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Nike Case Study

Essay by   •  January 5, 2014  •  Case Study  •  3,911 Words (16 Pages)  •  1,607 Views

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Nike is the most important corporate initiatives who played a major role and contributed to the prosperity of what is known today as the biggest Athletic Goods Company. The athletic footwear, apparel and equipment industry is keenly competitive on a worldwide basis. Nike is the most powerful brand name in the world today. It is the number one producer of sport shoes across the international market. Nike engages in design, development and marketing footwear, apparel, products for specific athletic use, casual or leisure purposes, accessories and other equipment designed for sports activities and uses. Nike has the largest market share of 43%, compared with competitors like Reebok, Adidas etc. Nike Inc. is listed 1st in the 'Sports Clothing & Footwear Industry' & 163rd in Fortune 500, for the year 2006, with over $ 137 billion in annual revenue and Profit of over $ 12 billion.

To understand the strategic ways, which Nike used to gain a significant market share in the sports wear industry we must consider its history first. Nike in 1962, started as Blue Ribbon Sports, as its Founder member, Phil Knight thought there was a market for athletic shoes designed by athletes for athletes. In the year 1964, Bill Bowerman, Knight's track coach & Phil Knight joined hands together & NIKE Inc. was co-founded with headquarters in Beaverton, Oregon. Nike's grassroots strategy was born of low capital and necessity, but became one of the strengths of the company. The 80's and 90's yielded greater profits as Nike began to assume the appearance of athletic juggernaut. "Advertising Age" named Nike the 1996 Marketer of the Year, citing the "ubiquitous Swoosh Logo and its memorable 'Just do it' catch line was more recognized and coveted by consumers than any other sports brand--arguably any brand". That same year Nike's revenues were a staggering $6.74 billion and rose to $12 billion in sales by the year 2000. In year 2003, for the first time in the company's history, international sales exceed USA sales.

By late 70's and early 80's, athletic shoe industry was growing smartly, due in part to a health and fitness movement sweeping the nation. All shoe manufacturers began to concentrate on this segment of industry. Sales of running shoes boomed and there began intense competition amongst the shoe companies. With emerging competition, Nike's Competitive strategies, farsighted vision and timely decisions, revolutionized the athletic shoe industry, bringing energy, creativity and new technology to a field that had been running in place for years. However, Nike's Management thought that they would benefit further from International and Global presence.

Nike's Customer Base strategy is derived from evaluation of product based upon customer needs, customer benefits and product features. Facing customer needs on a global level for brand name athletic shoes, Nike succeeded in innovating fashion with technology to cater to the these specific needs of the consumer. They doubled their design staff and tripled their design budget since 1995 and have over 300 designers working on the latest trends in fashion, to ensure durability and comfort. Nike scanned the world for the best labor productivity in terms of cost and maximizes Economies of Scale in order to compete globally. Their outsource manufacturing strategy formulates contracts with other firms to carry out its manufacturing operations; thereby, utilizing the abundance of cheap labor in various Asian countries.

Nike developed a reputation of authenticity and high quality based on cheap gym shoes and used it to develop a range of technologically advance and highly qualitative sports footwear. They marketed it successfully to different type of customers - men, women & children and used the strength its brand name acquired to diversify into other related markets, such as sports clothing, bags & even sunglasses. Nike established a benchmark in the footwear industry, by launching products like NIKE AIR - durable bags filled with inert gas for cushioning; TAILWIND - the technologically advanced, patented Air-Sole cushioning system; AIR CROSS TRAINER - High Cushioned sole shoe. Nike dominates the shoe market with over 1200 different shoe models, worldwide.

When we analyze the growth of this enterprise as a global leader whose products are most sort after the world over, we see that Nike has created a "niche" in the market by the quality of its product coupled with the excellent support of its strategic advertisement campaign. Nike brand building strategy, focused on the information acquisition means of customers, through Print, Media and the Internet. Nike best utilized the advent of Mass / Electronic Media by placing advertisements in multi-lingual fashion and athletic magazines (i.e., GQ, Elle and Maxim). Nike choose athletes like Michael Jordan, Tiger Woods, Serena Williams, for their advertising & product promotion program. Nike declared total advertising and promotional expenditure of $1.6billion in the year May 2005. By sponsoring Events & Athletes, Nike gained direct corporate benefits, community outreach, cultivate professional relationships, business reputation enhancement, brand awareness and improved recruiting. Nike responded to the growth in E-commerce by launching their website - Nike.com. Nike sells shoes trough its own website which make this medium global in nature.

A SWOT analysis of Nike is important in order to understand their current position in the market.

Strengths

Nike has a strong global brand which everyone will know by its logo. The logo itself needs to be presented without the name and everyone will know what it is, that is how powerful the brand is. Some companies require their names to be present but in this case that is not true. This is garnered a long term customer loyalty base where the products are synonymous with high quality clothing and fitness trainers. The power of the brand is also evident in the fact that Nike has well known athletes and other celebrities which will put further backing to the brand if it is deemed to be "cool" to wear. Athletes like LeBron James, Roger Federer and others such as Andrew Luck where each of these people represent a different sport from basketball to tennis to American football respectively. They promote the company by wearing Nike branded clothes from head to toe to more recently wrist in the form of the Nike FuelBand.

The company is a clothing brand and there is little to innovate in. However, Nike has managed to find ways to innovate their products and to provide a range for various different price points to cater for different demographics.

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