PRODUCT
OVERVIEW
INTRODUCTION
The company Nike was founded in 1964 as Blue Ribbon Sports and initially operated as a distributor for the Japanese shoemaker Onitsuka Tiger (now known as Asics). In 1971, the company name officially became Nike Inc. Bill Bowerman and Phil Knight created it. They originally wanted to call the company "Dimension 6." The Nike name comes from the Greek goddess of victory, and it’s pronounced "ny'-kee." Nike's first employee, Jeff Johnson is the person who came up with the name (O'Reilly, 2014). The Nike swoosh was designed by a Portland State University student named Carolyn Davidson.
The slogan that Nike is known for “Just Do It” was inspired by serial killer Gary Gilmore, who said “let’s do it” just before he was executed by a firing squad in 1977. Nike's mission statement is “BRING INSPIRATION AND INNOVATION TO EVERY ATHLETE* IN THE WORLD. *IF YOU HAVE A BODY, YOU ARE AN ATHLETE.”
Michael Jordan who no longer is a professional athlete still reportedly earns $60 million annually in royalties from Nike, according to Forbes. That makes him the athlete with — by far — the biggest Nike endorsement deal (O'Reilly, 2014). For that reason we will focus on his Nike Air Jordan Brand.
The slogan that Nike is known for “Just Do It” was inspired by serial killer Gary Gilmore, who said “let’s do it” just before he was executed by a firing squad in 1977. Nike's mission statement is “BRING INSPIRATION AND INNOVATION TO EVERY ATHLETE* IN THE WORLD. *IF YOU HAVE A BODY, YOU ARE AN ATHLETE.”
Michael Jordan who no longer is a professional athlete still reportedly earns $60 million annually in royalties from Nike, according to Forbes. That makes him the athlete with — by far — the biggest Nike endorsement deal (O'Reilly, 2014). For that reason we will focus on his Nike Air Jordan Brand.
PROBLEM STATEMENT
There have been a few large problems in Nike’s history with the Jordan brand, one of those problems being a suit claiming that it’s iconic “Jumpman” logo owes its existence to a photo taken for Life magazine, and violates the copyright of that image. The silhouetted image Michael Jordan with his legs spread and arm extended found on billions of dollars worth of Jordan brand sneakers and apparel is now the subject of copyright infringement. In March of 2015, Nike filed a motion to dismiss the lawsuit, claiming the complaint was “meritless” and failed to meet the standard for infringement. Nike paid the initial photographer $15,000 so they could keep using the photo they created, and the photographer submitted an invoice, not a contract, for the $15,000 as part of the filing which specifies that Nike’s photo was to be used “for North America only” for two years, with all other rights reserved by the initial photographer (Bain, March).The issue behind this problem is that over the past 30 years since the Jordan brand has been around, Nike has made billions of dollars, and if Nike were to have to pay out some of those profits, it could mean a hefty chunk of change they would have to come up with and may cause strain on the brand and also the market.
Another problem is the controversy behind how and where the shoes are made. Their business model was based on outsourcing its manufacturing, using the money it saved on aggressive marketing campaigns to better their brand, which brought production to countries where there were sweatshops and people working for little to nothing to produce the products. Since their “outing”, Nike has focused on being transparent and became the first in its industry to publish a complete list of the factories it contracts with and also published a detailed report revealing conditions and pay in its factories and acknowledged widespread issues, particularly in its south Asian factories (Nison, 2013). The issue behind this problem is if Nike is employing children and not offering a good work environment, they are in turn causing harm to the workers simply to make a profit.
The last issue to touch on is the damage to the whole Jordan brand. Michael Jordan himself has been caught saying “I don’t want to hear any complaining about can or can’t afford what. There isn’t any Phillipinos or Indonesians that are going to be wearing Jordan’s anytime soon and they’re making them for five cents an hour. My Air Jordan’s are the new Blood Diamonds” (Celebtricity, n.d.). When the brand starts to downplay a potential market, or classify themselves as “better than that”, that is when it starts to lose some of its momentum. The Jordan’s brand even saw some of their best customers boycotting the brand because of the sweatshop issues they faced, and also because of the very specific target market the brand had.
One of Nike’s
strongest branding initiatives is partnering with top athletes in a myriad of
different sports. Many of these top-performers have caused issue for Nike when
various scandals have come to light. While other sponsors have dropped several
of the following athletes due to scandals, Nike has been careful which to cut
ties with and which to stand by.
Kobe Bryant,
one of the NBA’s all-time best players, was accused of sexual assault by a
19-year-old. Claiming it was consensual, charges were dropped and Nike chose to
hold ties with Bryant. In order to save face, the company chose not to use
Bryant’s advertisements or personal brand for two years while he recovered from
the scandal.
Tiger Woods
also has been a notable example but not necessarily for illegal acts. His
numerous counts of infidelity has caused the public to view him as
untrustworthy and immoral, shaking the view of his brand, but not causing Nike
enough trouble to warrant breaking contract.
Lance
Armstrong recently admitted to doping while training for races, ultimately
losing his contract with Nike. Before this came to light, he was a great
example of cancer recovery and inspiration to many.
ADVERTISING/MARKETING OBJECTIVE
Nike has a number of marketing strategies to target consumers. The targeting strategies include the sponsorship of products by professional athletic teams, celebrity athletes and college athletic teams. This strategy is specifically successful because of its ability to reach a large number of athletes. If the athletic team manager endorses a specific type of track shoes made by Nike, the trainees have no option than to buy them. The teams can as well buy the track shoes in bulk and supply them to the team members.
The second strategy that Nike applies is the designing of product destination. Nike does this by associating success with the product. Like when a celebrity athlete sponsors a specific brand; that brand then is associated with success. It’s a mental strategy that will cause the consumer to buy the product if they want to perhaps “be like Mike.”
Finally, Nike targets the consumers who are likely to develop product intimacy; those who care more about the utility and quality of the product than the price. In this way, the pricing is not affected too much in a bid to accommodate a large number of consumers. Many of Nike’s clothing lines are advertised to assist customers in athletic activity that they engage in. To assert this idea, Nike has to manipulate language in a way that convinces customers of the effectiveness in the apparel they purchase. You will see such language like “Dri-FIT” and you’ll think; “well I do sweat a lot when I run, maybe I’ll buy that.”
These strategies will help us reach our objectives of getting our quality products to the customers that will appreciate them, and make them stay loyal to the brand by igniting positive feelings about the product that can turn into lifelong customer loyalty.
The second strategy that Nike applies is the designing of product destination. Nike does this by associating success with the product. Like when a celebrity athlete sponsors a specific brand; that brand then is associated with success. It’s a mental strategy that will cause the consumer to buy the product if they want to perhaps “be like Mike.”
Finally, Nike targets the consumers who are likely to develop product intimacy; those who care more about the utility and quality of the product than the price. In this way, the pricing is not affected too much in a bid to accommodate a large number of consumers. Many of Nike’s clothing lines are advertised to assist customers in athletic activity that they engage in. To assert this idea, Nike has to manipulate language in a way that convinces customers of the effectiveness in the apparel they purchase. You will see such language like “Dri-FIT” and you’ll think; “well I do sweat a lot when I run, maybe I’ll buy that.”
These strategies will help us reach our objectives of getting our quality products to the customers that will appreciate them, and make them stay loyal to the brand by igniting positive feelings about the product that can turn into lifelong customer loyalty.
AIMS OF YOUR CAMPAIGN
Nike Jordan currently has their ongoing campaign called #WeAreJordan. The aim of this campaign is for those who wear the shoes to be Jordan. Not Michael, but Jordan. With Jordan, one may have feelings and thoughts like
I am not Michael. I am my own legend. And in pursuit of my greatness, I will face every challenge. And improve from failure. You can doubt me, even test me. I am not Michael, but I will show you the heart of a champion. I am not common, average, familiar, or ordinary. I am Jordan. It's more than what I wear. It's how I live. So no matter the test, no matter the cost. No matter the game, you will know, I am not Michael...But I am, Jordan.
(Nike, n.d.)
