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NIKE STRATEGY

Introduction
Once again , Boston Consulting Group (BCG ) has developed its annual list of the 50
most innovative brands in the world. If Apple and Google are among the tech giants
that focus on innovation with watches and virtualglasses for example, or Facebook
and Amazon who have made their core business of online networks , Nike and Fast
Retailing (owner of Uniqlo ) appear as the most innovative fashion brands.
With its technical fabrics, ultralight sneakers and other useful gadgets to athletes to
test their prowess, Nike is one of the industry 's biggest investor in innovation.
Nike with the launchs of the new baskets Kobe X, the new runnings Flyknit lunar and
the new football boots Hypervenom sponsored by Nemar himself affirm his position
on the market and shows that they still want to stay the number one and afford the
best products for their customers.
Constant innovation has always been the byword for Nike's success. It is at the heart
of NIKEs business growth strategy. Their relentless focus to be better helps them
create the world's most innovative products for consumers across the globe. If its
certain that innovation is part of their marketing strategy, well see what their whole
marketing strategy is and how innovation allows nike to become a global brand.
I - The overall strategic direction of Nike
A.

Brief presentation

Nike is an American company which is specialized in the design and manufacture of

footwear, apparel and sports equipment. It was founded in 1972 by Bill Bowerman
and Philip Knight. The company is the world market leader in sports equipment. Its
headquarters is located in Beaverton, Oregon. In 2013, the Nike realized global sales
of $25.3 billion. It employs over 41,000 people worldwide and its sneakers activity
represents 57% of its total turnover.

Strengths
Strong brand name/reputation
Highly competitive organisation

and strong spirit of competition

Sponsor famous athletes
Innovation products
Diversified products range

Weaknesses
High advertising costs
The majority of income is acquired
through

footwear

sales.

If

footwear market share falls, Nike

-

would face with problems.

Most of the retailers sell other
brands than Nike sot hey are able

Opportunities
Product development
Emerging markets such as India
have a new, richer generation of

consumers
Sport is healthy, trend which

becomes greater
Nike doesnt reach

only

the

sport

Nike

is

people .

to bargain prices
Threats
International
trade

problems with exchange rates)

Highly competitive market
Price sensitivity of consumers
The Humain Rights organizations

(eventual

pursuing poor employment record

in

Nike

contracted

manufactures

perceived as a fashion brand by

young people

B.

An innovative and creative strategy

According to the strategies of Porter, Nike has a differentiation strategy. Indeed, the
brand is highly innovative. It has understood that in order to differentiate itself from its
competitors (Addidas, Rebook, Puma, etc.); it needed a competitive advantage. It is
about innovative products (creation of ever more lightweight shoes) or even
innovative shops such as NikeLab for example. These unique stores offer rare
collections, exclusive collaborations, and the latest innovative products. Moreover, it
has been built considering the environment, with a smaller carbon footprint. This,
again, is a part of the strategy. Indeed, the company wants to be sustainable. Based
on this idea, Nike developed its triple bottom line. Nike is now rooted in a social
responsibility approach. The brand wants to meet its 3Ps: People, Profit and Planet.

For instance, the brand meets the People aspect when it is protecting the interests of
sports worldwide. It is also meeting the Profit aspect because it keeps maximizing its
profits. In addition, it is more and more concerned by the environment. This is why it
is always trying to reduce waste, or even its carbon footprint (e.g buid stores,
manufacturing process, etc). Another way to prove Nike is an innovative brand is the
number of patents delivered by the brand. As shown in the figure below, we can see
that this number is much more superior in 2013 than in 2006. This ongoing
improvement is possible because of Research and Development expenses.

This innovation strategy is clearly described in the mission statement: " To bring
inspiration and innovation to every athlete* in the world. (*If you have a body, you are
an athlete). This strategy of differentiation allows the brand to set a premium pricing
strategy to be in line with its added value. Indeed, the price of running shoes for
women is at least 110. This is not a real concern since the perceived value by the
consumer worth this price. He is willing to pay for it.

II - The marketing strategy of Nike

Nike has been creative since the start. It has been pushing the technological
boundaries of innovation to offer its customers new products and also differentiate
itself from its competitors. Somewhere in its evolution, Nike also realised the
importance of hi-tech gadgets in day-today lives. So it started to combine new
products with hi-tech solutions to give unconventional capabilities to a customer of
sportswear. In order to reach this success and offer customer value, it uses several
marketing strategies.

