nike case study introduction

Nike Strategic Management: The Case Study Essay

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Introduction

Marketing environment and success strategy, drivers to superior performance, strategic management tools, marketing strategy and international markets, competitive advantage and value creation.

Nike Inc. is an international company based in the United States, which deals with sportswear and other apparels. The company is ranked as the top seller of sports shoe and clothing. Nike was started in 1964 by Bill Bowerman and was originally called Blue Ribbon Sports, but was later changed to Nike in 1978. During that time, its main goal was to produce low cost, high quality shoes for Americans to break Germans control over domestic trade (Nike, Inc., 2009).

Today, Nike not only distributes its products domestically, but also all around the globe. It has market regions in continents such as Asia, Europe, and United States. Besides, Nike has produced many brands such as Nike Skateboarding and Nike Pro. This paper focuses on the Nike Company and the strategic methods and tools that have led to its superior performance.

According to Peters (2009), Nike produces a wide range of products, which are categorized according to their relevant sports. Nike’s first products were track shoes, which were meant for running: the company has managed to design and produce shoes for different games such as baseball, hockey, football, basketball and Cricket.

This is due to the ever-increasing number of customers favoring the company’s products. The latest product that has been produced is the Cricket shoe named as air zoom Yorker (Nike, Inc., 2009). Air Zoom Yorker is better because it is 30% lighter as compared to the one designed by Reebok. Another new product is air Jordan XX3, which is meant for basketball.

Additionally, as a company that relies on collaborative marketing, Nike together with Apple Inc. has designed a product that is able to check runner’s performance through a radio device, which is placed inside the shoe and is connected with the iPod nano. Nike has also produced shoes that contain flywire and lunarlite foam meant to make the shoe lighter.

The Nike+sports brand records the mileage, lost calories, and time used. According to Mintzberg, Ahlstrand, and Lampel (2005), product differentiation and market segmentation form the basis for strategic management in marketing. In this light, meeting customers’ demands has been the strategic objective in Nike’s plan.

Dess and Alan (2006) affirm that the marketing strategy used by Nike is an essential element for its success. It has enticed its customers through advertising with a slogan ‘Just Do It’. Nike has also teamed up with athlete celebrities through sponsorship agreements. It has many elements of advertising such as advertising through television.

The first advert was created by Wieden and Kennedy at New York marathons. Similarly, Nike has also won Emmy Awards for commercial advert. The advert that won the award was based on what an athlete could face if there was Y2K realization on 1 January 2000.

The second commercial advert was called ‘move’, which marked the famous athletes. In product promotions, Nike pays players to wear their products such as t-shirts, shoes and shorts in order to advertise them. Such players include Michael Jordan, and through him, the promotion has boosted Nike’s publicity and sales. It also sponsors many football clubs in Brazil, Netherlands and United States.

Golf players like Tiger Woods and Michelle Wie have also benefited from the sponsorships. Nike also sponsors high school basketball and has developed websites for various sports such as nikerunning.com (Johnson & Scholes, 2008).

However, Nike has faced a tough competition in the market with companies such as Reebok and Adidas, which sell the same products as it does. Reebok has many female consumers, but has a weakness of poor marketing as compared to Nike. It does not always advertise its products on Televisions as compared to other Companies. Nike has tried to capture a big market share of female customers by sponsoring Women’s world cup football, which was held in 1999.

Nike has used the five forces model of competition that determines the industry structure. This model has helped it to deal with external forces such as, new entrants in the market, alternative products or services, bargaining influence of suppliers and buyers and competition and enmity among other competitors (Berman & Evans, 2006).

Onkvisit and Shaw (2004) argues that the risk of new entrants has been a threat to Nike since there are other firms in the clothing and shoe industry that have a potential to produce sportswear shoes and clothes if given a choice. Entry of new entrants has affected the prices because Nike has lowered some of its product costs.

However, the threat has been minimized by government regulations and brand loyalty. Further, Nike avoids extreme rivalry among other competitors because it is a risk to profitability rates. Nike, Inc. considers the bargaining power of the buyers as a threat because strong buyers have the power to lower the products prices and hence raise costs. The buyers are capable of buying in huge quantities and therefore getting a lot of profit while the firm suffers loss (Lynch, 2006).

The company has balanced its products productions and costs to minimize the bargaining power of buyers. Nike has also been able to cope with the bargaining power of suppliers, which poses a threat because the suppliers have power to increase the prices on raw materials. Nike has reliable suppliers who inform the management first upon the increase of costs of raw materials.

Nike has common drivers that produce superior performance. These drivers include people management, which entails realization of the potential of the employees either in groups or in an individual level. The company has come up with a strategy of upholding fairness among the employees, communication and caring for employees (Nike, Inc. 2009).