Our campaign will make those who wear Jordan feel all of those feelings. They will feel like an athlete, one that can accomplish anything. Everyone will feel like Jordan, even if that Jordan means something different from one person to the other. They will be at their best with their Jordan's. Our campaign will make people feel at one with themselves and their passion.
PRODUCT
PROFILE
PRODUCT NAME
Nike Jordan has many different types of products under this brand including shoes, apparel, and active and athletic gear. Our group's main product focus will be the Nike Jordan shoes. Upon visiting the Nike website, one will find there are different options when looking to find their specific Jordan footwear. Potential customers are able to choose Jordan's made for lifestyle, basketball, training, other sportswear, and iD. The iD is a great option for those looking to find the perfect Jordan shoe because it is customized by the consumer, so it's tailored to one's specific likes and needs.
Jordan's most recent addition to the "flight frontier" is the Air Jordan XXX, and it will be "bringing with it three decades of innovation that have led to a shoe that lives up to its legacy," (Nike, n.d.). It is this shoe, among many other Jordan's, that allows those who wear them to be and feel like the top performing athletes they aspire to be.
PRODUCT CLASSIFICATION
Nike Jordan shoes are classified as a specialty good in the athletic footwear department. Goods in the specialty products classification "tend to promote very strong brand identities, often resulting in strong brand loyalty among consumers. Buyers for your specialty goods generally spend more time seeking the product they want than on comparing brands or products to make a value decision," (Dye 2016). This is certainly true for people buying Jordan's. Those who purchase Jordan's are usually extremely loyal to the brand, and often owning multiple pairs. They hold high value in the products and carefully choose the shoe that will be most suited for them.
PRODUCT CHARACTERISTIC
Jordan footwear products have many different characteristics and attributes that make the shoe truly wonderful. The shoes are made of high quality material that make the shoes last and deliver high performance. In addition, there are different types of Jordan shoes made for several different activities, so there is certainly variety when choosing your Jordan footwear. The shoes can be found in multiple colors, and if you cannot find the color you are looking for, one has the option to custom make their Jordan so they can get exactly the color they want with a certain shoe style.
The classic Jordan logo is found on all Jordan footwear products as well, so mistaking Jordan's for something else is unlikely. The shoes are lightweight and will not drag our down in during your activities. Wearing Jordan's will feel weightless and a natural part of you.
DISTRIBUTION
Nike Jordan shoes are distributed globally to specialty athletic footwear stores and other independent retailers. They can be bought online through the Nike site itself and through retailer's sites. However, one cannot apply to sell Nike products on auction sites, as those applications will not even be considered by Nike. In order to ensure you are getting authentic Jordan's, one should make sure they are buying from a reliable source. When doing a search for the Jordan products, one should pick from one of the first few sites that come up in a search just to be safe.
PRODUCT LIFE CYCLE
The product demand life cycle happens with every product. All products go through the introductory stage, growth stage, maturity stage, and the decline stage. While all products go through all the stages, there is not a set amount of time for products to go through all of the stages. Some cycles last longer than others, and can take years to move into the decline stage.
When Jordan shoes introduce a new product, there will be advertisements with commercials, posters and displays at stores, and advertisements in magazines. The price of this product will be higher when introducing the product and with a lot of customer excitement and anticipation for the new product, they will usually pay the higher price for this product.
In the growth stage, Jordan footwear products will continue to sell and the price will remain high. As long as the product is growing and in demand, it means the customer is still willing to pay the high price for the hot new product.
The maturity stage of Jordan shoes occur when the shoes have been out on the shelves for a while and are still being bought at a somewhat consistent rate. People are still interested, but there is no more back orders for the products. They are easy to obtain and purchase, as they are not as in demand as before.
In the decline stage of Jordan products, the shoes may start to go on sale. With the shoes going on sale, customers will be inclined to purchase the high quality shoes at a lower price. This is help to clear the inventory in stores and warehouses in order to make room for new products. When there are products in the decline stage, Nike is likely introducing a new Jordan product.
THE BRAND
The Nike shoe company has many brands, one of their most profitable being Jordan. Their site has an area dedicated to that all of the latest Jordan Brand News. Currently, Jordan Brand is celebrating the Asia's largest Jordan-only store that offers premium member services. Another large Jordan-only store has plans to open this summer in Toronto. The brand is very popular and continuing to grow and make their products more accessible with the opening of new stores.
The brand is meant to make anyone who wears them feel like an athlete capable of accomplishing any feat, no matter the circumstances. Anyone wearing the Jordan Brand will sport the Jordan logo somewhere. This logo symbolizes the strength that one carries with them when wearing the brand. The logo makes people wearing the product feel confident about their appearance and performance, no matter what it is they are doing. The brand makes people feel they are Jordan. They are nothing less than a legend when they carry the brand with them.
THE
COMPANY
OVERVIEW, DESCRIPTION, HISTORY
Nike's purpose is to design, develop, and market footwear, equipment, apparel, and other accessories. This includes the market of apparel affiliated with professional athletes and college teams.
In 1963-1964 University of Portland track coach Bill Bowerman and Phil Knight, a track star, joined forces to import and provide a low cost running shoe from Japan in order to compete with the German-dominated athletic shoe market. Starting out with the name Blue Ribbon Sports, Bowerman and Knight began to sell the Japanese Onitsuke Tiger running shoes. In 1967 Blue Ribbon Sports was officially incorporated. It was 1970 when Bowerman’s desire to improve the design and do more than simply import running shoes came into full swing. That year was the year they introduced the Nike Waffle Outsole and also the year they officially changed their name to Nike, after the Greek goddess of victory. Nike’s swoosh logo was created in 1971 by the graphic designer at University of Portland, Carolyn Davis. It was 1984 when Nike signed Michael Jordan to an endorsement deal and released the first model of the Air Jordan. Two years later Nike’s revenue reached $1 billion for the first time.
The “Just Do It” slogan was originally introduced in 1988 and is still the company’s slogan today. In 1993, Nike introduced an innovative sustainability program called Reuse-a-shoe, which collects the old athletic shoes and grinds them up to make athletic courts, tracks and fields. December 24, 1999, Co-founder of Nike, Bill Bowerman, dies at the age of 88. The next year Nike introduced it’s Shox athletic shoe technology.
The year 2003 was a big year for Nike, not only did they buy out bankrupt rival Converse for $305 million, but for the first time in the company’s history did their international sales beat out their USA sales making Nike a global company. Also that year, Nike signed high school basketball star Lebron James, while their Jordan brand shoe signed Syracuse basketball star Carmelo Anthony. In 2004 Nike’s revenue exceeds the $13 billion mark. In 2004 Nike’s revenue exceeds the $13 billion mark.
BRANDS, MAJOR PRODUCTS AND SERVICES
Nike is a divisional company but retains some functional departments as well. The brands Nike sells comprise many of the divisions of the company. Apparel for Nike brand, Converse, and Jordan brands are examples of some divisions created around specific products. Functional departments such as Nike design and investor relations are also part of Nike’s organizational structure. Nike, employees report to the divisional manager and the president of each division reports directly to the CEO. Nike’s continued product innovation and successful marketing are due to the combination of functional and divisional organization using an operations department to insure communication between divisions.
Nike, like a lot of companies, has a lot of expenses that occur on an annual basis, but the most significant expenses Nike experiences is the cost of materials and labor, as well as their increased spending in advertising. The most significant source of revenue for Nike is really no surprise; it’s footwear. Footwear makes up 60% of Nike’s global revenue. Athletic footwear is by far the most profitable segment of the company and will forever stay that way as long as there are sports.
Over the years technology in basketball shoes has evolved the look and fit of the basketball shoe industry. Shoemakers like Nike have developed lighter, yet stronger shoes that provide support and breathability. The Nike Zoom Hyperfuse basketball shoe, for example, uses a blend of synthetic leather, mesh and TPU film to keep your feet cool.
Basketball shoes have evolved from heavy, one-colored, canvas, high top Converse models to lightweight, synthetic sneakers in a variety of styles. Technology in shoe cushioning and durability paved the wave for big companies to sell their shoes at higher prices, while endorsements from NBA stars have pushed shoe prices even higher. The result is a highly competitive industry where new technology is highly valued. Technology impacts the production function of Nike by ordering stocks of raw materials, planning production schedules, checking the quality of the product, and packing and storing the final products before distribution.
