`

Project Report

How does Nike keep

hold of its market
because of its great
marketing?
Submitted By: - Submitted to: -

PGDM 6th TRIMESTER (SECTION-A) Prof. Pankaj Upadhya

Name of Students Roll No.

Gaurav Bhist

Tarun kumar Manglik 54

Shefali Arora 49

Deepika Tyagi 18

Priyali Jha
 DECLARATION

Project Title: How does Nike keep hold of its market because of its great
marketing?

The project is submitted by Gaurav Bhist, Tarun Kr Manglik,Shefali Arora,

Deepika Tyagi, Priyali Jha . All sections of the text and results, which have
been obtained from other sources, are fully referenced.
 CERTIFICATE

This is to certify that the project work entitled

How does Nike keep hold of its market because of its
great marketing?
being submitted by Gaurav Bhist, Tarun Kr Manglik,
Shefali Arora, Deepika Tyagi, Priyali Jha is the work
carried out under the supervision of
Prof. Pankaj Upadhya at JIMS, Kalkaji.
It is further certified that we have not submitted this
report to any other organization for any other degree.

Prof. Pankaj Upadhya

 ACKNOWLEDGEMENT

This project reports on “How does Nike keep hold of its

market because of its great marketing?” has been
developed by Gaurav Bhist, Tarun Kr Manglik,
Shefali Arora, Deepika Tyagi, Priyali Jha under the
supervision and guidance of Prof. Pankaj Upadhya.

We thank Prof. Pankaj Upadhya for his painstaking effort,

which helped us throughout the working of the project. It’s
our privilege to acknowledge our deepest sense of gratitude to
him for his inspiration, which has helped us immensely. The
project could not have taken its present form sans her
endeavor and numerous suggestions. We are extremely
grateful for her unstinted support and encouragement in the
preparation of this project.
 Contents

Topic Page No.

Introduction 6
(Role and characteristics of culture)
INTRODUCTION
Nike, Inc. is a major publicly tradedsportswear and equipment supplier based in
the United States. The company is headquartered near Beaverton, Oregon,
which is part of the Portland metropolitan area. It is the world's leading supplier
of athletic shoes and apparel.

'If you have a body, you are an athlete' - Bill Bowerman

When Nike co-founder Bill Bowerman made this observation many years ago,
he was defining how he viewed the endless possibilities for human potential in
sports. He set the tone and direction for a young company created in 1972,
called Nike, and today those same words inspire a new generation of Nike
employees.

Their  goal is to carry on his legacy of innovative thinking, whether to develop

products that help athletes of every level of ability reach their potential, or to
create business opportunities that set Nike apart from the competition and
provide value for our shareholders.

It started with a handshake between two visionary Oregonians - Bowerman and

his University of Oregon runner Phil Knight. They and the people they hired
evolved and grew the company that became Nike from a US-based footwear
distributor to a global marketer of athletic footwear, apparel and equipment that
is unrivaled in the world. 

Along the way, Nike has established a strong Brand Portfolio with several
wholly-owned subsidiaries including Cole Haan, Converse Inc., Hurley
International LLC, NIKE Golf, and Umbro Ltd.

Nike world headquarters is located near Beaverton, Oregon, a suburb of

Portland. So while the Pacific Northwest is the birthplace to Nike, today
operate in more than 160 countries around the globe. Through their suppliers,
shippers, retailers and other service providers, nikedirectly or indirectly employ
nearly one million people.

That includes more than 30,000 Nike employees across six continents, each of
whom make their own contribution to fulfillnike mission statement: to bring
inspiration and innovation to every athlete* in the world.For the fiscal year
ending May 31, 2009, nike reported record revenues of $19.2 billion, a 3
percent increase over last year’s earnings.
Nike Products
Nike produces a wide range of sports equipment. Their first products were track
running shoes. They currently also make shoes, jerseys, shorts, baselayers etc.
for a wide range of sports including track and field, baseball, ice hockey, tennis,
association football (soccer), lacrosse, basketball and cricket. Nike Air Max is a
line of shoes first released by Nike, Inc. in 1987. The most recent additions to
their line are the Nike 6.0, Nike NYX, and Nike SB shoes, designed for
skateboarding. Nike has recently introduced cricket shoes, called Air Zoom
Yorker, designed to be 30% lighter than their competitors'.In 2008, Nike
introduced the Air Jordan XX3, a high-performance basketball shoe designed
with the environment in mind.

