This article appeared in the Spring 2013 issue of LINKS.
The next time you go to the course, do a quick survey and see how many Nike clubs you see in other bags. Chances are you’ll find very few. Talk to fellow golfers and you’ll probably hear comments like the following, which were found on golf websites:
“I’ve never played golf with anybody with even one Nike club in his bag.”
“I don’t see how they could justify paying [Rory] for a club endorsement when it still results in people walking by the Nike clubs at the stores constantly.”
“Titleist = golf. Ping = golf. TalyorMade = golf. Callaway = golf. Nike = running shoes.”
It’s odd, to say the least, given that Nike has had the most marketable golfer in history, Tiger Woods, since 1996, as well as many other top players, now including world-number-one Rory McIlroy. Not only do they make good clubs with a lot of smart research and development behind them, but they also have the best marketing machine in sports. Witness the recent, attention-getting ad with Woods and McIlroy dueling on the range. Though it ran for only a few days, it has racked up close to 10 million hits on YouTube.
So why don’t more golfers play Nike clubs?
One reason is that many golfers think it really is all about the shoes—that Nike is only interested in selling soft goods (clothing and footwear) and having an equipment division furthers that goal by giving their golf brand a bigger presence. But Nike Golf president Cindy Davis passionately disputes that notion.
“Look at the investment we’ve made over the last decade,” she says. “Absolutely, equipment matters. Equipment is the emotional epicenter of the golf industry. We made a strategic decision long before I was here to get in the equipment business because we knew the importance that piece held to ultimately becoming the leader in the category.”
To be fair, Nike Golf is pretty new to selling golf clubs, doing it for barely a decade. But that means many golfers, particularly older ones who didn’t grow up with the brand, still don’t see Nike as a legitimate equipment brand.
“Nike is by far our number-one apparel company and it’s one of the top brands in shoes,” says Kerry Kabase, Edwin Watts’s vice president of purchasing and inventory. “The big puzzle for them has been the hard goods side of it. They’ve had some nice products but they’ve never really resonated with the consumer, probably because golfers don’t perceive Nike as an authentic golf brand as far as clubs go.”
Once they got into equipment, the running-shoe pros were slow off the mark. They acquired a first-rate R&D unit (Impact Golf Technologies in Ft. Worth, Texas, now called “The Oven”), but didn’t do a very good job of servicing hard-core golfers.
“You couldn’t get custom clubs from them in a reasonable time frame,” notes Kabase. “They didn’t cater to the better players who wanted to get fit, who didn’t want something right off the shelf, and I think that hurt them over the years. It took them a while to realize that if you’re going to be an authentic golf brand, you have to do custom clubs and deliver them in a quick manner. But it’s an issue they’ve addressed and they’re a lot better at it now.”
Nike is hoping to hit one out of the park with the VR_S Covert driver, which is unique for its cavity-back design (perhaps the first driver ever with one) and red crown with the big swoosh on it. To get it into more golfers’ hands, they took the unusual—and expensive—step of placing almost 300 reps every Thursday through Saturday in the month of March in big golf shops across the country to entice customers into a distance challenge.
“It was quite a big-scale project, so my hat’s off to them,” says Kabase, who had Nike reps in 50 of his stores. “They’ve put a lot of R&D and effort into the Covert, and so far so good. I’m not going to say it’s our number-one driver, but we’ve done a lot better with this club than we have with the others in the past, so it’s been a nice start to the season for them on the hard goods side.”
Nike Golf has never had a breakout product, which every company needs at some point to establish itself. Think Ping with its Eye2 irons and Callaway with the Big Bertha driver.
“It can change everything,” says Davis. “We are in the midst of that with this driver. Our sell-through [units sold] is double-digits times more than it was last year. What does that say? If you bring to market an exciting product that’s demonstrably different and can make golfers better, there will be interest to try it. If you look at the history of a lot of companies in the club category, at some point in their journey there’s a breakthrough product that changes everything. I think we’re on that now with this driver.”
“Covert” is an apt name as Davis won’t share sales data. But even with the driver selling, Nike Golf’s market share remains very small. And with about 50 players on staff, including the two highest paid endorsers in the game (Woods and McIlroy), one wonders how the company can recoup its costs, especially when they have to pay a premium to players to own all their logo space.
“Absolutely, there’s a return on investment,” says Davis. “I’m responsible for quarterly and annual earnings so we look at everything to drive the business. First, we learn a lot from working with the best athletes in the world. Our engineers, whether they’re in apparel or equipment, spend a lot of time understanding what these athletes need. So if we can make products to help them perform their best, we can make products for any golfers to perform their best. Our stable of athletes is very actively involved in the development process and working with our R&D team. And then secondly, the fun part is they then take our products out onto the biggest stages in golf and perform.”
Truth be told, older golfers will probably never play Nike equipment. But the younger generation, growing up under the influence of McIlroy and Woods, is more likely to view Nike Golf as a true golf company.
“We’ve always looked at this as being more of a marathon than a sprint,” says Davis. “If you’re asking, ‘Where do you see Nike 10, 20 years from now?’ I have no doubt that we will be a flat-out leader in clubs and balls. I say that because of the investment we’ve made in innovation and the next generation of golfers growing up with young athletes like Rory McIlroy using our product.
“What’s so fantastic for our brand is that golfers are changing,” she adds. “There was a day when nobody would have played a Covert driver, nobody would have worn on-course/off-course footwear. You’re seeing changes in consumer habits, trends, and behaviors that are beneficial for our long-term success in clubs and balls. It’s just a combination of our maturity and the evolution of golfers in the category.”
She could very well be proven right. After all, swoosh is not just their logo: It’s also the sound of a golf club in motion.
With Rory, Tiger, and many other top tour players on its staff, Nike is the New York Yankees of golf. But they have yet to hit a home run with consumers.
By: Tom Cunneff