Nike’s international operations are always subject to the usual risks of doing business abroad, such as possible adjustment of currencies, export and import duties, anti-dumping measures, quotas, safeguard measures, trade restrictions, and in certain parts of the world, political instability and terrorism. Nike is a seller of athletic footwear and athletic apparel worldwide.
The Company focuses its product offerings in seven key categories: Running, Basketball, Football (Soccer), Men's Training, Women's Training, NIKE Sportswear and Action Sports. Nike sells sports apparel and accessories, as well as athletic bags and accessory items. It also markets apparel with licensed college and professional team, and league logos.
Being the maker and seller of athletic footwear and athletic apparel, Nike is able to help people worldwide who want to be and stay active, or just look stylish. It’s pretty obvious how Nike solves the problems of its customers with the manufacturing of shoes, but it also helps its customers by creating products such as Nike Fuel Band. Nike Fuel Band is a bracelet you wear and can sync up with your phone to keep track of how many steps or calories you have burned in a day.
Nike's once loyal market is currently aging. This means that their customers are not as athletic as they may have been in the past. However, this poses as an opportunity for Nike because they have the ability to influence the next generation of Nike customers. Therefore, older generation of Nike customers have the power to influence their children. In addition, by marketing different types of shoes to this market, these existing customers will continue to be loyal to Nike.
Unfortunately, despite million dollar promotional and advertising campaigns, Nike’s products remain unavailable to most people worldwide. The price for their products are rather high and so overwhelming that the majority of purchasers buy franchise copies holding Nike’s logo. However, this is one of the justified and reasonable business strategies applied under the conditions of globalization.
Nike uses the law of supply and demand in marketing by only producing so much of a certain product. Resellers boost the sale, which in turn boosts the demand, which in turn boosts the supply. The reason why they do this is so they don’t have excess inventory because they pay the manufacturers for the goods produced, even though there is no demand for them. This will ultimately save them money on materials needed for the goods and on labor.
KEY PEOPLE
The key people for Nike are ones who have helped to shape the company into being one of the today's leading players of the athletic gear and footwear industry. Listed below some are not only executives but also are on the board of directors.
Board of Directors
NIKE, Inc.
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NIKE, Inc., The Walt Disney Co.
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NIKE, Inc., National Association of Basketball Coaches
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Laika LLC, NIKE, Inc., Apogee Enterprises, Inc.
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TechnoServe, Inc., Gilt Groupe, Inc., Pembroke College Foundation, Inc., Christa House, NIKE, Inc.
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Duke University, Apple, Inc., The National Football Foundation & College Hall of Fame, Inc., NIKE, Inc.
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Indiana University Foundation, Federal Express Corp., Mid-America Apartments LP, Methodist Le Bonheur Healthcare, Mid-America Apartment Communities, Inc., NIKE, Inc., The Methodist Hospitals, Inc.
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NIKE, Inc., Quirky, Inc., Cooper-Hewitt National Design Museum
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University of California, Berkeley, Comcast Corp., NIKE, Inc.
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John G. Connors, 56 Independent Director
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Parse, Inc., Motif Investing, Inc., AppSense, Inc., Scout Analytics, Inc., Xamarin, Inc., Splunk, Inc., NIKE, Inc., Washington Policy Center, DataSphere Technologies, Inc., Tempered Networks, Inc., Rim Tec, Inc., Tier 3, Inc. (Washington), Chef Software, Inc., INRIX, Inc., The Tyee Club
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NIKE, Inc., PayPal Holdings, Inc., Intel Corp., Skype SARL, Skype Technologies SA, Dartmouth College
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John C. Lechleiter, 62 Independent Director
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Eli Lilly & Co., Fairbanks Institute, Xavier University, United Way Worldwide, The U.S.-Japan Business Council, Inc., NIKE, Inc., The Central Indiana Corporate Partnership, Ford Motor Co., 2012 Indianapolis Super Bowl Host Committee, Chemical Heritage Foundation, Indianapolis Downtown, Inc., The Life Sciences Foundation
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Phyllis Mary Wise, 71 Independent Director
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First Busey Corp., NIKE, Inc., RAND Healt
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CORPORATE VISION
The corporate vision of Nike is to enable the company and its consumers to thrive in a sustainable economy where people profit, and the planet is in balance. It is with this vision that the company surrounds its goals around. With that vision always at the forefront of Nike's mind, the company is able to plan accordingly in order to achieve the vision of their company. This is where strategic marketing and planning really come into play to turn that vision into a reality.
CORPORATE MISSION
Bring inspiration and innovation to every Athlete* in the world
*If you have a body, you are an Athlete
Nike's mission is for every person, no matter their physical condition and limitations, to feel inspired to be the athlete they are on the inside. They want people to move and be active in any way, and to not let life's obstacles stop them of achieving their personal athletic goals. Don't let your mind or other influences stop you. Do it for yourself. Do it for you mind and body. Do it just because. Find strength from within and leave the weakness behind... and JUST DO IT.
MEDIA EXPENDITURE
Nike is a global marketing powerhouse that has been moving to more digital and social media marketing. Nike is full aware of the scope of digital, personal data, and social media and the recent moves are on the direction of establishing new solutions for users and sports people worldwide conscious of the importance of social analytics and personal tracking data systems (Guarda, 2013) .
LOCATION AND SUBSIDIARIES
· The company's headquarters are located near Beaverton, Oregon and under these headquarters are several other footwear and apparel companies such as Cole Haan, Bauer Hockey, Converse, Hurley International, Starter and Umbro (Statista, 2015) .
· The number of Nike stores has increased from 674 stores in 2009 to 931 stores in 2015 (Statista, 2015) .
· Nike employed approximately 57,000 people and operated more than 850 retail stores worldwide in 2014 (Statista, 2015) .
· With so many subsidiaries, Nike is able to reach more customers that are interested in multiple different sports, lifestyle categories, and price points.
PRODUCT SALES HISTORY
Since the product launch in 1985, there have been 30 different designs of the Jordan shoe and Nike was in a struggle to get away from being known as the “running shoe company” which was a phenomenon that was slowly dying Looking for a way to reinvent themselves and appeal to a new segment of the market, Nike turned to an NBA rookie named Michael Jordan, who was already endorsing several other products ) . Jordan was interested in getting an endorsement from other companies at the time and wasn’t interested in Nike’s offer, but his agent at the time saw a great opportunity with Nike by creating a brand new line of shoes called Air Jordans (Air Jordan Shoes HQ, 2016) .
In 2014 during a court case, Michael Jordan’s financials were made public and that is when we found out that he made just over $94 million from contracts in his NBA career; last year, his ties from Jordan Brand netted him $100 million. Jordan and Nike redefined the shoe industry which Jordan can attribute much of his wealth to, and also in the aide of transforming Nike into the most powerful athletic wear company on the planet. In April of 2015, a pair of shoes Jordan wore in his early career sold at auction for over $71,000, and a different pair sold at auction in 2013 for $105,000. These numbers seem huge, but are only minor when compared to how much Jordan-brand products produce for the Nike brand; it is reported that Jordan brand products make an estimated $2.5 billion a year.
Air Jordans started selling in 1985 and sold $70 million worth in the first two months; fast-forward 30 years, and the Jordan brand now controls nearly 60% of the U.S. basketball -shoe market, which is just part of Nike's total basketball shoe empire that controls around 95% of the market. Nike made over $3.7 billion in basketball segment sales in 2015, a 19% increase over 2014 sales, which was another 19% increase from 2013 sales. Nike is also growing its basketball presence outside the United States, they co-hosted the Quai 54 World Streetball Championship in Paris in 2015, releasing special-edition shoes for the occasion with Jordan himself in Paris to introduce the event (McNew, 2015) .