Through communication, the company ensures that there is a flow of information between the top, middle and higher levels to ensure that every employee’s contribution is taken into consideration. Nike, Inc. also motivates the employees by giving them incentives and rewards to build commitment to promote the organization.

People development enables employees to utilize their potentials and fully contribute to the organization’s goal realization. Rewards and recognitions motivate employees to give their best performance and strive to excel through continuous improvement (Berman & Evans, 2006). Furthermore, Nike has authorized the customer liaison manager to replace customer’s products in case of a complaint. The manager can make decisions without consulting the management.

Johnson and Scholes (2008) assert that leadership is another driver to superior performance, and it entails transforming the organizations direction and instigating others to follow. Leadership is paramount in Nike’s strategic management. Leaders have a stake in realization of the vision, mission and objectives of an organization because they ensure that other employees follow the organizations values. Leadership is developed at top, middle and lower levels in the organization.

Continuous improvement is another driver, which is activated by both customers and employees. In this case, there is feedback from the customers and from the employees and hence customer’s needs are met. Organizations’ processes are improved because customers provide their needs and the employees act and produce products according to customer’s specifications – all the stakeholders gain improvement benefits (Joshi, 2005).

Similarly, customer focus is a driver where a relationship with customers is an important issue. This entails assessing customer’s perceptions about products and acting on their response as soon as they raise an issue of concern about a product. Close relationships with customers benefits all the stakeholders involved. Nike has also employed process focus as a driver for performance improvement. The system performance has to meet the set objectives since it is a key technique (Nike, Inc., 2009).

Another important driver to performance is collaborating with suppliers. This entails relationships between the organization and the suppliers (Lynch, 2006). Nike has recognized suppliers as key for the organization to achieve shared goals while also sharing expertise and knowledge.

Improving on processes allows working with suppliers to share resources and improve performance. Nike applies various communication strategies within all its stakeholders to encourage openness and reliance. When communication flows through all the levels in the organization, it makes it easy for the employee’s ideas to be taken into consideration.

Stimulating innovation and creativity is another driver that has supported Nike to build up competitive products and services. This has been achieved by modifying the organization structure and being involved with product improvement activities. Nike has also managed its assets and resources to improve the effectiveness and efficiency of the organization. Protection of its properties maximizes customer’s value (Mark, 2000).

Onkvisit and Shaw (2004) concurs that measuring performance and benchmarking is another driver that Nike uses for superior performance. By utilizing a balanced score card, it has been able to measure process improvements alongside with the organizations objectives.

The company also monitors performance in other organizations and collect information from existing and future stakeholders. It uses the information to plan for the future, set targets to be achieved within a certain period, and get unique ideas on improvements from other organizations.

Furthermore, Nike employs corporate social responsibility as a driver to superior performance as well as interacting with the society representative. A good example of this is boosting children’s games in the community by sponsoring their sports and provision of uniforms that has Nike’s logo (Nike, Inc., 2009).

Strategic management is a technique that Nike, Inc. has been able to apply to determine how it is performing in its current position and how its future should be. This has greatly helped the managers to lay a plan for the organization and take it where they want it to be. The management employs strategic management components such as vision, environmental analysis, strategy creation, strategy implementation, and strategy assessment (Nike, Inc., 2009).

Nike has set business plans through strategic management in order to assess its business areas. It is a process which managers build strategies to get better results in performance. This involves studying the competitors’ techniques, both in the current and future. The Company has utilized strategic management tools which have supported it to examine itself in the present and perceive how its future will be. Strategic management acts as a road map to show managers the best direction to follow for the organization to be where it is supposed to be (Lynch, 2006). The tools employed for strategic management include mission statement, SWOT analysis, SMART goals and benchmarking.

Mission statements help to make clear how the organization is observed and how it will be perceived in the future. The organization reflects on how it will be different from other competitors like Reebok in the market place. SWOT analysis has been applied to find out the organizations strengths, weaknesses, prospects and risks.

Berman and Evans (2006) affirm that this has supported the organization to take advantage of its strengths and reduce the impact of its weaknesses. SWOT analysis has assisted the management to consider other external factors such as new openings and risks to be avoided.

SMART goals ensure that the goals and objectives laid down are specific, assessable, achievable, appropriate, and timely. SMART goals are essential for Nike’s management because they have enabled the company to get rid of frustrations due to unrealistic goals. The management has been specific to establish whether the set goals have been met.

Measuring enables the management team to gauge whether they are about to reach their goals and if not close to the goals, how much time and work is remaining in order to get there (Mintzberg, Ahlstrand, & Lampel, 2005).

Benchmarking is another tool that is employed to scrutinize and adapt to the best processes from other organizations around the globe. As explained earlier, managers have been able to improve the organizations performance to meet its goals and to be at the competitive edge over its competitors.

