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NIKE's Unusual Business Strategy to to Market itself & make Billions? (Business STRATEGY Case Study) - YouTube
Channel: Think School
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Hi everybody.
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Nike is one of the greatest brands in the
world.
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And time and again, Nike has established new
benchmarks with its iconic marketing campaigns.
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But on third of September 2018, Nike had a
campaign that literally broke the internet
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in the wrong way.
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This commercial became so controversial that
President Donald Trump himself put out a tweet
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bashing Nike for their commercial, people
started burning Nike shoes and what followed
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next was a series of catastrophe with boycott
Nike trending on Twitter.
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On top of this, the media started covering
all this drama, which again led to a tonne
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of bad publicity.
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But you know what, guys?
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While all this drama was going on, just when
everybody thought that Nike sales were going
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down the drain, the world was shocked to know
that after this controversial ad, Nike sales
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actually shot up by 31%, and their quarterly
earnings shot up by $129 million.
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And when this news broke out, the stock price
shot up by 36% and Nike gained a market cap
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of $6 billion.
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The question is, what exactly was this commercial?
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How did Nike use this controversy to make
$100 million extra, and most importantly,
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as students of marketing, what are the lessons
that we need to learn from Nikes genius marketing
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strategy.
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This video is brought to you by KuKu FM but
more on this at the end of the video.
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This is a story that dates back to 2016, America.
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And just like the George Floyd case in 2020,
even back then, there was several instances
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of police brutality on black men.
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So an NFL player named Colin Kaepernick kneeled
during the national anthem as a gesture of
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protest against this police brutality.
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And this gesture, took the black lives matter
to another level.
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Millions of people started posting on social
media to both support and criticise Colin
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Kaepernick.
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And this became such a burning issue that
even President Donald Trump tweeted about
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it.
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However, within some time, Kaepernick was
left unemployed with none of the 32 teams
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willing to sign in for the 2017 season.
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Soon enough, many other players started protesting
in their own ways, as the Black Lives Matter
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movement started catching fire.
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And that is when on third of September 2018,
Nike introduced the world to the iconic dream
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crazy commercial.
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And this commercial had the voice of Colin
Kaepernick himself.
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Within just a few hours, this commercial was
trending on every single social media platform.
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And within some time, there were more than
2.7 million posts referring to the Nike brand.
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This led to a massive social media outrage,
we saw people burning Nike shoes, and the
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President again tweeted about it.
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Now the question is when this commercial was
meant for such a noble purpose, and so many
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people resonated with it.
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Why were people burning Nike shoes?
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And why was there so much hate for the Nike
brand?
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As it turns out, this was a result of something
called Bipolarisation wherein one segment
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of people saw this as a gesture of courage
and support for the minority of the United
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States, whereas the second segment of people
saw Kaepernick's kneeling down as an insult
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to the national flag of America.
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So when Nike supported Colin Kaepernick, Nike
was seen as an anti national brand by this
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particular segment of people.
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And these were the people who started the
boycott Nike trend on Twitter.
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As a result, when the sentiment analysis was
done for the conversations around Nike, they
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were absolutely terrible.
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According to brandwatch, immediately after
the ad went live, the sentiment ratio around
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Nike drawn from 90% positive to more than
60% in the negative.
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And as soon as the ad rolled out, the online
conversation about Nike went from 72% positive
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to 65% in the negative.
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This was the disastrous impact of the dream
crazy commercial.
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Then the burning question is that when so
many people were boycotting Nike, and there
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was so much backlash?
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How is it even possible that Nike sales actually
shot up by $100 million dollars?
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Well, the first part of this answer comes
from this wonderful book written by a Nobel
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laureate called Daniel Kahneman.
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In this book, Daniel describes our human brain
as a function of two systems, that is system
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one and system two, while system two is a
scientist who can do all the mathematical
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and complex calculations, system one or the
limbic brain is the monkey brain.
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And this brain is involved in your behavioural
and emotional responses.
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And the catch here is that if you emotionally
appeal to the limbic brain, you can command
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the trust of the humans.
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And the major driver of this trust is the
purpose of your action.
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If you can resonate with the purpose of the
opposite person, then that person or that
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group will automatically begin to trust you.
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And Simon Sinek phrased it very beautifully
when he said, People don't buy what you sell,
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they buy why you sell it.
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And this is where Nikes dream crazy campaign
comes in.
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The Dream crazy campaign was a purpose driven
campaign that stood by a purpose.
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That is the dignity, the respect and the safety
of the black minority in the United States.
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And as soon as people saw it, every single
person who resonated with the Nike's message,
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started sharing the video resulting into extreme
virality.
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Now on the outside, although it looked like
a majority of the Americans were against Nike.
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If you look at the intricacies of the numbers,
it reveals a completely different story.
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While market research shows that 13% of Americans
identify as African American, 18% of Nike
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buyers are black, while Hispanics or people
from Spanish speaking countries account for
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16% of US population.
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They represent 19% of Nike buyers, and Asians
account for 3% of the population, but 5% of
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Nikes customers, whereas the white population
in the US is 75%, but they comprise only 67%
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of Nikes customers.
