How a Shoe Problem Can Cost Billions

An 18-year-old college basketball player, Zion Williamson, was wearing Nike PG2.5 sneakers during a high-profile game between Duke University and North Carolina on February 20. 

Williamson is anticipated to be top of the list in the 2019 NBA Draft pick in June. However, 33 seconds into the game, his Nike sneakers ripped apart and he injured his knee as a consequence. Nike’s market capitalization took a hit of $1.46 billion as shares dropped 1%.

Endorsement deals with star athletes is a crucial part of Nike’s growth strategy, and having something like this happen to someone who is dubbed “the next LeBron James” can seriously hurt the brand’s reputation. Nike immediately released a statement via Twitter after the incident: “The quality and performance of our products are of utmost importance. While this is an isolated occurrence, we are working to identify the issue.”

Former U.S. President Barack Obama was present at the game and a video of his reaction, expressing shock and saying “his shoe broke!” as he points at the athlete, sparked up social media with many celebrities and basketball’s biggest names making comments about Nike and wishing Williamson a speedy recovery.

If I was playing basketball, running, or simply just walking to class and suddenly my Nike shoe ripped apart so easily, no one would care. If I post a photo of my ripped sneakers on Instagram, it would probably not affect Nike’s shares at all. 

This is because I do not influence many people and I cannot impact any company’s shares. LeBron James and Barack Obama did not publicly criticize Nike; all they did was wish the athlete a good recovery but this was enough to go viral on social media. 

The effect on Nike may not be long term because the incident was caused by an apparent malfunction. And this doesn’t happen often since the brand has a reputation of being of high quality (thus highly priced). And people may also not boycott Nike or other companies with links to it. For example, the New York Times reported that advertisers have recently started to boycott Youtube because of the many comments made by pedophiles on the comment section. A faulty sneaker can hardly cause that much damage.  Nike was also quick to react. They released a statement immediately after the incident, rather than let things simmer. 

Social media is a powerful marketing tool for companies to advertise their products. But things can also turn wrong when a negative incident goes viral on social media and leads the shares of a company to drop. Celebrities’ opinions can cost billions of dollars to companies and every time someone of high status is wearing your brand, it can either be a great product placement technique that will raise demand for your products, or things may go horribly wrong as we’ve seen with Nike.

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Falak Al Refai

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