Nike sells an assortment of products, including shoes and apparel for sports
activities like association football,basketball, running, combat sports, tennis,
American football, athletics, golf and cross training for men, women, and
children. Nike also sells shoes for outdoor activities such as tennis, golf,
skateboarding, association football, baseball, American football, cycling,
volleyball, wrestling, cheerleading, aquatic activities, auto racing and other
athletic and recreational uses. Nike is well known and popular in youth culture,
chav culture and hip hop culture as they supply urban fashion clothing. Nike
recently teamed up with Apple Inc. to produce the Nike+ product which
monitors a runner's performance via a radio device in the shoe which links to
the iPod nano. While the product generates useful statistics, it has been
criticized by researchers who were able to identify users' RFID devices from
60 feet (18 m) away using small, concealable intelligence motes in a wireless
sensor network.

In 2004, they launched the SPARQ Training Program/Division.

Some of Nike's newest shoes contain Flywire and Lunarlite Foam. These are
materials used to reduce the weight of many types of shoes.

The 2010 Nike Pro Combat jersey collection will be worn by Miami, Alabama,
Boise State, Florida, Ohio State, Oregon State, TCU, Virginia Tech, West
Virginia and Pittsburgh. Teams will wear these jerseys in key match ups as well
as any time the athletic department deems necessary.

Nike has contracted with more than 700 shops around the world and has offices
located in 45 countries outside the United States.Most of the factories are
located in Asia, including Indonesia, China, Taiwan, India, Thailand, Vietnam,
Pakistan, Philippines, and Malaysia.Nike is hesitant to disclose information
about the contract companies it works with. However, due to harsh criticism
from some organizations like CorpWatch, Nike has disclosed information about
its contract factories in its Corporate Governance Report.
NIKE MARKETING STRATEGY EVOLUTION.

Nike’s marketing strategy rested entirely upon a brand image which is

favourable and has evolved into a great multinational enterprise over time. The
favourable brand image has been kept afloat due to the strong association with
the Nike’s logo which is quite distinctive and the slogan “Just Do It” which has
been used in advertisement for quite some time. The company has been known
to invest heavily in advertisements and brand promotion.

Market Segmentation
Most of the consumers of Nike’s products are mainly sportsmen. This is so
because of the utility that comes with the products. An athlete is more likely to
go a sports shoe designed and marketed by Nike more than a person who detests
sporting and exercises. Nike targets these consumers by agreements between
Nike and athletic teams, college’s athletic teams1 etc for product sponsorship
and eventual promotion to the members of these teams. In this way, Nike is able
to reach a wide number of consumers and consumers who are more likely to
buy. Even though others are likely to buy the products, Nike pays specific
emphatic targeting to the athlete more than any group of individuals even
though it also targets the youth who have embraced the hip hop culture (Mercer
David, 1996, pp 171).

Targeting strategies
Nike lays a number of strategies to target their immediate consumers; athletes
and other sportsmen. The targeting strategies include among others 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
prescribes a specific type of track shoes made by Nike, the trainees have no
option other than to buy them. The teams can as well buy the track shoes in
bulky and supply them to the team members.
The second strategy that Nike applies is the designing of product destination. It
does this by associating success with the product. For example, when a celebrity
athlete sponsors a specific brand of athletic shoes, the brand will be associated
with success. This psychological effect is reinforced with advertisements that
affirm this position.
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. However, price has also been factored in Nikes
marketing strategies as shall be seen later in this paper (Frank, 2004, p.173)

Pricing Strategies
As stated in the foregoing section, Nike targets the consumers who embrace
product intimacy and thus care less about the product. This has enables Nike to
set relatively higher prices than its competitors. This is a strategy that calls for
higher pricing points so as to push the perceived product value. It has been
established that consumers who consider a product to be of high quality are
likely to pay the high price more often and consistently. Once consumers
develop product intimacy, they come to associate their person with the product
and will pay whatever price quoted on the product provided it has the Nike logo
on it.
Another very important thing to note is the fact that Nike uses the vertical
integration pricing strategy in which they take ownership of the participants at
channel levels that differ and they also engage in multifarious channel level
operations both in a bid to control costs and thus influence pricing function
(Goldman S, 2000, pp154)

Distribution Strategies
Distribution strategies embraced by an organization can either give them an
edge in market or make them lag behind the winners in the market. The more
efficient the product distribution is the more sales and thus more profits. The
delivery of the right product and at the right time to the consumer not only
effects utility but also leads to high degree of consumer satisfaction and loyalty.
Nike distributes its products on level basis. The high priced premium products
are given to certain distributors while leaving the low priced to be sold at highly
discounted prices at mega retail stores such as Wal-Mart. Whereas Reebok
embraced a limited distribution strategy Nike ventured more into a global3
market capitalization (Jeannet J, 2000, pp 44).

