as “a problem whose roots were found in the demand by western consumers for low-cost, fashionable footwear and apparel” (170). The media framed Nike as “a company that cares more about its brand image than human rights of its workers in the Third World” (127), thus creating a scandal and damaging its image. Perhaps because of Nike’s previous “Stick it to the Man” image, it was easy for the media to portray the angle that Nike was ignorant and oblivious to its factory’s working conditions.
Once the media imploded with news stories, Nike’s PR team had to make a choice of the most efficient way to handle the bad press. Nike was honest and transparent about the sweatshop situation by publically publishing a report revealing workers’ wages and their working conditions. Nike took action by raising the minimum wage, improving oversight of labor practices and ensuring a safer environment (Greensberg and Knight 141), all while reporting to news sources about each step being taken. Instead of Nike protesting that it was a third party factory, Nike acknowledged the situation by acting in a timely manner.
Nike’s transparency towards the public with respect to the factory conditions is a valuable component of Nike’s brand currently. Even today, 27 years later, Nike continues to publish these reports with detailed analysis of working conditions in its factory overseas. The sheer accountability Nike provided gave the company more credibility with consumers and allowed it to repair its brand image.
2. APPLE The brilliant and irreverent Steve Jobs founded Apple in 1976, and Apple became one of the most successful companies in the world. Apple exhibits extreme innovation through the revolutionary way it uses PR to manipulate the media. Apple used a very influential method of PR—the power of exclusion. An article written by Mark Gurman called, Understanding Apple’s Mastery of the Media, details “the imbalance in the relationship between Apple PR and journalist” where it was “one-sided in favor of Apple, with fewer real benefits to the journalist.” Apple used this technique with reporters’ egos to influence the initial coverage of launching new products, ultimately protecting its brand image. Apple strategically chose not to work with numerous media sources and instead focused on a small number of reporters who would set the tone for other reporters to follow. This allowed Apple to maintain control and authority over how the company was portrayed in the media. Exclusion and inclusion is powerful in public relations. A journalist’s job is to report and gather information, and by manipulating a journalist from performing one’s job demonstrates a sense of power. In other words, the majority of media companies, including journalists, desperately want to be the ones to report a launch of a new Apple product. The desire is so great that media outlets will blindly follow Apple’s PR rules of what to say in order to be part of the inner circle.
However, regardless of Apple’s innovative PR strategy and extreme cautiousness of preventing bad press, this superior tactic failed in June 2010. Apple launched the new iPhone 4, which unknowingly had a significant problem with the antenna, causing the phone to lose service frequently (Gurman). Many customers complained, and the problem was very widely reported in the news which generated a significant amount of negative publicity targeted at the Apple brand.
The New York Times wrote an article titled, Errors Mar Initial Sales of iPhone 4, and many other prestigious media outlets reported this problem including the Huffington Post, CNN, and the Wall Street Journal. The NYT’s article paints Apple as ignorant as “They’ve had the same problem with all three previous iPhone launches.” This article was published on June 15th 2010 and Apple responded by uploading a press release to their website on July 2nd 2010, 17 days later. The first paragraph states: Dear iPhone 4 Users, The iPhone 4 has been the most successful product launch in Apple’s history. It has been judged by reviewers around the world to be the best smartphone ever, and users have told us that they love it. So we were surprised when we read reports of reception problems, and we immediately began investigating them. Here is what we have learned. . . . (Letter from Apple Regarding iPhone 4, Press Info) The statement continues with mentioning all mobile phones sometimes lose connection, not just Apple phones, because “Almost any mobile phones in certain ways will reduce to 1 or more bars. This is true of iPhone 4, iPhone 3GS, as well as many Android, Nokia and RIM phones.” Apple desperately wanted to place blame elsewhere by claiming that this malfunction was not an Apple problem, but a problem with all mobile phones in general. The PR team attempted to reinforce this claim with evidence and a detailed investigation. Apple then said that, “we will issue a free software update within a few weeks that incorporates the corrected formula.” Apple’s strategy was not to openly apologize, but to say that they understood the problem and would try to fix it. This statement seemed to work as the media stopped reporting and Apple was able to restore its brand image by defacing the claim.
