A collision of cultures at Nike Golf

Why the world’s greatest athletic brand couldn’t win in the golf equipment market.

There’s no doubt that Nike is one of America’s most influential brands. Its origin story with waffle-iron running shoes, its history of iconic advertising, and its long list of memorable sports-marketing coups make it required reading at every business school in the country.

But the company that brought us Air Jordan, Just Do It, and Kaepernick on his knee could not deliver when it came to the fickle world of golf equipment. Despite Tiger Wood’s endorsement and an almost unlimited amount of money, Nike exited the golf equipment business back in 2016.

Yes, it’s old news by now, but for anyone who’s concerned about marketing in the golf industry, it’s worth revisiting what went on at Nike Golf.

Nike’s rise to stardom in the golf world began when Phil Knight signed Tiger Woods to a $40 million 20-year endorsement deal in 1995.

In 2002 they introduced their first golf clubs… Nike forged blades. In 2003 Nike became the second-best selling shoe brand in golf. And in 2006 it took over the No. 1 spot in golf apparel. And yet, the largest sporting goods brand in the world, and certainly one of the greatest marketing companies of all time, couldn’t compete with Ping, Callaway, TaylorMade, Titlest and even Tour Edge when it came to golf equipment.

As Phil Knight famously said, “It’s a fairly simple equation. We lost money on clubs and balls for 20 years, and we realized next year’s not going to be any different.” So Knight, or his board, decided to cut their losses and pulled the plug.

But there’s more to it than just a simple financial decision.

Many people have said that Nike quit right when they were hitting their stride as a club company — right when their massive investment in R&D would start paying dividends. Some believe it was a collision of cultures that sealed the golf brand’s fate from day one. Still others say it’s Tiger’s fault.

Everyone seems to have their spin on it, so we’re going to shed some light based on the first-hand experience of Birdie Ops partner Matt Montagne.

Matt spent 10 good years at Nike Golf as the Creative Director and lead designer. He wasn’t designing the clubs, but his work had a significant impact on the innovative — and sometimes controversial — look of everything coming out of Nike Golf.

Even the most ardent Nike Golf haters would agree that they put out some very nice looking golf clubs with never-before-seen graphic touches. The aesthetics were exceptional.

If you’ve ever looked closely at the gorgeous red paint job of a Nike Covert driver you’ll know what we’re talking about. And that super cool packaging for the Mojo Golf ball… that’s also Matt’s work.

From what Matt saw, and from everything I’ve learned in 30 years of marketing, these are the

four biggest contributing factors of why Nike Golf failed.

1. Lack of Clarity — they were unclear about key issues such as purpose and positioning.

2. Product Parity – Nikes “innovations” didn’t translate to better performance.

3. Ego-based decision making.

4. Collision of Cultures – Two camps were always at odds.

5. Too much spent on celebrity endorsements.

6. No story to tell beyond Tiger Woods.

Let’s look at each one of those:

Nike Golf failed for the same reason that 90 percent of all startups fail: Lack of clarity.

Nike never was clear about who it wanted to be in the context of golf equipment. There was no strategic roadmap and no cohesive product vision.

Golf apparel and shoes always fit well within the bigger Nike Brand ethos, but equipment’s a different animal altogether. Matt believes the whole foray into the club making business was little more than a whim.

“All the c-level execs at Nike played golf back then, and I think they just decided they didn’t want to be playing someone else’s clubs,” Montagne said. “It was embarrassing to them, so they just said, hey, we have Tiger Woods. We’re #1 in golf apparel and #2 in shoes. Why not do clubs and balls also?”

Just cuz you can extend your brand into new categories doesn’t mean you should.

Nike Golf is a classic example of a big brand falling into the brand extension trap. The faulty, ego-based thinking goes like this: “We’re so big we can put our name on anything, and it’ll be successful.”

But to golf industry purists, and to a huge portion of the golfing public, Nike golf clubs made about as much sense as Smith & Wesson mountain bikes, Harley Davidson perfume or Colgate frozen entrees. (All are famous brand extension failures.)

It’s not about what Nike can produce. What really matters is the perception consumers have about the brand… How they categorize Nike in their minds.

“Nike’s a shoe company. Sure, they also make shirts and sweats, but golf clubs… I don’t think so.”

It’s just too much of a stretch. Like when Bic tried to stretch its brand into the underwear market. (Bic pens, lighters and razors are all disposable. So why not disposable underwear!)

As reported on the Motley Fool website, “Nike is an incredible brand, and one of the best apparel and shoemakers in the world. But hardware devices don’t fit in Nike’s natural skillset.”

Nike has actually failed repeatedly when they try to sell hard goods of any kind. Case in point: Hockey gear and snowboarding. So is it really any surprise that they failed at golf equipment too?

Nike Golf tried to approach the golf market the same way they sold basketball shoes. But

“Swoosh status,” according to Phil Mushnick of the NY Post, had no effect on which clubs the average golfer chose to play.