Promotional and Communication Strategies

Apart from Nike selling quality products which have lead to a high degree of
customer loyalty, the promotional strategies that the company employs are
simply superb. Nike has contracted a number of professional and celebrity
athletes which have managed to draw a considerable attention to their products.
Some of the sportsmen signed by Nike include soccer stars such as Ronaldinho,
Ronaldo and Roberto Carlos, Basketballers such as Jermaine O'Neal and Lebron
James2, triathlete Lance Armstrong and golf superstar Tiger Woods. This has
created a relatively high degree of Nike products’ awareness. Besides the
signing of celebrity sportsmen to promote their products, Nike has also
employed a great deal of advertisements through the mass media. Nike employs
a selective- demand advertisement focused on the high priced shoes used for
traditional sports (Goldman S, 2000, pp154).
4 P’s
Nike implemented a number of marketing strategies to sell its products. One of
the most important consideration is its marketing mix, better known as the 4Ps.

Nike is a global sports shoe giant company. It is the largest seller of athletic
footwear in the world, holding the lion share of 33% of the global market. The
company has production facilities in Asia, sales facilities in almost 200
countries, and customer service and other operational units worldwide.

The marketing mix or the 4 Ps of Marketing are Product, Price, Place

(distribution) and Promotion. Nike's 4Ps are the following:

1. Product

Nike offers a wide range of shoe, apparel and equipment products, all of which
are currently its top-selling product categories. Nike started selling sports
apparel, athletic bags and accessory items in 1979. Their brand Cole Haan
carries a line of dress and casual footwear and accessories for men, women and
children.

They also market head gear under the brand name Sports Specialties, through
Nike Team Sports, Inc. They sell small amounts of plastic products to other
manufacturers through Nike IHM, Inc. Bauer Nike Hockey Inc. manufactures
and distributes ice skates, skate blades, in-roller skates, protective gear, hockey
sticks and hockey jerseys and accessories.

2. Price

Nike’s pricing is designed to be competitive to the other fashion shoe retailers.

The pricing is based on the basis of premium segment as target customers. Nike
as a brand commands high premiums. Nike’s pricing strategy makes use of
vertical integration in pricing wherein they own participants at differing channel
levels or take part in more than one channel level operations. This can control
costs and influence product pricing.

3. Place

Nike shoes are carried by multi-brand stores and the exclusive Nike stores
across the globe. Nike sells its product to about 20,000 retail accounts in the
U.S. and in almost 200 countries around the world. In the international markets,
Nike sells its products through independent distributors, licensees and
subsidiaries. Independent distributors need not adapt to local pressures because
the 4Ps of marketing are managed by distributors.

4. Promotion

Promotion is largely dependent on finding accessible store locations. It also

avails of targeted advertising in the newspaper and creating strategic alliances.
Nike has a number of famous athletes that serve as brand ambassadors such as
the Brazilian Soccer Team (especially Ronaldino, Renaldo, and Roberto
Carlos), Lebron James and Jermane O’Neal for basketball, Lance Armstrong for
cycling, and Tiger Woods for Golf.

Nike also sponsors events such as Hoop It Up and The Golden West
Invitational. Nike’s brand images, the Nike name and the trademark swoosh,
make it one of the most recognizable brands in the world. Nike’s brand power is
one reason for its high revenues. Nike’s quality products, loyal customer base
and its great marketing techniques all contribute to make the shoe empire a huge
success.
Nike Marketing strategy
Nike's marketing strategy is an important component of the company's success.
Nike is positioned as a premium-brand, selling well-designed and expensive
products. Nike lures customers with a marketing strategy centeringaround a
brand image which is attained by distinctive logo and the advertising slogan:
"Just do it". Nike promotes its products by sponsorship agreements with
celebrity athletes, professional teams and college athletic teams. However,
Nike's marketing mix contains many elements besides promotion. These are
summarised below.

Advertising

In 1982, Nike aired its first national television ads, created by newly formed ad
agency Wieden+Kennedy, during the New York Marathon. This was the
beginning of a successful partnership between Nike and W+K that remains
intact today. The Cannes Advertising Festival has named Nike its Advertiser of
the Year on two separate occasions, the first and only company to receive that
honor twice (1994, 2003).