To begin with the market segmentation, Sportsmen are the majority consumers of
Nikes products. This is extremely because of the usefulness that goes along with the
items. Nike focused on these consumers by means of agreements between the
Company and sports team, college athletic for product support and sponsorship as
well as eventual endorsement to the team members. Moreover, Nike is also targeting
teenagers who have hold the hip hop customs and recently women after having
developed running and fashion shoes adapted for them.
Concerning the targeting strategy, Nike targets the users who are possible to build up
product intimacy, consumers who are after the quality and utility of the items rather
than the cost. Nike is targeting customers who are looking for value, whatever the
price.
Regarding the 4ps strategy, lets begin with product strategy. As mentioned before,
Nike uses innovation and technology. The main products of the Company are the
sports shoes. Indeed, it represents 57% of its sales. However, it has also developed
itself in sports clothes. About the pricing strategy, Nike focused on the users who
embrace product understanding and closeness and thus heed less regarding the
product. This allows the Company to set quite higher cost that its rivalry. This is a
marketing strategy of Nike which calls for superior pricing points in order to push the
supposed value of the product: the premium pricing strategy. Moreover, the
distribution strategy of Nike is quite particular. Indeed, Nike Company distributes its
items based on the level of quality or price. The high costs items are given to
particular distributors such as Nike Store, while products with low priced are left to be
trade at various retail stores such as Wal-Mart. Product delivery at the required time
to the user results of high level of customers satisfaction as well as loyalty. To finish
with the communication and promotional marketing strategy of Nike, Nike has hired
many professionals and well known celebrity sportsmen that have managed to make
a considerable interest to their items. Most of the athletes contracted by Nike include
soccer superstar Roberto Carlos, Ronaldo and Ronaldinho, basketball legends and
superstars such as Lebron James. This has developed a fairly high level of Nikes
items awareness. Aside from dealing or contracting of celebrity athletes to endorse
their products, Nike also used a best deal of ad by means of mass media. The
company uses a selective demand ad targets on the higher costs shoes utilized for
typical sports.

Nike marketing strategy shows a competitive marketing management which has

allowed the company to become the world market leader.

III - The strategic alignment between both of them:

In the last parts we have talked about the overall strategic direction of Nike and its
marketing strategy. The company evolves in a very competitive market where strong
brand are already well implemented. The athletic footwear and sport apparel is a
challenging and saturated market (hypercompetitive industry).
To summarise, the strategic direction of Nike is to become the world's leading sports
and Fitness Company. However, its competitors (Adidas, Reebok) tend to have the
same goal. In this kind of saturated market it is difficult to gain market shares upon
the competitors and to attract new customers because of their high-level of fidelity. In
this case, the marketing strategy is really important and can determine the future of
the company.
Nike uses a wide variety of communication techniques; online and offline; and almost
all the communication supports available (advertising, street marketing, branding,
outdoor advertising). The question is to know if the marketing strategy of the
company (or the changes in its marketing strategy) matches its strategic direction. It
was already known all around the world as one of the footwear and sport apparel
leader.
We can say that its strategy works, according to the last financial report (2013/2014),
the company has increased its net income of $2,69 billion (which represents an
increase of 9% compared to the last report). During 2014, Nike took the World Cup
effect. Indeed, it was one of the official sponsors for the competition and for some
national team. Its sales jumped by 15%, this strong performance is explained
primarily by a 32% increase in sales in Europe where it becomes as important as
Adidas with nearly the same percentage of market shares (11% for Nike and 13% for
Adidas).
Thanks to its marketing strategy and its sponsorship program, the brand is now one
of the largest suppliers of athletic shoes and apparel and a major manufacturer of
sports equipment. Its market shares are almost the same than Adidas in Europe

where the company has gained ground over its main rival. Nike is in good health at
all levels and really closes behind Adidas in the sport market.
To conclude with Nikes strategic alignment, Nike engages with a broad range of
stakehoders on an ongoing basis, including individuals in civil society organisations,
industry and government, as well as consumers and shareholders. Nike does this
informally, through participation and membership in networks and organisations, as
well as a structured part of its outreach strategies on emerging issues and
challenges.
Nike believes that developing and refining the skills of listening is critical to a
companys success. This has been true for Nikes history of listening to, and
innovating for athletes to deliver performance products.

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