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Therefore, when Nike released a minority supporting
campaign, 43% of Nikes customers were more
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likely to relate and resonate with Nikes campaign.
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And Nike's reports even say that a major chunk
of Nike's white customers also supported Colin
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kapernick.
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Secondly, the research done by the best marketing
agencies in the world states that purpose
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driven marketing is by far the most powerful
marketing strategy among the millennials and
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the Gen Z.
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And the fun fact is that this is what Nike's
customer segment looks like.
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15% of Nike buyers are less than 18 years
old, 41% are 18 to 24 years old, and 19% are
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25 to 34 years old, which means what 75% of
Nikes customers are less than 34 years old,
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who are extremely likely to resonate with
a purpose driven marketing strategy of Nike.
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And this is where the magic happened.
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While most people saw the general American
reaction and felt that Nike's brand was going
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down the drain Nikes own customers actually
became even more loyal to the Nike brand,
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because to them.
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Now, Nike was not just a shoe company, it
was something way more than that.
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It was a representation of their opinion,
and an icon that stood for their dignity.
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This is the reason why many many celebrities
who resonated with the campaign started sharing
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Nike's commercial on their social media accounts.
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And this included legends like Serena Williams,
LeBron James, and even the Black Panther star
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Michael B. Jordan.
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Eventually, all of this together led to an
extraordinary level of brand perception, leading
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to spike in sales by more than 100 million
dollars.
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And I don't know how many of you have seen
this, but then This usually happens the case
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of politicians or Apple products, that is
when people around them criticise their favourite
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politician or their Apple product.
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These people often tend to passionately defend
their product or their favourite politician,
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sometimes even illogically.
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Nonetheless, because of the criticism, they
tend to find even more ways to support their
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Apple product or their favourite politician.
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You see, this is the byproduct of Bipolarisation.
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And because of this, there was a cherry on
the cake for Nike.
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In this process, Nike actually achieved the
super powerful golden loop of publicity with
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the media, which says that anything that is
sensational, gets covered by media, and anything
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that gets covered by media becomes sensational.
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In this case, the raging reaction to the Nike
ad turned it into a sensation, which is why
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national media channels started writing about
it.
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And this turned it into a national issue inviting
more publicity.
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As a result, the President himself tweeted
about it.
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And this again turned it into an even bigger
sensation, which eventually resulted into
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more media publicity.
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And guess what, because of all these drama,
Nike ended up getting $163.5 million worth
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of media buzz at zero cost.
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This is how Nike established a benchmark for
viral marketing in the 21st century.
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And this brings me to the most important part
of the episode and that are the lessons from
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the case study and the study materials to
help you read further.
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Meanwhile, if you're someone who genuinely
wants to know more about Nike and its revolutionary
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strategies, you should definitely read this
book called shoe dog by Phil Knight.
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And if you don't have the time to read the
entire book, you can listen to the audio book
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in your own reason language using the Kuku
FM app.
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Kuku FM is India's leading vernacular audio
learning platform and it's got some of the
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best audio books in the world in six different
regional languages.
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Apart from this book, you can even listen
to the inspiring stories of Mark Zuckerberg,
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Steve Jobs, Elon Musk, and even JRD Tata.
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And you can get your hands on their 1000 hour
content library by getting the annual subscription
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at just 399 rupees.
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On top of that, you can get a special 20%
discount using the coupon code Think20, which
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And lastly, if you're among the first 1000
people to click on the link below, you can
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use the code think50 and get a 50% discount
on the Kuku FM subscription.
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So if you want to quickly get the knowledge
of shoe dog and other wonderful books, download
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the Kuku FM app from the link in the description.
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Moving on, there are three very very important
business lessons that we need to learn from
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Nike's dream crazy campaign.
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Lesson number one, the 21st century branding
is no longer about just sales and discounts.
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And marketing is no longer just a nudge to
sell your product.
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Today, they're about establishing a deeper
connection with your customers and standing
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up for something that's way beyond conventional
standards.
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In this case, it was Nike's courageous standard
to sponsor Colin Kaepernick to support the
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right cause and use their advertisement as
a symbolic representation of the dignity and
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safety of African Americans.
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Lesson number two, if you're someone who wants
to excel in marketing, it is extremely important
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that you have an in depth understanding of
three important subjects.
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And these objects are consumer psychology,
behavioural economics and human centred design.
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And the best books to start with these objects
are hooked by Nir Eyal, Richard thaler's Misbehaving
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and Daniel Kahneman, Thinking Fast and Slow.
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And last and most importantly, always remember
controversial marketing, although it looks
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very lucrative on paper, it is a double edged
sword.
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When done right, it will put you on a pedestal
but if done wrong, it can make an irreversible
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damage to your brand.
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A classic example of the same is the Gillette's
we believe commercial.
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So always study the failures as carefully
as you study the success.
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That's all from my side for today guys, if
you learn something valuable, please make
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sure to hit the like button in order to make
YouTube Baba happy.
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And for more such insightful business and
political case studies, please subscribe to
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our channel.
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Thank you so much for watching.
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I will see you in the next one.
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Bye bye
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