Nike also has earned the Emmy Award for best commercial twice since the
award was first created in the 1990s. The first was for "The Morning After," a
satirical look at what a runner might face on the morning of January 1, 2000 if
every dire prediction about Y2K came to fruition. The second Emmy for
advertising earned by Nike was for a 2002 spot called "Move," which featured a
series of famous and everyday athletes in a stream of athletic pursuits.

In addition to garnering awards, Nike advertising has generated its fair share of
controversy:

Beatles song

Nike was the focus of criticism for its use of the Beatles song "Revolution" in a
1987 commercial, against the wishes of Apple Records, the Beatles' recording
company. Nike paid US$250,000 to Capitol Records Inc., which held the North
American licensing rights to the Beatles' recordings, for the right to use the
Beatles' rendition for a year.

Apple sued Nike Inc., Capitol Records Inc., EMI Records Inc. and
Wieden+Kennedy advertising agency for $15 million. Capitol-EMI countered
by saying the lawsuit was 'groundless' because Capitol had licensed the use of
"Revolution" with the "active support and encouragement of Yoko Ono Lennon,
a shareholder and director of Apple."

According to a November 9, 1989 article in the Los Angeles Daily News, "a
tangle of lawsuits between the Beatles and their American and British record
companies has been settled." One condition of the out-of-court settlement was
that terms of the agreement would be kept secret. The settlement was reached
among the three parties involved: George Harrison, Paul McCartney, Ringo
Starr; Yoko Ono; and Apple, EMI and Capitol Records. A spokesman for Yoko
Ono noted, "It's such a confusing myriad of issues that even people who have
been close to the principals have a difficult time grasping it. Attorneys on both
sides of the Atlantic have probably put their children through college on this."

Nike discontinued airing ads featuring "Revolution" in March 1988. Yoko Ono
later gave permission to Nike to use John Lennon's "Instant Karma" in another
advertisement.

Minor Threat advertisement

In late June 2005, Nike received criticism from Ian MacKaye, owner of
Dischord Records, guitarist/vocalist for Fugazi&The Evens, and front-man of
defunct punk band Minor Threat, for appropriating imagery and text from
Minor Threat's 1981 self-titled album's cover art in a flyer promoting Nike
Skateboarding's 2005 East Coast demo tour.
On June 27, Nike Skateboarding's website issued an apology to Dischord,
Minor Threat, and fans of both and announced that they tried to remove and
dispose of all flyers. They state that the people who designed it were
skateboarders and Minor Threat fans themselves who created the advertisement
out of respect and appreciation for the band. The dispute was eventually settled
out of court between Nike & Minor Threat. The exact details of the settlement
have never been disclosed.

Chinese-themed advertisement

In 2004, an ad about LeBron James beating cartoon martial arts masters and
slaying a Chinese dragon in martial arts offended Chinese authorities, who
called the ad blasphemous and insulting to national dignity and the dragon. The
advertisement was later banned in China. In early 2007 the ad was reinstated in
China for unknown reasons.

Sponsorship
Nike pays top athletes in many different sports to use their products and
promote/advertise their technology and design.

Nike's first professional athlete endorser was Romanian tennis player

IlieNăstase, and the company's first track endorser was distance running legend
Steve Prefontaine. Prefontaine was the prized pupil of the company's co-founder
Bill Bowerman while he coached at the University of Oregon. Today, the Steve
Prefontaine Building is named in his honor at Nike's corporate headquarters.

Besides Prefontaine, Nike has sponsored many other successful track & field
athletes over the years such as Carl Lewis, Jackie Joyner-Kersee and Sebastian
Coe. However, it was the signing of basketball player Michael Jordan in 1984,
with his subsequent promotion of Nike over the course of his storied career with
Spike Lee as Mars Blackmon, that proved to be one of the biggest boosts to
Nike's publicity and sales.

During the past 20 years especially, Nike has been one of the major
clothing/footwear sponsors for leading tennis players. Some of the more
successful tennis players currently or formerly sponsored by Nike include:
James Blake, Jim Courier, Roger Federer, Lleyton Hewitt, Juan Martín del
Potro, Andre Agassi, Rafael Nadal, Pete Sampras, Marion Bartoli, Lindsay
Davenport, Daniela Hantuchová, Mary Pierce, Maria Sharapova, Serena
Williams.RafaelNadal is currently sponsored by Nike, Inc.