CURRENT PROMOTIONAL STRATEGY
Nike is currently using a few different promotional strategies to reel customers in. Some of these strategies are used constantly, and some are used more often depending on which point a certain Nike product is on its product demand life cycle. Some of the most notable promotion strategies include
Advertising
Nike advertises to a target audience. They do so in ways that ensure their product will reach the eyes and ears of those they are targeting. With effective advertising, Nike is able to elicit important consumer responses, such as:
Attention - company is able to grab attention of your audience through all other competing advertisements
Interest - arouses interest and delivers sufficient impact in the message or offering
Desire - desire creates a craving for ownership of the product
Action - advertisement prompts potential customers to go out and buy the product
Attention - company is able to grab attention of your audience through all other competing advertisements
Interest - arouses interest and delivers sufficient impact in the message or offering
Desire - desire creates a craving for ownership of the product
Action - advertisement prompts potential customers to go out and buy the product
Social Media
Nike has taken to social media to be where their audience is at.
This is a great promotional strategy because Nike is able to get word of their
new products out where they know their audience will see it. You can find Nike
on social media sites such as Twitter, Facebook, YouTube, and Instagram. By
adapting to new social medias, Nike's strategies are constantly evolving for
the better. They are continually capturing their audience in new ways, and
growing with them. When Nike is on social media, it adds a presence that cannot
be achieved through other marketing mediums. It's more personal. Customers can
feel more connected to a company they choose to be loyal to. They feel like
they aren't interacting with an entity, but more so an actual person.
Promotional strategies on social media can really go a long way. Nike knows
this which is why they have chosen to get with it and be interactive with their
audience.
Selling
Those selling Nike products through Nike and other various retail stores need to know specifics of the product in order to effectively make sales. If those selling and representing the product aren't properly informed of what they are selling, Nike sales will suffer in the long run. It is very important for Nike to employ those that will learn the product inside and out to maximize its selling potential. Sometime the products sell themselves, but those selling can often make the difference between a potential sale or pass.
Celebrity Endorsements
Nike is infamous for endorsing very popular athletic celebrities. The celebrity endorsements go outside just basketball, and include others figures from many different sports that their audience may be into. Some of the most popular celebrities include: Michael Jordan, Kobe Bryant, LeBron James, Tiger Woods, Maria Sharapova, Cristiano Ronaldo, etc. "With collaboration of famous athletes, teams, coaches, and organizations throughout the world, Nike has become the face of sports across the board through brand-player grouping and recognition," (Ross 2013).
Loyalty Program
Nike has their loyalty Nike+ program where members gain access and benefits that nonmembers are not offered. Some of these perks include the Nike+ Apps, training club access, news about events, promotional codes, and more. In addition, members are offered free shipping on purchases and returns.
Provide Retailers With Promotions of Products and Other Giveaways
When a potential customer walks into a footwear store and sees a Nike promotional display, that is provided by Nike in hopes that retailers will promote their new products and give them adequate shelf space. When people see this, it will hopefully induce those 4 responses mentioned earlier with the customer: attention, interest, desire, and action.
CURRENT MARKETING OBJECTIVES
Nike's marketing objectives include goals set by the company when promoting its products or service to potential customers. These goals are set to be achieved within a given time frame. The objectives must never be lost when promoting products and services. Losing sight of objectives can make for an ineffective promotion. These are just a few of the marketing objectives Nike keeps in mind during all times when doing promotions.
Put Customer Interests First
Potential customers are more easily able to justify a purchase if they feel it will personally benefit them and fulfill their needs and interests. That is why when Nike makes a new product, they make it with customer interests in mind. Ever wonder why Nike sells products for so many different types of sports? Well, they are considering the interests of many different athletes and trying to accommodate all of said interests.
Provide Quality Products With Low Prices In Order to Gain More Market Share
Making quality products is an absolute must for Nike. Those products must be made of quality materials to make the products last, while also making the products affordable. With more people able to purchase Nike's products, the market share of Nike will continue to grow substantially.
Market BENEFITS of the Product
Selling the benefits of a product rather than selling just the product itself has proven to be the key that has gained Nike great respect in the athletic communities. For example, when co-founder and track and field coach of Nike, Bill Bowerman, was looking to make a new jogging shoe, he made it with benefits in mind. "His goal was to make the world’s most light–weight running shoe. He believed that this factor alone could dramatically improve the speed of a distance runner," (Moon 2016).
Sustainability
Sustainability is a powerful opportunity to innovate. Nike hopes to create maximum performance products with minimal impact on the environment. This also includes manufacturing efforts. Nike believes that business must be conducted in ethical ways. To ensure ethical practices are being performed, Nike makes it a point to work with business partners and suppliers that have a commitment to engaging workers, providing safe working environments, and recognize their own environmental responsibilities.
SWOT ANALYSIS
STRENGTHS
Strong Global Brand: Nike is the most valuable sports brand in the world. Its “Swoosh” logo is instantly recognizable around the globe. Its long partnership with legendary basketball player Michael Jordan has driven strong sales of the company’s basketball sneakers, including the retro business, which makes up about half of the Jordan shoe business. In fact, one of every two basketball shoes in the U.S. last year carried that Jordan brand. Nike’s ability to maintain and enhance its iconic brands has allowed it to enjoy continued success for decades.
Low Cost Manufacturing: Virtually all of Nike’s footwear is manufactured outside of the United States by independent contract manufacturers who operate multiple factories. In fiscal 2014, Vietnam, China, and Indonesia manufactured roughly 43%, 28%, and 25% of total Nike Branded footwear. It also has operations in Argentina, Brazil, India, and Mexico. The low cost of producing products in these countries continues to boost the bottom line.
Strong Research and Development: Nike takes its research, design, and development efforts very seriously, and it believes this is one of the key factors for its success. Technical innovation in both the design and manufacturing process of its footwear, apparel, and athletic equipment has helped the company continue to produce better products, which have enhanced athletic performance and reduced injuries. The company has its own staff of specialists in the areas of biomechanics, chemistry, exercise physiology, and related fields, and also uses advisory boards made up of athletes, coaches, trainers, orthopedists, and other experts who consult with Nike about designs, materials, and concepts for products and improvements.
WEAKNESSES
Ongoing Perception of Poor Labor Practices: It wasn’t long ago that Nike was facing intense criticism of its labor practices and work conditions. However, over the past 20 years, it has undertaken efforts to improve conditions for its roughly one million contract workers. While conditions have improved, many of its factories in developing countries still do not meet Nike’s own standards. The company itself has acknowledged that the low wages for some of its workers remains a concern. Safety issues at certain locations are also an issue. If some type of disaster were to occur at one of its facilities, this would no doubt hurt the company’s image.
High Prices: Due to its strong brand, Nike can typically command a premium on the products it sells, which in turn supports higher margins and profitability. However, the cost of its footwear is higher than most of its competitors, which make its products out of reach for many customers around the globe, particularly in emerging markets. There is also the risk of declining demand when an economy falls into recession, as consumers have lower discretionary spending for non-essential items.
OPPORTUNITIES
Emerging Markets: While Nike already has a presence in many emerging markets, we believe that there is still significant growth potential there. Rapidly growing economies like China, along with other emerging markets like India and Brazil, have the potential to drive future earnings growth. While China accounted for roughly 9% of 2014 revenues, the company believes this figure will rise as it continues to enhance its brand image there. It is also realigning its product portfolio to better appeal to Chinese customers’ tastes and preferences. All told, we think Nike should be able to increase its share of the global footwear market by continuing to grow its base in these regions, which have been reporting higher growth rates than developed markets for the past few years.
Innovative Products: Given Nike’s focus on R&D, as mentioned in the strengths section of this analysis, the company is typically on the forefront on product innovation. While products like FuelBand, a wearable technology that monitors physical activity, may not have been as successful as hoped, Nike still has its eye on the next “big thing”. The company’s brand strength, coupled with its focus on R&D, should allow it to remain at the forefront of new technologies in the footwear and wearable technology space.
THREATS
Competition: The athletic footwear, apparel, and equipment industry is highly competitive, both in the United States and around the globe. There are several significant athletic and leisure footwear companies and sports equipment firms that produce similar products. Some of the primary ones are Puma and adidas. Other large companies have diversified their product lines to include athletic and leisure footwear, sports and lifestyle apparel, and equipment, including Under Armour and Lululemon. The rapid changes in technology and consumer preferences constitute significant risk factors for Nike. Too, demand for Nike’s products depends on the relative popularity of various sports and fitness activities, as well as changing design trends, so any major shifts in these trends could temper business results. If competitors have more success attracting customers with more appealing footwear or apparel, this would also hurt business prospects.