“Nike, beginning with its partnership with Michael Jordan, has always relied upon creating a feeding frenzy among young, ‘gotta have ‘em’ males. In the case of golf, however, they were barking up the wrong tree. Golfers aren’t as impressionable as high school kids. They don’t seek street cred.”

Tiger Woods did a lot for the game of golf, but he did not bring street cred to Nike Golf within the golf industry.

Nike’s first irons were their Forged Blade series. They never intended to make a profit off a niche product like that, but they did hope the clubs would buy them some credibility with the golf industry wonks. It didn’t work.

Nike was seen as an intruder… a big brand just buying its way into the equipment business. Publicly, many of those industry insiders were throwing shade at Nike clubs from day one, discounting the brand as a real player. But behind closed doors, all the competitors were scared to death when Nike announced it was getting into the golf equipment business.

“Everyone thought Nike was going to just kill it,” Matt said. They brought big time talent from the golf industry, and of course they had Tiger Woods, but they jumped into the equipment business with no product focus, no brand clarity, no clear positioning strategy at all.

“At Nike we were generalists in a world of specialists,” Matt says. “Many of the products were really good, but they were scattered all over the place. It was just try this, try that. One minute we’d be working on forged blades that Tiger would want, and the next we were trying to get something the general public would embrace. We were never able to get clear on what we wanted to be.”

Nike had never before been tasked with marketing to a crowd of middle-aged white guys who smoke cigars and hang out at country clubs. “It was completely out of Nike’s realm, and frankly kind of a train wreck at times,” Matt said. “We very quickly attracted all the Nike fan boy golfers of the world. All ten of them. But then we were left with trying to figure out how the reach the rest of the market.

Nike built clubs for everyone, but didn’t know how to talk to anyone.

Their clubs were not credible enough to attract the accomplished “core” golfers. And nothing they tried did anything to capture the attention of the casual golfer — the 50-year-old hacker. They just could not get past the rabid brand loyalty the old guys have for their Pings or Titleists.

Nike Golf got stuck in a marketing no man’s land.

Two different cultures butting heads

Nike’s lack of brand clarity was compounded by an internal culture clash that developed right from the start. There were two groups… traditional golf industry execs who left other big golf brands to help launch Nike Golf. Then there were the Nike corporate guys. Two separate camps completely.

Naturally, the golf industry guys wanted to do everything in the old, traditional ways of the golf industry. That’s all they knew. Their whole M.O. was steeped in the traditions of golf and green-grass retail sales.

That camp wanted to position Nike clubs as the authentic country club player’s clubs. They advocated for forged blades and boring-looking drivers specially built for elite players.

But the Nike guys wanted to do everything the Nike way… push innovation, lead the way, introduce ground-breaking technology and dominate every category they entered.

One of the Nike maxims is “we are on offense, always!” They don’t care what anyone else is doing… it’s always pedal to the metal. The golf guys didn’t understand that.

Nike sets trends, it doesn’t follow.

So they did adjustable Covert drivers, RZN balls, slingshot irons, square Sasquatch drivers, toe sweep wedges, adjustable, counter-balance putters.

All good ideas. Most were expertly executed by the guys at The Oven, Nike’s state-of-the-art club making facility in Ft. Worth, Texas. Unfortunately, none of those “technological advances” in club design resonated with the general golfing public.

Tony Covey, on My Golf Spy, wrote: “Nike Golf was seldom conventional. For every beloved (or at least cult) product like the Pro Combo irons, Nike released three aggressively innovative (and often oddball) designs.”

“It’s part of what made Nike Golf cool, but… Under Tom Stites’ influence, the company’s tendency was to push the envelope long before it had found solid footing in the golf equipment space. Simply put, Nike Golf was innovative before it earned the right to be. It continually pursued non-traditional products, apparently believing that being Nike would be enough to drive sales; a notion categorically rejected by the consumer.”

Being Nike can sell a lot of shoes and shirts to golfers, but it didn’t work in equipment.

Tiger Woods worked against Nike Golf in three unforeseen ways.

Tiger was golf’s first real athlete. He made it okay for golfers to lift weights and get buff. In his book, Hank Haney said Tiger’s workouts were obsessive, which played perfectly into the overall Nike brand narrative.

We can all aspire to be like Mike, or Tiger.

Tiger definitely made golf incrementally cooler than it was, but still… 90% of the golfing public do not think of themselves as athletes and they don’t equate performance on the golf course with athletic performance.

There was a huge disconnect there.

Tiger had God-like skills that no ordinary person could relate to. He hit it ten miles. His clubhead speed was off the charts. He hit shots no one else on tour could hit and distanced himself from the field.

That image was reinforced with commercials like the one where he’s bouncing a golf ball off the face of the club while non-chalantly delivering his sales pitch.

So he was cool and fit, but not relatable to the general golfing public.

Then there was the painfully visible problem of Tiger not always playing the clubs that Nike Golf was producing. Tiger’s version of “What’s in My Bag” did not help Nike Golf at all.