Nike is also the official kit sponsor for the Indian cricket team for 5 years, from
2006 till end of 2010. Nike beat Adidas and Puma by bidding highest (US$43
Million total).

Nike also sponsors some of the leading clubs in world football, such as the
Brazil National Team, Portugal National Team, Netherlands National Team, US
National Team, Manchester United, Arsenal, FC Barcelona, Inter Milan,
Juventus, Shakhtar, Dnipro, Porto, Steaua, Red Star, Boca Juniors, Corinthians,
Club América, Aston Villa, Celtic, Águila and PSV Eindhoven. Nike will also
sponsor Dundee United from summer 2009.

Nike sponsors several of the world's top golf players, including Tiger Woods,
Trevor Immelman and Paul Casey.

Nike also sponsors various minor events including Hoop It Up (high school
basketball) and The Golden West Invitational (high school track and field).
Nike uses web sites as a promotional tool to cover these events. Nike also has
several websites for individual sports, including nikebasketball.com,
nikefootball.com, and nikerunning.com.
Current Nike Marketing Strategies and Current Company Status

Who would have imagined it? After years on top, Nike suddenly looks like a
world-class marathoner who, in midrace, questions whether he's got what it
takes to keep on running. Nike's symptoms of distress: a global glut of shoes,
flat sales in key markets, and declining profits. Moreover, the global brand
champ that captured its own winning corporate mindset with the "Just do it"
ad slogan has a new pitch, "I can"--to which investors seem to be retorting,
"No, you can't." Losing faith, they have knocked Nike stock from its all-time
high of $76 about a year ago to a recent $46.

What happened? While Nike has tripped on fickle fashion trends and
heightened competition before, its main obstacle today appears to be its own
success. Here's why:

BIG-BRAND BACKLASH. When he founded Nike in 1972, CEO Phil

Knight contended that if "five cool guys"--the best and most popular
athletes--wore his shoes, other people would want to as well. The strategy
worked wonderfully, of course, and now Nike controls an astounding 47% of
the U.S. athletic-shoe market. But the brand has become too common to be
cool. "I call it the Izod syndrome," says John Horan, publisher of Sporting
Goods Intelligence, referring to the once-hip golf shirt. "Nike is everywhere."
Brand expert Watts Wacker, chairman of the consulting firm FirstMatter,
believes that the ubiquity of the Nike logo--the over-Swooshing of America--
turns off important core consumers, the 12- to 24-year-olds. "When I was
growing up, we used to say that rooting for the Yankees is like rooting for
U.S. Steel," Wacker says. "Today, rooting for Nike is like rooting for
Microsoft."

THE MARLBORO MISTAKE. Indeed, many cool-conscious youngsters

have gravitated to other brands such as Adidas (which sells sneakers at lower
prices) and Timberland (a leader in the outdoorsy "brown shoe" trend).
Instead of responding with hotter products or lower prices, Nike did what
many overconfident giants do (think Marlboro, pre-Marlboro Friday): It
raised its prices ahead of inflation. "Retailers loaded up, but the products
weren't necessarily reaching consumers' closets," says Josie Esquivel, who
follows Nike for Morgan Stanley Dean Witter. Now, Nike is paying with
price cuts--in the 50% range--on last year's models (except the irrepressible
Air Jordan line).
THE (ASIAN) ECONOMY, STUPID. Nike's inventory glut is messiest in
Asia, largely because the company operates few outlet stores there. (In the
U.S., Nike sells almost half of its leftover shoes through its 41 factory stores
and the rest through discounters like T.J. Maxx.) Also, Nike was particularly
ill prepared for Asia's economic collapse because Knight has long believed
his company's sales are recession-resistant. Management expected revenues in
Asia to almost double this year, from $1.2 billion, but retailers canceled
orders at alarming rates. It looks as though sales will rise marginally at best.

WAFFLING ON WALL STREET. Nike worsened its woes by failing to

acknowledge them soon enough. "Early last year, there was a major crack in
the dam," says analyst Esquivel. "It took them over two months to say, 'Oops,
we have problems.' " She lowered her rating on the stock from buy to hold
last May, just before Nike warned that profits would fall short of
expectations. As more negative news followed, some analysts complained
that management was hard to reach for information. One executive, CFO
Robert Falcone, antagonized major shareholders and left in January.

Will Nike get back up to speed? Probably--it's one of the world's most
powerful brands, and Knight is resilient as well as smart. But the recovery
will be long and painful. Knight and his senior managers are currently
working on a plan to close facilities and reduce Nike's work force worldwide.
A big restructuring charge will hit profits hard this year, and growth will
likely be slow during the next few years.