Currency Volatility: Since the majority of Nike’s sales are generated outside of the United States, the company is exposed to significant currency fluctuations. The recent strengthening of the U.S. Dollar has hurt reported results, due to the foreign amounts being translated into U.S. dollars for reporting purposes. While the company does have certain hedges in place, they are designed to lessen the impact of unfavorable exchange rates, not fully eliminate the risk. The Dollar is expected to continue to strengthen in the coming months, so this will remain a concern for the near term.
INDUSTRY AND MARKETPLACE
NIKE INDUSTRY AND ITS DEFINITON
NIKE, Inc., together with its subsidiaries, designs, develops, markets, and sells athletic footwear, apparel, equipment, and accessories for men, women, and kids worldwide. The company offers products in eight categories, including running, basketball, football, men's training, women's training, sportswear, action sports, and golf under the NIKE and Jordan brand names. It also markets products designed for kids, as well as for other athletic and recreational uses, such as cricket, lacrosse, tennis, volleyball, wrestling, walking, and outdoor activities. In addition, the company sells sports apparel and accessories; and markets apparel with licensed college and professional team and league logos. Further, it sells a line of performance equipment, including bags, socks, sport balls, eyewear, timepieces, digital devices, bats, gloves, protective equipment, golf clubs, and other equipment under the NIKE brand name for sports activities; various plastic products to other manufacturers; athletic and casual footwear, apparel, and accessories; casual sneakers, apparel, and accessories under the Converse, Chuck Taylor, All Star, One Star, Star Chevron, and Jack Purcell trademarks; and action sports and youth lifestyle apparel and accessories under the Hurley trademark.
NIKE, Inc. sells its products to footwear stores; sporting goods stores; athletic specialty stores; department stores; skate, tennis, and golf shops; and other retail accounts through NIKE-owned retail stores and Internet Websites (direct to consumer operations), as well as a mix of independent distributors and licensees. The company was formerly known as Blue Ribbon Sports, Inc. and changed its name to NIKE, Inc. in 1971. NIKE, Inc. was founded in 1964 and is headquartered in Beaverton, Oregon.
SHAPE OF INDUSTRY
The U.S. athletic footwear industry grew by 8 percent in 2015, generating $17.2 billion and marking one of the best performances the industry has had in a number of years; unit sales grew by 3 percent and average selling price by 5 percent, to $61.15 (Cox, 2016). Performance footwear, particularly running and basketball shoe sales slowed down in 2015 and there was a rise in more casual and retro styles. Through research it is said that the more casual and retro style sales will continue to grow throughout 2016. With the merging of outdoor and athletic shoes, hiking shoes will see growth in the coming years as well. With each decade that passes, trends seems to change and often it is a cycle of different styles that are very popular and then lose some of their momentum because another style shoe is becoming the front runner based on fashion and market trends.
Coinciding with the holiday season, athletic footwear sales peak in December and 2015 saw one of the best months for sales in terms of sales growth for athletic footwear. Total dollar sales grew 13 percent, unit sales by 10 percent, and average selling price by 3 percent compared to December 2014 (Cox, 2016). The top brand for athletic shoes for men in 2015 was the Nike/Jordan brand, with Adidas and New Balance trailing behind. Nike and Jordan Brand claim a solid 62% share of the athletic shoe market, which is 10 times the amount of athletic footwear Adidas sells in the United States.
DEVELOPMENT OF INDUSTRY
The US athletic shoe market is a $13 billion-per-year industry that sells more than 350 million pairs of sports shoes annually. Sports shoes have become a fashion statement and also assist in the everyday task of working.
The driving force of new athletic-shoe design is not just performance. The use of athletic shoes for casual wear as well as for fashion plays a large role in shaping their appearance and features. The youth market is frequently targeted by advertisers and young people’s behaviors are used in selecting shoes. High school students have even been brought into the offices of manufacturers to get a handle on “how cool” contemplated models look. Colors, styles, fashions, and what is likely to be “hot” are important factors in the design of athletic shoes. A few manufacturers have discovered the extensive role that athletic shoes play in the workplace especially for aging boomer population which is a good potential market (Pribut & Ritchie, 2002).
The special role that marketing would play and the sophisticated manner to which it would be taken was presaged when Phil Knight announced with panache that four of the first seven finishers in the 1972 US Olympic trials wore Nikes (Pribut & Ritchie, 2002).
Before the late 1970s, running shoes were not high-tech items. Until the middle of the 19th century, shoes were made on a single straight last and there was no differentiation between left and right shoes. During those years, not many international competitions were held, and the modern Olympics did not appear until 1896. Keds started as a product produced by US Rubber in 1917. Keds was chosen as a name because the desired name, “Peds,” was already trademarked by another company. Keds were the first sneakers, so-called because of the stealth and quiet manner in which you could run up on someone when you wore them. Keds, and later Converse, captured much of the US “Sneaker Market.” Keds was purchased by the Stride Rite Corporation in 1979 (Pribut & Ritchie, 2002).
PF Flyers was named for “Perfect Foundation,” with the intention of making the sneakers appear to have been crafted with the latest scientific ergonomic principles in mind before anyone had even heard of “ergonomic.” Shoes need to be devised to assist the athlete in the specific demands of the sport and to meet the individual biomechanical of the participant (Pribut & Ritchie, 2002).
Today’s running shoes are designed with an eye toward accommodating various types and shapes of feet. Shoes are made that allow for the differences between men and women, light- and heavyweight runners, pronated and supinated feet, and narrow and wide feet. Sport-specific shoes also attempt to meet the diverse needs of differing sports which means that there is a shoe to fit everyone.
Podiatrists first participated in the development of athletic shoe technology in the 1970s. As biomechanical knowledge of foot and leg interactions gained huge momentum in the podiatric medical profession during that decade, the use of corrective devices in shoes achieved widespread popularity. Podiatric medical practitioners commonly added wedges, arch supports, heel cradles, and various cushioning devices to the existing footwear of athletic patients to treat their injuries and enhance their comfort. Soon, some podiatrists offered these technologies to athletic-footwear companies. The subsequent incorporation of such devices into athletic shoes led to monumental success for the manufacturer and redefined the standards within the industry (Pribut & Ritchie, 2002).
The most notable technologies developed by podiatrists in the 1970s were the Dynamic Heel Cradle, for Etonic, by Rob Roy McGregor, DPM, and the varus “kinetic” midsole wedges for Brooks, by Steve Subotnick, DPM. In the 1980s, Nike incorporated Dr. Harry Hlavac’s cobra pad into the company’s highly successful running shoe, the Equator. Also, Howard Dannenberg, DPM, developed and patented the Kinetic Wedge® addition to the midsole and outsole of a line of Brooks running shoes that became very successful for several years and that formed the foundation of the entire Brooks running-shoe line (Pribut & Ritchie, 2002).
In l981, Joe Ellis, DPM, of La Jolla, California, working closely with Asics, developed the first midsole technology that incorporated medial posting in the midsole section of the running shoe. During the 1990s, William Olson, DPM, worked closely with many major athletic-shoe manufacturers who wanted to incorporate his TL composite invention into various athletic shoes, including running, basketball, and in-line skating shoes. The TL composite was a proven success in the orthotic marketplace and had great credibility and appeal as a high-performance material for use in constructing athletic shoes. The device was first used in the “Air Jordan 12” basketball shoe during the middle of the 1990s and has been used in every Air Jordan model since (Pribut & Ritchie, 2002). With the important role that feet and athletic shoes play for the millions of people who exercise, podiatrists and podiatric medical students must carefully study the sciences of biomechanics and sports medicine. Enhancing knowledge in these areas will add a good deal of variety, interest, and even patients to a practice.