He was a traditionalist who did not change clubs lightly. Tiger was sticking with the old stuff that was working for him, and he seldom had Nike’s latest and greatest in his bag. So their new product launches were never supported by TV time on the weekends. The old golf industry adage, “what wins on Sunday sells on Monday” never played out for Nike.

“Nike Golf tried to position itself as a leader in equipment innovation, but that’s an untenable position when your top athlete, and the face of your brand, eschews nearly every aspect of that innovation,” Covey said.

So even those who loved Tiger, and were favorably pre-disposed to the Nike brand, were not compelled to buy Nike clubs.

Leave it to golfers to come to delusional conclusions like “If Tiger’s not going to play that new Nike driver, neither am I.”

And finally, there was the whole Tiger-in-a-heap-of-trouble scandal in 2008. That’s always a risk with celebrity endorsements. Nike was one of the few sponsors that stuck with him through his darkest times.

And here’s the kicker for Nike… When Michael Jordan was in his prime kids bought his sneakers even though they never really played basketball. Young people were flocking to Tiger’s footwear brand, but that’s as far as it went.

The halo effect did not extent to a full set of clubs.

Shoes don’t cost $1500 and they don’t hurt your performance on the golf course. No one wanted to risk it with an unproven brand of clubs, even with the name Nike behind them.

The saddest story of all is no story at all.

The clubs Nike produced were innovative in many ways, but superior in none. So in world of product parity, the only story Nike Golf had to tell was the celebrity endorsement story.

Throughout its history Nike has bet big on elite athlete endorsements. The brand wins big when their athletes win big. With basketball shoes and track spikes that happens quite often. But in golf, the individual wins are few and far between. Even for Tiger Woods.

There’s no doubt that Tiger’s presence helped sell tons of shoes and apparel. But Nike’s combined spending on Tiger, David Duval, Rory McElroy, Michele Wie, etc, etc, etc, was excessive and did not translate into club sales.

“The sports marketing team at Nike always wanted the best athletes at any price. And they did a great job of vetting golfers,” Matt said, “until Patrick Reed. That was a misfire. Not only that, Nike wanted to control the optics, head to toe, with all their athletes. They didn’t want any of their guys displaying any other logos, so it was all Nike or nothing.”

In 2013 they signed Jason Day to a 10 year deal worth $200 million. If you start tallying it up, the annual endorsement expenses alone made the marketing budget of Nike Golf bigger than that of most of their competitors.

But no matter how much money you throw at a marketing effort, it’s not going be very effective if you don’t have a relevant, compelling story to tell.

“The ROI on our marketing spend was frustratingly low,” Matt said. “But the Nike guys were always comparing it to what was spent in other divisions, and it was peanuts compared to Running, for instance.”

Matt said the golf industry guys kept trying to build a story around innovation. So there were a lot of opinions jammed into every club. At times, it became design by committee with a lot of stubborn people involved.

The results were hit and miss, at best. Stites was a firm believer in traditional head shapes for drivers and woods, but then there was this weird looking square driver. The sound of the Sasquatch driver ruined any chance for that club. (No amount of marketing could overcome that horrifying crack.) And that failure spilled over into the perception of Nike’s other drivers and woods.

One of the marketing challenges Matt faced was with their agency team. “Wieden & Kennedy was always good for Nike, but they didn’t know anything about golf,” Matt said. “They did some great spots, like Frank the headcover, but we definitely were not getting their A team. And their efforts were often out of sync with what were doing internally.”

As Matt says, “there were always strong headwinds that we had to fight. That was a recurring theme in all our strategy meetings.”

According to Forbes magazine 2013 was Nike Golf’s best year ever, with sales hitting $792 million. However, club sales accounted for only $90 million of that, and balls were worth $30 million in revenues. That means apparel and shoes were 80% of Nike Golf.

What’s even worse, Nike’s market share in drivers was only 3%. They barely reached 5% with Nike irons and putters. That’s not enough to keep Uncle Phil Knight interested, when he’s accustomed to winning in any category.

With golf apparel and shoes, Nike had the perfect combination of innovation, product mix, distribution, and promotions with Tiger leading the way. It really wasn’t much different than Nike’s business in any of their other divisions, be it basketball, running or tennis…

Excellent margins, fast turnaround time on new product launches, and a tried-and-true approach to marketing. But golf equipment, as they say, was a whole different animal.

Throw in clubs and balls, and Nike Golf was the worst performing division for the world's largest sporting goods brand. It’s no wonder they decided to quit on equipment and bring the rest of the golf division back into the Nike fold.

And let’s not forget… Nike’s not the only company to make that decision. Adidas also exited the golf equipment business by selling off TaylorMade and Adams Golf. At least they never tried to do Adidas brand drivers!

As My Golf Spy reported, “Nike never acted like a golf company. Much of that was by design. Nike Golf was powered by an absolute certainty that golfers would eventually come around to the Nike way. At the core of everything Nike Golf did, or did wrong, was its unyielding belief that it could succeed in golf equipment based on the sheer force of being Nike.

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