Apple also experienced bad press with regards to Foxconn, a technology company in China that creates all of Apple’s iPhones and iPads. In 2006, a news story broke in Mail on Sunday, a prestigious newspaper in Britain, that incriminated Apple for having “workers who assembled iPods for 15 hours a day for $50 per month” and for treating employees so poorly that they “work and sleep at the plant” (Frost and Burnett 104). Once this story was exposed, major news outlets around the world covered it, which attracted a significant amount of attention from the public. This story was “gaining most traction on the Internet rather than the mainstream media” resulting in the news spreading virally and quickly throughout blogs, websites and social media sites (Frost and Burnett 107).
Apple released records publicly online on August 17th 2006, six weeks after the first story broke out and promised they would investigate further into the working conditions. The public appeared satisfied with this solution, until Richard Bilton wrote an article titled Apple Failing to Protect Chinese Factory Workers in the BBC News, revealing that “in 2010 when 14 [Foxconn] workers killed themselves” (Bilton). BBC conducted a thorough investigation in 2014 resulting in a documentary that claims Apple did not improve working conditions. The reappearance of this claim sparked the controversial conversation again among media outlets. Tim Cook, CEO of Apple, immediately commented on this documentary by writing to his staff that he is “deeply offended” by the BCC claim and that “we are aware of no other company doing as much as Apple to ensure fair and safe working conditions” (Bilton).
Early in 2017, CNN released an article called, Apple Supplier Foxconn Could Create 50,000 jobs in U.S., written by Jenthro Mullen in January. Mullen reports that apple is attempting to build a Foxconn plant in the United States, with the hopes of creating thousands of jobs. However, this rumour is only speculation as Apple has not confirmed or commented on this plan. It is interesting to note, that 11 years after the exposé about Foxconn and the working conditions, it is still a relevant issue for Apple today,
Even with the negative press Apple has had, it still continues to use the power of exclusion when launching new products. Apple thrives on secrets and being generally closed off to the public, which could have affected its brand image in terms of being dishonest. There is an easy perception and correlation between keeping secrets and having something to hide. Apple’s secretive nature buoyed the media to relentlessly pursue stories in absence of getting perspective and context from Apple’s PR team.
Unlike Nike, Apple’s PR strategy was to deflect blame and it did not act in a timely way. In the absence of an action plan from Apple, the media continued to pursue the story and Apple was frequently in the news. However, Apple proved resilient with handling negative publicity by innovatively creating a new solution of bringing the Foxconn plant to the United States.
3. AMAZON Although Amazon is younger than both Nike and Apple, it too can credit much of its success to innovation and redefining a business model. Amazon has been dominating the electronic marketplace since 1995, discovering the best business model to establish success in e-commerce through supply and demand. At the core of the business model, Amazon’s value proposition is offering hundreds of thousands of products representing thousands of brands all in one website. This established website coupled with a predictive intelligence model that can suggest products to consumers is a winning business model (Amit and Zott 46).
Amazon thrives and relies on customer satisfaction as the existence of its company. Jeff Bezos, the CEO of Amazon, says, “Our focus is on customer obsession rather than competitor obsession, eagerness to invent and pioneer, willingness to fail, and the patience to think long-term” (Amit and Zott 44). This relentless focus from the CEO ensures that commitment to customers is at the core of the Amazon brand. Amazon’s business model revolves around a customer service strategy, giving the overall brand an image of trust. It is Amazon’s brand image that allowed it to recover when associated with negative press.
On August 15th 2015, the New York Times broke an exposé about Amazon called, Inside Amazon: Wrestling Big Ideas in a Bruising Workplace. This lengthy article exposes the Amazon workplace as an atmosphere with the ability “to tear apart one another’s ideas in meetings, toil long and late (emails arrive past midnight, followed by text messages asking why they are not answered), and held to standards that the company boasts are “unreasonably high” (New York Times). The article incorporates many quotes from past and current employees that depict the workplace as an unfit and harsh business atmosphere. Within two days of this article going public, Bezos immediately confronted the situation by writing an email to all his staff encouraging everyone to read the report by including the link. Bezos says, “The article doesn’t describe the Amazon I know or the caring Amazonians I work with every day” and even includes his personal email for people to reach out to him.