THE MARKETPLACE
Currently, Nike sells their goods on the global marketplace. Their operations within the marketplace consist of "the design, development, marketing, and selling of athletic footwear, apparel, and equipment. Sales are seasonal and depend on geography... Nike has seven reporting segments:
- North America
- Western Europe
- Emerging Markets
- Greater China
- Central and Eastern Europe
- Japan
- Converse
In the marketplace, Nike has remained an industry leader against competitors because they are always anticipating customer's current and future needs of those in the market. Nike does this for customers all over the global marketplace, as some needs are different than others. Nike describes that:
As Nike has evolved, so has the consumer. They connect and collaborate with each other all over the world. As retail evolves to meet these changing needs – from athletic specialty to department stores – old, predictable formats tend to blur the line among products and brands. So we ask tougher questions. What kind of choices does a consumer have? What type of experiences does a consumer respond to best? We see this as opportunity for Nike and our retail partners.
As the industry leader, we have the ability and the responsibility to take the industry and our partners someplace new. Our retailers want Nike to lead and that’s exactly what we’re doing – driving innovative product and brand presentation into the stores of our wholesale partners.
We do this by working with our wholesale partners to create differentiated retail destinations and product assortments that are tailored to their consumers. We do it by investing in direct retail concepts that elevate our products and our brands online and in store. And we tightly manage the distribution of our products to balance supply and demand, maintain the strength of our brands and the profitability of our business.
(Nike 2016)
CURRENT CONDITION OF THE MARKETPLACE
Currently, Nike generates most of its revenue from the North American segment. In 2015, the North America segment was responsible for 44% of the company's total revenue. Nike's competitors have similar results in this way. " Under Armour Inc. (UA), derives over 90% of its revenues from North America. Other NIKE competitors, VFC Corporation (VF) and Lululemon Athletica Inc. (LULU), also have a much higher dependence on North American sales," (Soni 2014).
Currently, Nike's "hopes to grow its North American segment by high single digits each year through fiscal year 2017 (Soni 2014).
Nike recognizes that in order to stay ahead as an industry leader within the markets they operate in, they need to make sure their products and brands stay in demand with their consumers. "Nike is now strategizing on how to widen the gap with its nearest competitors, or increase the degree of separation," (Soni 2014). Nike plans on doing this through:
· Innovation
· Providing the customer with premium, must-have products, and a premium experience
· Transforming the marketplace and expanding its direct-to-consumer footprint
It is NIKE’s "consumer-focused category strategy that will be driving growth through increased market place capacity and penetration... Our consumer focused strategy enhances our ability to deliver great product and elevated consumer experiences which will help grow the NIKE Brand to approximately $23 billion by the end of fiscal 2015," (Nike 2010).
It is clear that no matter how Nike is doing in the market, the consumer will always be their number one priority. Being so customer focused is what keeps Nike in operation across all its markets.
CHANGES IN THE MARKETPLACE
Nothing ever stays the same what was once a fringe group of fanatics is now changing the way sportswear giants Nike and Adidas both do business, and redefining the sneaker business (Tomaszewski, 2014). The rise of "sneakerheads" is causing a growing populace of consumers following these companies' every move like a tabloid photographer follows the latest celebrity train-wreck. That level of brand awareness is driving sales and even creating new markets.
A sneakerhead is a devotee of athletic footwear and at one time they were an underground community of fanatics, now they are a semi-mainstream collection of enthusiasts whose demographics run the gamut from suburban teens to celebrities like Mark Wahlberg, Jason Sudekis, and Jerry Seinfeld. According to Forbes, it is estimated that sneakerheads represent about 5% of the $22 billion retail sneaker market in the U.S. That's good for roughly $1.1 billion (Tomaszewski, 2014).
Since companies are aware of the buying power of sneakerheads, they are providing fans with a lot of information regarding upcoming releases. This drives up demand among sneakerheads who famously camp out in advance of a release to get a pair (Tomaszewski, 2014). It is not uncommon for a particularly coveted or limited model release to sell out in minutes.
The big sneaker companies are also adjusting their business models in other ways in an effort to court sneakerheads. Since Michael Jordan entered the NBA and ascended to the top of the sporting world (in many ways he's still on top), Nike released several models of his eponymous shoe, the Air Jordan, every year, each in a different color scheme (Tomaszewski, 2014).
Because of sneakerheads players like LeBron James now sport as many as 10 versions of their signature shoe during the regular season, followed by a completely different model in various color schemes for the post season. Each time a new color scheme or model is debuted on the hardwood, the sneakerheads begin their quest to add them to their collections. A pair of signature shoes can range in cost from $140 to $275 (Tomaszewski, 2014).
This type of devotion to footwear has even led Nike to use social media to offer sneakerheads the ability to purchase shoes that had previously sold out. Because a particularly coveted model will likely sell out within minutes of release online, Nike will sometimes, and without warning, issue what is called a restock (Tomaszewski, 2014).
Creating New Markets
Sneakerheads are creating an entirely new market for athletic footwear, the second-hand market. A sneakerhead will do what he or she has to in order to acquire the latest pair of shoes. Due to the limited inventory released into the retail market and the increasingly high demand for models from the likes of Adidas, Nike, and its high-profile subsidiary Jordan Brand, the only way the vast majority of people who want a particular pair of sneakers is to buy on the secondary market ... at a price that is often two to three times the cost of retail (Tomaszewski, 2014).
Sneakerheads are changing the way companies like Nike, and these changes are here to stay. In the future we can expect changes to the way sneakers are marketed and sold. It won't be long before every 10-year-old is following Nike on Twitter to get release dates, checking out LeBron James' Instagram to see what sneakers he's wearing, and then texting their parents to ask for the latest pair before tapping a "buy now" button embedded in the James photograph (Tomaszewski, 2014).
COMPETITIVE SITUATION
DIRECT AND INDIRECT COMPETITIORS
Nike has both direct and indirect competitors who they compete with on a daily basis. Some direct competitors that Nike has include Adidas, Reebok, and Converse. Some indirect competitors include Wal-Mart, Target, and other discount stores.
Nike’s challenge is to gain a strategic advantage by putting a better product above the rest of their competitors. One apparent advantage is the brand name and logo of Nike. The name Nike and the Swoosh logo are known worldwide and are associated with high-quality products.
Nike’s challenge is to gain a strategic advantage by putting a better product above the rest of their competitors. One apparent advantage is the brand name and logo of Nike. The name Nike and the Swoosh logo are known worldwide and are associated with high-quality products.
Another strategic advantage Nike has is its ability to promote its product through top athletes. When certain athletes like Michael Jordan, Lance Armstrong and Tiger Woods are mentioned, people are familiar with their endorsement relationship with Nike. Consumers relate with these athletes and purchase items based on what they are using or wearing.
CONSUMER AND STAKEHOLDER
CURRENT CONSUMER CHARACTERISTICS
Nike's current consumers have a whole different array of characteristics, ranging from: demographic, psychographic, behavioralistic, and geographic. Although there may be differences in these characteristics, their current consumers also have similarities. They all are usually men and women athletes in need of high performance gear, like shoes, apparel, and gear. Those who wear Nike generally have a passion for sports and/or being active. In addition to their passion for activity and movement is their passion for the Nike brand itself. Nike consumers are loyal to the brand and will choose to wear their gear to perform at their max in whatever they do. Nike wants to capitalize on these types of consumers "with a view to ensuring future growth, young athletes are a big part of its sales strategies, especially in categories such as soccer, basketball, and running," (Soni 2014). Alongside young athletes, Nike is also focusing a good amount of attention on appealing more to women as well.
Currently, "women in their 20s and 30s are largely driving the 'athleisure trend,' in which customers buy leggings with the intent of wearing them to the gym, errands, and brunch," (Lutz 2015). Due to this athleisure trend among Nike's women right now, Nike's "Women's Training segment is growing is faster growing than the Men's Training segment (Soni 2014) and "could add $2 billion in additional sales by 2017," (Lutz 2015).
Nike already has a lot of the athletic community at their side. By focusing on all different consumer characteristics, Nike is able to anticipate many types of needs their consumers may have. One need all current Nike consumers have is the need for high performance gear. Nike delivers this need in all the ways they can, gaining them loyal customers and staying ahead in the industry along the way.