In order to recover, Nike will certainly need fresh products to excite bored
consumers. "The lineup for the coming year looks okay," says Ralph Parks,
president of Foot Action, the second-largest athletic-shoe specialty retailer. "It
looks better than 1997's, but I'm not sure the core consumer is quite ready to
jump back in."

Most important, Nike needs a new vision--of itself and its brand. This task
belongs to Knight, who turned 60 a few weeks ago and says he plans to work
until he dies. That's a good thing, because the boss's favorite motto, "There is
no finish line," seems more appropriate now than ever.
SWOT ANALYSIS OF NIKE

Strengths.

 Nike is a very competitive organization. Phil Knight (Founder and CEO)

is often quoted as saying that 'Business is war without bullets.' Nike has a
healthy dislike of is competitors. At the Atlanta Olympics, Reebok went
to the expense of sponsoring the games. Nike did not. However Nike
sponsored the top athletes and gained valuable coverage.
 Nike has no factories. It does not tie up cash in buildings and
manufacturing workers. This makes a very lean organization. Nike is
strong at research and development, as is evidenced by its evolving and
innovative product range. They then manufacture wherever they can
produce high quality product at the lowest possible price. If prices rise,
and products can be made more cheaply elsewhere (to the same or better
specification), Nike will move production.
 Nike is a global brand. It is the number one sports brand in the World. Its
famous 'Swoosh' is instantly recognisable, and Phil Knight even has it
tattooed on his ankle.

Weaknesses.

 The organization does have a diversified range of sports products.

However, the income of the business is still heavily dependent upon its
share of the footwear market. This may leave it vulnerable if for any
reason its market share erodes.
 The retail sector is very price sensitive. Nike does have its own retailer in
Nike Town. However, most of its income is derived from selling into
retailers. Retailers tend to offer a very similar experience to the
consumer. Can you tell one sports retailer from another? So margins tend
to get squeezed as retailers try to pass some of the low price competition
pressure onto Nike.

Opportunities.

 Product development offers Nike many opportunities. The brand is

fiercely defended by its owners whom truly believe that Nike is not a
 fashion brand. However, like it or not, consumers that wear Nike product
do not always buy it to participate in sport. Some would argue that in
youth culture especially, Nike is a fashion brand. This creates its own
opportunities, since product could become unfashionable before it wears
out i.e. consumers need to replace shoes.
 There is also the opportunity to develop products such as sport wear,
sunglasses and jewellery. Such high value items do tend to have
associated with them, high profits.
 The business could also be developed internationally, building upon its
strong global brand recognition. There are many markets that have the
disposable income to spend on high value sports goods. For example,
emerging markets such as China and India have a new richer generation
of consumers. There are also global marketing events that can be utilised
to support the brand such as the World Cup (soccer) and The Olympics.

Threats.

 Nike is exposed to the international nature of trade. It buys and sells in

different currencies and so costs and margins are not stable over long
periods of time. Such an exposure could mean that Nike may be
manufacturing and/or selling at a loss. This is an issue that faces all
global brands.
 The market for sports shoes and garments is very competitive. The model
developed by Phil Knight in his Stamford Business School days (high
value branded product manufactured at a low cost) is now commonly
used and to an extent is no longer a basis for sustainable competitive
advantage. Competitors are developing alternative brands to take away
Nike's market share.
 As discussed above in weaknesses, the retail sector is becoming price
competitive. This ultimately means that consumers are shopping around
for a better deal. So if one store charges a price for a pair of sports shoes,
the consumer could go to the store along the street to compare prices for
the exactly the same item, and buy the cheaper of the two. Such consumer
price sensitivity is a potential external threat to Nike.
Nike Marketing Case Study

I. Definition of the Issue

The Nike case study has presented the company in different angles with all
aspects having different concerns. The main issues in this case that we would
focus on are concerning the future of Nike.  We would want to analyze if Nike
has chosen the appropriate targets for new marketing efforts. We would also
discuss if the company can be successful in gaining market share among
women. These issues are what we think are going to affect Nike’s performance
in the coming years.

II. Objectives

Our paper’s objective is to generate strategies that may aid Nike’s development
in response to the issue through a quantitative analysis.

The paper also includes a potential problem analysis to help strengthen the
strategy’s defenses and enables the company to predict and anticipate future
issues.