This email proves how significant relationships are to Bezos, only furthering his image of trust. Bezos responded to the article with a sense of urgency, this instant reaction helped dissipate any further media spins as he could contain the story. Bezos had enough equity in his personal brand and his company’s brand to quickly deal with the media storm with a well thought PR strategy and plan.
Amazon’s PR team also worked hard to give the media lots of content to keep Amazon in the news in a positive way, while also allowing Amazon to control the message being portrayed. Amazon provides a parade of innovative content like drone delivery and state of the art Artificial Intelligence investments to feed the media positive news stories (Murrary and Chu). Collaboratively, this content builds equity in its brand and its relationship with the media.
CONCLUSION Nike, Apple and Amazon have all proved successful and resilient in terms of building leading business empires that have been affluent for decades. Although each company, respectively, have had to manage and cope with negative publicity, each PR team deciphered a successful plan in order to best survive. Each company was able to manifest innovative solutions and revolutionize the relationship of public relations and the media. Nike was able to repair its brand image after being scrutinized for its working conditions by being honest and transparent with the public and turning a prohibited Air Jordan shoe into an entire brand. Apple restored its brand image by resourcefully bringing the Foxconn plant to the United States, which not only alleviates Apple from criticism, but also retracts the public image of ignorance. Amazon was able to immediately defend itself by connecting with staff and the general public on a personal level, which allowed the company to continue its interpersonal brand image. Overall, it can be noted that even the largest and most successful brands are not immune to negative publicity. However, it is only through pure resilience and innovative PR strategies that a business empire is able to survive and restore its brand image. Works Cited Agrawal, Jagdish, and Wagner A. Kamakura. "The Economic Worth of Celebrity Endorsers: An Event Study Analysis." Journal of Marketing 59.3 (1995): 56. Web. "Amazon.com on the Forbes World’s Most Innovative Companies List." Forbes. Forbes Magazine, n.d. Web. 23 Apr. 2017. Amit, Raphael, and Christoph Zott. "Creating Value through Business Model Innovation." MIT Sloan Management Review 53.3 (2012): 41-9. ProQuest. Web. 24 Apr. 2017. Andrews, David L. Michael Jordan, Inc.: corporate sport, media culture, and late modern America. Albany: State U of New York Press, 2001. Print. "Apple on the Forbes Canada's Best Employers List." Forbes. Forbes Magazine, n.d. Web. 23 Apr. 2017. "Apple supplier Foxconn could create 50,000 jobs through new U.S. factory." CNN Money. Cable News Network, 23 Jan. 2017. Web. 23 Apr. 2017. Bilton, Richard. "Apple 'failing to protect Chinese factory workers'" BBC News. BBC, 18 Dec. 2014. Web. 24 Apr. 2017. Frost, Stephen, and Margaret Burnett. "Case study: The Apple iPod in China." Corporate Social Responsibility and Environmental Management. John Wiley & Sons, Ltd., 26 Apr. 2007. Web. 23 Apr. 2017. Greenberg, Josh, and Graham Knight. "Framing sweatshops: Nike, global production, and the American news media." Communication and Critical/Cultural Studies 1.2 (2006): 151-75. Web. 24 Apr. 2017. Gurman, Mark. "Seeing Through the Illusion: Understanding Apple’s Mastery of the Media." 9 to 5 Mac. N.p., 29 Aug. 2014. Web. 23 Apr. 2017. Jordan, Michael, and Mark Vancil. For the love of the game: my story. New York: Crown Publishers, 1998.: n.p., 1998. Print. Kellner, Douglas. "Sports, Media Culture, and Race—Some Reflections on Michael Jordan." Sociology of Sport Journal 13.4 (1996): 458-67. Web. Murray, Chase C., and Amanda G. Chu. "The flying sidekick traveling salesman problem: Optimization of drone-assisted parcel delivery." Transportation Research Part C: Emerging Technologies 54 (2015): 86-109. Web. "Nike on the Forbes Canada's Best Employers List." Forbes. Forbes Magazine, n.d. Web. 23 Apr. 2017. Rovell, Darren. "How Nike landed Michael Jordan." ESPN. ESPN Internet Ventures, 15 Feb. 2013. Web. 23 Apr. 2017. "The Economics of Nike's Air Jordan Brand." The Market Mogul. N.p., 28 Sept. 2015. Web. 23 Apr. 2017.