DEMOGRAPHICS
Nike has plans to grow its direct-to-retail business to 15% of total sales, or $3.5 billion, from 12% today. In order for them to accomplish this, Nike will have to increase capital spending to $475 million annually, up from just under $400 million. In the past, the managers at Nike used to consider 18- and 22-year-olds as part of the same demographic target. Now they are treated as separate and distinct markets when it comes to age, interests, and tastes. The reason they are doing this is to tailor products to individual consumers (Holmes, 2007).
Nike is unique due to the fact that they have a very general targeted demographic segment. Anyone that wants to be athletic, are going to receive at least one marketing target no matter what their racial profile, economic status, or other sub-demographic may be. Households that make more money will receive additional targets, of course, but everyone who wants to look good while they’re out playing their preferred sport is supposed to want Nike (Gaille, 2015).
- Nikes primary targets are consumers who are between 18-40 years of age.
- They equip teens under the age of 20 with athletic apparel, especially in sports like football and soccer.
- Nike targets households and teens that have a particular desire to look athletic and fashionable at the same time.
- All socioeconomic classes are targeted as part of the segmentation of Nike’s demographics.
- Nike does its marketing mainly in the United States, but this is to increase the market share of their athletic apparel more than it is to advertise their footwear.
- No single customer accounted for more than 10% of Nike’s overall sales in the last year, proving that the company has a very diversified market.
- North American sales for Nike are still 2.5x greater than the next closest market, which is Western Europe (Gaille, 2015).
PHYSIOGRAPHY
Physiological needs can best be described when in reference to Abraham Maslow's hierarchy of needs. "Each level of the pyramid is dependent on the previous level; a person does not feel satisfied until the first level is fulfilled," (Pandya 2014). The first and base level of Maslow's hierarchy of needs happens to be the physiological needs. He held the belief that "humans strive to reach the highest level of their abilities." In order to reach their highest level of abilities, they must first have their physiological needs met.
Physiological needs include the most basic of all human needs like food, water, and physical well-being. "It pertains to our survival needs and is our most basic motivation because if our physiological needs aren’t met, our bodies will ultimately fail and we will die... As it pertains to marketing, it’s pretty basic. By appealing to a consumer’s primal needs, we encourage them to fulfill their basic psychological motivation," (Lee 2015). In order for Nike to appeal to a consumer physiological needs, they must sell the brand as a way of keeping you on the track to being physically fit and strong, just as you would need to be for survival. Once Nike markets their products in this sort of way, their consumers are more inclined to purchase because they feel that as a consumer, their most basic physiological needs are being met.
STAKEHOLDER'S CHARACTERISTICS
A stakeholder is a person who has something to gain or lose through the outcomes of a planning process, programme or project. They are affected directly or indirectly in someway by company changes. Not all stakeholders are equal, as some are affected more or have more of an impact than others when decisions are made. Nike has five core stakeholder groups: consumers, shareholders, business partners, employees and the community. Nike stakeholders usually posses a similarcharacteristics and traits, such as:
- Understanding of the apparel and footwear business
- New and unique perspectives
- Expertise and reputation in sustainability strategy and/or issue areas ranging from water and energy to labor and chemistry
- Geographic/nationality, gender and issue diversity (NIKE 2014)
Nike reports stakeholders belonging to several different social groups, including civil society organizations, industry and government, as well as consumers and shareholders. Stakeholder relations are kept through both formal and informal relationships. Nike connects informally through related organizations and connections and formally through stakeholder engagement opportunities and partnership activities.
PRIMARY STAKEHOLDERS
The primary stakeholders of Nike would be individuals or other companies who take interest in Nike and in turn, are affected by the company. These stakeholders include a wide variety of industries and genres such as social society, industry, government, consumers, and shareholders. The strategies and successes of Nike are related to the stakeholders and often Nike relies on their input and feedback on interests and disinterests when introducing new products to the market. One major player for Nike is the Business of Social Responsibility (BSR), which is a non-profit that directs 250 companies on corporate responsibility strategies and practices (Johnson, 2014). This organization gets together with a selection of stakeholders of the company to direct the overall process, lead the stakeholder discussions and to provide feedback, then Nike’s sustainable Business and Innovation team manages the overall reporting process, and participate during the stakeholder engagement as information givers and receivers (Johnson, 2014). Because business starts with the stakeholders, the ones Nike should be more concerned with are individuals like directors, founders, presidents, officers, writers, advisors, and CEO’s.
SECONDARY STAKEHOLDERS
The secondary stakeholders of the company would be the community. Socially responsible organizations like Nike consider the effect of their actions upon all stakeholders, including safety laws, environmental protection and other laws and regulations, and what consumers and the communities want from companies is that they act ethically and socially responsible. When secondary stakeholders become dissatisfied, the reputation of the company could get tarnished. An example of this is when Nike was under the spotlight for their inhumane working conditions in their several sweatshops around the world where their workers were not being treated as they should, the community was not happy with this and Nike saw that through the drop in their sales for a period of time.
STRATEGIC TARGET AUDIENCE
PROPOSED PRIMARY TARGET AUDIENCE
Nike is the world’s leading sports footwear and apparel company. Nike’s high-performance athletic gear is mostly targeted at professional athletes. Nike’s innovations, products, and services seek to develop athletic potential, according to the company.
Right now, Nike is focusing their target audience on young athletes, women, and runners. Nike wants to capitalize on these types of consumers "with a view to ensuring future growth, young athletes are a big part of its sales strategies, especially in categories such as soccer, basketball, and running," (Soni 2014). Alongside young athletes, Nike is also focusing a good amount of attention on appealing more to women as well as the "Women’s Training segment is faster growing than the Men’s Training segment." To handle this growth, Nike is appealing to women by designing more athletic sportswear and gear that can be worn during workouts and doing other "athleisure" activities that are popular with women of this audience.
Runners are being targeted to specifically right now as the sales in this department are not reflecting the recent innovations the company has created for its running shoes. In an effort to increase sales of running shoes, Nike has revamped its Nike+ app for runners. The Nike+ app "lets runners track their route, distance, pace, time, and calories. It also lets them share photos and compare progress with their friends...Nike sponsors grassroots running events around the world to recruit new customers as well," (Lutz 2015).
Young athletes, women, and runners form Nike’s target market in the future.
PROPOSED SECONDARY TARGET AUDIENCE
Nike's current primary target market includes young athletes, women, and runners. However, these aren't these only type of consumers wearing Nike gear. Nike realizes this and tries to appeal to a secondary target audience as well. These secondary consumers wearing Nike products do so to appear fashionable while supporting the largely recognized brand. For example, the Nike Free iD running shoes are also for young adults with a casual lifestyle and a fashionable taste. Nike creates fashionable products for these secondary target audiences to wear and appreciate. Just because these secondary audience members are not as active as the typical primary target audience member, they still have the body that makes them an athlete worthy of wearing the brand.
Digital has been the focus of Nike’s marketing efforts in recent years. The company’s gone hi-tech with its push into digital sport and e-commerce. It introduced the Nike+ running sensor in collaboration with Apple Inc. Other products such as the Nike FuelBand personalize the hi-tech experience for the customer. The FuelBand tracks the intensity of workouts and even motivates the wearers, among its many uses. These products appeal to both athletes as well as non-athletes.
The push into digital gives the company the opportunity to engage directly with the customer. Digital initiatives are especially appealing to younger customers. They also provide invaluable feedback to the company about the overall customer experience.
RESEARCH DEVELOPMENT
MARKETPLACE RESEARCH
The Nike brand has a huge marketplace, always trying to improve on their current products and create more for the consumers to love. Nike markets all kinds of footwear which includes footwear designed for aquatic activities, baseball, cheerleading, football, golf, lacrosse, outdoor activities, skateboarding, tennis, volleyball, walking, wrestling, and other athletic and recreational uses. Nike doesn’t only focus on footwear though, research found that the consumers wanted more than just footwear, so they also market apparel with licensed college and professional teams, and league logos.
Performance equipment can also be found under the Nike brand name, including bags, socks, sport balls, eyewear, timepieces, electronic devices, bats, gloves and protective equipment. It isn’t enough to just wear the shoes, athletes want anything and everything they can find to have the Nike logo attached to it.