III.S.W.O.T. Analysis

Strengths

Nike has several strengths that enabled them to be one of the largest and one of
the most famous brands in the athletic footwear industry in the world. The first
strength is the product’s strong brand recognition. Almost all people know the
brand Nike and its logo, and usually even without the brand name the customer
can still recognize the brand by looking at the check ü or “swoosh” logo. The
second strength could definitely be contributed by its distribution. In the U.S.
alone, there are around 18,000 retail accounts and outside the U.S. there are
around 30,000 international retail outlets that sell Nike products. Nike also
operates a “futures” program, wherein retailers can order up to six months in
advance. They sell there products through independent distributors in 200
countries around the world. The next strength could be attributed to its research
and development. They have a team which observes athletes in order to provide
them with the latest technologies in footwear and apparel. Since Nike contracts
with foreign manufacturers to produce their shoes, the company does not really
require a huge investment in machines and equipments, which is a strength
because they have fewer expenses. Having a broad range of products also
contribute to Nike’s success, because it gives the consumers a chance to choose
what they want. They have Nike performance focusing on athletes, Nike active
which includes “gym to street” wear, and Nike Fusion stylish clothing made of
high performance fabrics etc… With regards with the company itself, they have
good marketing. Nike has online stores where people can buy or browse for new
designs etc…They market their product as high-performance products designed
with high-technology features. Lastly, another strength is their strong
management style and culture. Their founder created a strong culture based on
loyalty and camaraderie, he trusts these employees to “Just Do It”. They
continue to follow their founder’s philosophy which is Play by the rules, but be
ferocious…It’s all right to be Goliath, but always act like David.

Weaknesses

Nike’s main weakness is their lack of focus on one main product. This is
because of Nike’s commitment on having diversified products for athletes,
meaning having too many different products available to sell to their customers.
Due to this, they tend to have divided attention on each product line. Although
having many different products might be advantageous (increased sales,
additional market penetration, fall back in case one product fails), Nike should
also consider the time & resources spent in maintaining each product.

Another weakness that we could identify, although not as great as the first,
would be Nike’s pricing strategy. Compared to their competitors, Nike’s
products tend to be more expensive than those of their competitors. But this
may be due to their products reputation, being made from the highest quality
materials, extensively researched and developed and tested by extraordinary
athletes around the world.

Opportunities

One of the opportunities that we quickly saw is the company’s efforts in

penetrating the market. Nike is currently focusing on Generation Y market (age
category) and women (gender category). Due to the strong increase in demand
for clothing & footwear for leisure activities by Generation Y representing a
large sum (of about 60 million people) of potential consumers, Nike addresses
this by acquiring Converse, increasing its offering in the currently popular retro
and classic shoes.
Besides from acquiring Converse to address the issue on Generation Y, Nike
has begun marketing towards women more aggressively by creating Nike
Goddess stores and introducing women’s yoga shoes in an attempt to appeal to
health conscious women.

Lately, buyers have become more brand conscious giving Nike an edge over
their competitors. Nike’s name and logo present high consumer awareness that
the company does not need to include their name on each product that they
produce. The “swoosh” logo is all that is needed. Also, some legal/regulatory
issues provide many opportunities not only for Nike, but for international
operations because of easier access to different countries.

Threats

As said in the article, Footlocker has decided to lessen the purchases of Nike
shoes because they want to sell low priced shoes and Nike shoes are quite high
priced. This poses as a threat to Nike because Footlocker accounts for 10.9% of
Nike’s revenue. They lost millions of dollars because of this and if not
addressed right away might cost them further loss of revenue.

Future occurrence of terrorism and disease also is a threat to Nike because it is

something that they cannot control. An example is the September 11 attacks
which slowed down the economy. It affected not only the shoe manufacturing
industry but the whole country and the whole world as well.  Diseases like
SARS also threatened Nike’s sales as shoes were coming from Asia where
SARS was reported to have come from. Likewise, the economic and political
condition of the countries manufacturing Nike shoes also is something that they
have no hold of which poses as a threat to Nike because shipments of products
may be delayed which would cause loss of sales and revenue.

Because Nike has a strong brand name, controversies affect the company in a
negative way. Some Nike followers may be turned off by controversies about
Nike not being ethical, which may or may not be true. This causes loss of sales
for the company.

High level competition of Nike with Reebok and Adidas also is a threat to the
company as all of these companies have almost the same product line and target
the same market. This is why strategies are very important for Nike.