Nike differentiates themselves from their competitors because they focus on the technological and scientific side of their footwear. Customers of Nike are not only looking for a fashion statement, they are also looking for performance, technology, fashion and leisure.
MARKET OBSERVATION
Nike conducts both qualitative and quantitative research for gathering vital information for its products and new launches of products. They put focus on the consumer for why, how, or what they do to make a decision when purchasing Nike products. Nike analyses consumer markets, as well as competitor’s markets in order to understating the consumer’s buying behaviors and their buying patterns. Nike uses online surveys and questionnaires to understand what the consumers like or do not like, and what they could do to change the consumer’s attitudes to buy more of their products. Because Nike is so interested in customer feedback, they have gained the loyalty and value they have today. Through market observation Nike has added a special feature to their website where customers can create custom shoes to match their individual style and create a one of a kind pair of shoes.
ONLINE SURVEY ANALYSIS
Nike administers online surveys to their consumers. Doing so gives Nike the opportunity to learn what motivates their customers, uncover what's important to them, and gather other meaningful comments and feedback on Nike's performance and products.
These online survey are more likely to yield honest responses. This is because "respondents are more likely to provide open and honest feedback in a more private survey method. Methods such as online surveys, paper surveys, or mobile surveys are more private and less intimidating than face-to-face survey interviews or telephone surveys," (Wyse 2012). The private environment mixed with the anonymity aspect of online surveys are what generate honest responses. This is one benefit of many that Nike would use online surveys for gathering data. Other benefits include: cost, decision making, and ability to compare results.
When it comes to cost, online surveys have a "very small cost per respondent... Even if incentives are given to respondents, the cost per response is often far less than the cost of administering a paper survey or phone survey, and the number of potential responses can be in the thousands." Nike does offer incentives for completing one of their surveys with the access code provided on your receipt. The current Nike survey incentive is $5 off your next purchase. Nike saves money by giving out these incentives, and ultimately makes money by doing so in the long run because the respondents answers make for better decision making.
Using online surveys is an unbiased approach to making better business decisions. This is because unbiased responses are given, which is raw data that can be analyzed. Analyzing these unbiased results will allow Nike to see address certain areas of importance rather than "wasting time and valuable resources on areas of little or no concern." Gathering and analyzing this data over time will allow Nike to learn about their consumers as they use Nike products over time.
After online surveys are taken by Nike consumers, the results are analyzed and decisions are made. These results will always be available for comparison to other results over time. The attitudes, thoughts, comments, and concerns of Nike products could change, or stay the same throughout the years. Either way, online surveys allow Nike to compare results and see where consumers think the business is doing well, and which areas consumers feel need improving.
The Nike store survey mentioned earlier is featured on the receipt with a code to participate. The Nike survey has its own address called mynikevisit-na.com. After completion of the survey, the participant will receive a $5 Nike gift card. There are conditions when using the gift card, which include:
- Must be redeemed in-person at a Nike store
- Cannot be combined with any other offer or discount, including employee discount
- Cannot be redeemed for cash or applied to previous purchases
- Expires 60 days after issued
- One time use only
- Cannot complete more than two surveys within seven days
- Not valid at Nike.com or phone orders (Nike 2016)
So there are conditions with the incentive, but they are not unreasonable by any means. It's just enough for consumers to go online, take the survey, and receive a small reward for helping out the business and providing them with valuable consumer data.
PRECEDENT STUDIES
ADVERTISING STRATEGIES
Nike advertising is one of the most effective emotional branding examples in the marketing world today. Their customer loyalty is off the charts, all thanks to the Nike brand strategy and masterful application of emotional branding. Today, we look at Nike’s marketing strategy and how they use the centuries-old archetype of Heroism to tell their story.
Nike brand strategy is to build a powerful brand so powerful that it inspires fervent customer loyalty from people literally all over the world. This is because Nike advertising uses the emotional branding technique of archetypes in its advertising more specifically, the story of the Hero. It’s an age-old tale, a tale of a hero pitted against a great foe, and after a great struggle, emerging triumphant. In a way, you could say that Nike's marketing strategy is thousands of years old, and has been inspiring customer loyalty the entire time.
PRECEDENT STUDIES
Nike advertising isn’t the only group that uses the Hero archetype to inspire customer loyalty. Many other companies use this emotional branding technique to great effect. In most cases, the foe is external. The most common story of the hero is that of a man of humble origins setting out to defeat a great evil – one far more powerful than he and, against all odds, emerging triumphant. This same pattern could apply to, say, a home security system against a house fire, or an antacid against heartburn. As long as there is a clearly identified enemy and a clearly identified hero, the emotional branding can begin.
Nike brand strategy is excellent on this end because not only is the internal foe someone we can all hate, the hero is the viewer! In one way or another, we are all the hero of our own story, and Nike marketing has long since identified that feeling and used it to inspire timeless customer loyalty.
MARKETING PROGRAMS AND MARKETING STRATEGIES
ADVERTISING
Nike has named its advertising efforts “demand creation,” spending $3 billion under this label in the 2013-2014 fiscal year. These costs include both media marketing/advertising and its sports endorsements, some of its primary sponsorships.
Just Do It, Nike’s most well-known and powerful campaign began as simple 1988 advertising campaign and exploded into one of the company’s two most recognizable trademarks. This campaign urged sedentary people to run that first lap or step onto the court for the first time and increased the company’s revenue by 1,000% in the first decade of its run. Collectively, Nike’s “Swoosh” trademark and the “JUST DO IT.” phrase have an estimated worth of $26 billion.
SALES PROMOTION
Consumer & Trade
Nike has the opportunity to use direct-to-consumer approaches of sales through its factory stores as well as through sports outfitters and shoe stores. Alongside this, Nike uses its unsurpassed advertising and branding initiatives to communicate brand value to consumers. One of the top sportswear providers in the world, Nike has no problem convincing consumers of its worth. Its use of top-tier athletes who simply wear the product ensures consumers can see the products in action.
PUBLIC RELATIONS
With Nike being such a big player in the athletic footwear, apparel, and gear industry, it is very important that they have top-notch public relations strategies. Nike knows this all too well from their late 1990s PR nightmare when Nike products "become synonymous with slave wages, forced overtime and arbitrary abuse," (Beder 2016). Due to the bad PR, Nike's reputation dropped along with its sales and share prices. Nike had to change their image and make the company appear to be caring and concerned about working conditions in contractor's factories in China and Indonesia.
During this time, Nike developed a public relations strategy to deal with this problem. Their efforts included " upgrading its own code of conduct and participating in a range of coalitions including the Global Alliance for Workers and Communities aimed at helping workers in third world shoe and clothing factories and other business coalitions that represented social responsibility." Nike also spent money on philanthropy in countries where its products were made. These public relation strategies were necessary for bringing Nike back to the top and leading in the industry.
Public relations is a very important part of business. PR is like the middleman between the public and the company. Those working in PR for Nike, or any other company, will have to deal with the good publicity, and the bad of course. Public relations and the use of effective strategies is what got Nike products back to being associated with greatness and athleticism instead of with sweatshops.
PERSONAL SELLING
Nike uses personal selling in order to build a relationship with its consumers in order for them to purchase their products. Nike has been reaching out to young audiences by way of a social media campaign that calls on youth to share their own sports story.
The campaign is called “What do you play for?” and its purpose is to get youth excited about their own involvement with sports and to share their stories. This is joint effort between both the athletics brand and Youth Noise which is a social network for teens and social media firm Brickfish (Dilworth, 2009). The purpose of this campaign is to allow Nike to build an online community in the youth demographic so that youths can share their personal stories about sports and to encourage these youths to be creative about telling their stories visually (Dilworth, 2009). Nike’s Jordan brand uses celebrities such as Lebron James.
DIRECT MARKETING
Nike uses direct marketing to directly reach customers and potential customers on a personal basis, or mass-media basis such as with magazine ads, commercials, etc. Nike also is using social media and direct email as another avenue of media to reach its customers By marketing directly to where Nike's target market is, they are more likely to get their message across to who they want to see it.
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