Limited exports of Nike products due to legal restrictions also pose as a threat to
Nike as the supply of the products internationally is limited as well. They
cannot sell to other countries as much as they would want to because of the
limitation set by the government which decreases their potential for more sales
and revenues.

IV. Strategies

Upon careful analysis of Nike’s strengths, weaknesses, opportunities and

threats, we focused on developing strategies that would strengthen Nike in
terms of marketing, distribution, and management.

Distribution

1) Strengthen distribution in regions where Nike is currently losing sales, these

include footwear in the U.S. Region; and footwear, apparel, and equipment in
Americas region. Along with these, a strategy of penetrating emerging markets
in developing countries (e.g China) is also to be implemented. Easy access to
Nike products would result in higher sales and revenues.

2) Build more specialty stores or consignment with other existing local specialty
stores catering to specific sporting needs like Stoked, Inc. for
skating/wakeboarding/snowboarding, Surfworld Co. for surfing and other water
sports, Golfer’s Choice for golf, etc. Providing for different sports needs
increases Nike’s followers.

3) Give a more aggressive take on online stores and allow consignments with
other existing specialty stores in this industry like www.skateboard.com and
www.ccs.com for skating (Hurley), and www.iloveyoga.com for yoga and other
women dominated activities, etc. Going into e-commerce can increase sales
because of increasing internet users.

Marketing

1) Develop marketing strategies that would further push its products to its
diverse target market.

a) Sponsorship of kid-friendly programs to widen the customer base of the

target market of kids-adolescent like after school programs and summer/winter
programs. (Hurley in summer skateboarding, surfing lessons, and snowboarding
lessons in winter, Impact Golf Technologies in golf lessons, and other such
subsidiaries in soccer, basketball, baseball, and other programs). Target children
and youth to make them life long Nike followers.
b) Internet users have continuously increased due to advancements in
technology. Nike has to be more aggressive in advertising through the internet
and music videos that would cater to the target markets of each division
especially to the emerging fashion scene and the rise of more active women.

c) Sponsor women empowerment programs to widen the customer base of

active women since Nike is currently concentrating on women.

Management

1) Strengthen office relations by offering after office programs and family

social gatherings for the employees (picnics, out of towns, etc) to develop
network and good relations among employees.

2) Closer observance in manufacturing managements (sweatshops) especially

on foreign contract manufacturing. Frequently review the employees’ code of
conduct and quickly respond to any change needed by the evolving company
culture. This is to ensure that the company is following ethical standards to
avoid controversies.

3) A quicker response to emerging social, economic, legal, and environment

issues. This is to be able to be flexible to issues or problems and adapt to an
environment that the company cannot control.

V. Conclusion and Recommendation

By catering to the target market’s specific needs in fields of sports, fashion, and
lifestyle, Nike will be able to widen its consumer base and generate more
revenue. This is done by closely monitoring the implementation of the proposed
marketing and development strategies. There have also been management issues
in the past, and Nike should strive to face these issues and prevent the
occurrence of such. As a company being socially responsible, a quick response
to emerging issues should also be consistently done.

VI. Potential Problems

Problems may arise as a result in such changes proposed in form of distribution,

marketing, and management strategies of Nike.

Distribution

Response to penetrating emerging markets might not be favorable to the

company. If such a scenario arises, this could prove detrimental to the company
since money would be invested in such an action.
Marketing

Strategies under marketing might not be welcomed as positively as expected,

and if such occurs, the company will lose money invested in such programs as
well as in internet/music videos.

Management

In the case of consistent strict observance in foreign contract manufacturing,

this may not be easy to pursue since difficulty in international relations are
bound to appear due to distance, barrier communication, and as noted in the
case illnesses that form on other countries (e.g S.A.R.S.) Aside from this,
feedback may not always be accomplished on time, thus failure to respond
quickly to issues may happen.
Conclusion
By catering to the target market’s specific needs in fields of sports, fashion, and
lifestyle, Nike will be able to widen its consumer base and generate more
revenue. This is done by closely monitoring the implementation of the proposed
marketing and development strategies. The gap between the marketing work
done with the goals expected is minimal .

Customer satisfaction with respect to quality and usage is the highest which in
turn boosts the morale of the executives working hard with their marketing
strategies.

Nike has always changed its marketing strategies appropriately by absorbing

the global and national changes in any region and hence coming out to meet
their individual needs.

Thus boosting the faith on the brand “NIKE”.

These all when combined becomes the USP of Nike and holds up its market
share globally in proportion.