Other techniques that have been used in project management include program evaluations; this helps the company to evaluate a project from start to end. This has supported the management to ascertain the time left to for the completion of the projects. Nike utilizes these projects and programs to reach its goals and achieve its objectives.

The Company uses break even analysis technique to decide on the number of products to sell to break even and grow to be profitable. Lynch (2006) says that game theory is applied in the market to conclude how the customers will react and it does this either through increase in prices or introduction of new products.

Financial control techniques like budgets, audits, and financial breakdown are efficient in controlling and balancing the cost of business. Budgets are employed to manage the organizations income and expenditure as well as allocation of resources to different activities and projects.

Nike has many strategic management techniques organized in steps to achieve the laid down goals and objectives. First, environmental scanning is a process that the company employs to collect information from both internal and external environments that has power to influence the organization. This is meant for improving the processes through analyzing competitors, employees, products, and suppliers (Mark, 2000).

After analyzing the environment, strategy formulation is the next step where Nike management takes the best plan among many to accomplish organizational goals and objectives. Through this stage the managers set strategies for business and functional policies. Strategy implementation is taking the best plan and implementing it (Berman & Evans, 2006). Organization structure is devised in this step together with the allocation of resources, hiring of human resource and coming up with a clear decision making process.

Strategy evaluation is the last step where the strategy implemented is assessed to determine whether it is performing well and if it has deviated, and that the best corrective actions are taken. The purpose for the evaluation is to make sure that that the organization goals are met.

In light of this, Nike has been on the global market and has gained competitive advantage on the market. Its marketing managers keep on analyzing the global industries and how competition keeps changing. Trade is increasingly becoming global because of improvement in transport and communication. Nike’s consumers have been able to have access to a wide range of products in their countries. Nike started exporting its products in small amounts, but later increased and reached the export stage. It got more and more foreign orders until it was able to export its products all over the world (Nike, Inc., 2009).

Nike has stayed at international market for a long time and it applies many techniques such as adding new brands. Nike keeps on adding new products such as sports shoe and clothes. The information about the new product is posted on the website (nike.com) where consumers can read. Joshi (2005) asserts that through advertising of the new product, Nike gains an increase in sales because this has brought in new customers who have never bought the current products.

The existing customers have had a variety of the products to choose. Nike combines the new brand and the old ones into an exceptional package as an offer. Nike has also become a valuable resource to its customers by giving them free information about the products. They have assisted their customers to easily get services, fast deliveries, and at low costs.

The company is unique since it produces exclusive and best quality products. They have also promoted the end result of products by telling the consumers about the benefits they will get when they choose to use the products. Nike keeps on changing its marketing strategies due to other aggressive and innovative rivals like Puma, Reebok, and Adidas (Peters, 2009).

Nike’s brands have turn out to be to be very strong as compared to others such as Reebok and Puma. Their secret is brand management because despite selling their products at a higher price, consumers are still willing to pay more money for its brands which are believed to be of high quality with different styles. Due to the strong brand competitive advantage, Nike has been able to increase its market share all over the globe. Its prices are a bit high as compared to other competitors but it has made many sales than those of its competitors.

Nike, Inc. has gained a competitive advantage over its rivals. This is achieved through giving consumers a greater value and offering high quality products. The company has devised superior value over other competitors. Nike, Inc. uses Michael Porters strategies for competitive advantage such as cost leadership, focus, and differentiation (Johnson & Scholes, 2008).

The reason why Nike, Inc. has gained a competitive advantage over other companies is that it undertakes an evaluation process, which involves evaluation of resources, clarification of goals, defining customers and examining competitors.

In evaluation of resources, the company relies on the resources available and plans on how to use them through product offering and resources. In goals clarification, Nike plans on how to achieve its goals and objectives. Defining customer’s strategy entails looking at the products and services that the plans to develop, and is not provided by the other competitors.

This assists Nike, Inc. to determine and communicate to its customers in order to understand their needs and get additional suggestions from them. Examination of competitors helps to identify other ventures targeting a particular market. Through this, Nike compares its strengths and weaknesses with the other competitors (Nike, Inc., 2009).

In this regard, there are many techniques used to achieve a competitive advantage. These techniques include product differentiation, service differentiation, people differentiation, image differentiation, quality differentiation, and innovation differentiation (Lynch, 2006). Product differentiation implies that Nike has a wide range of products. Other competitors have tried to imitate its products but it remains upfront due to its quality and the products are different in styles and consistency.

Peters (2009) argues that in service differentiation, Nike, Inc. offers additional services such as delivery and product return services. This extra service is the one that consumers are after. Information and other instructions about the products are also extra services that attract customers.

People differentiation entails hiring result oriented employees who are better than those in other rival companies. Because employees are intangibles, it is difficult to imitate them as in the case of tangibles. Training employees and paying attention to their needs gives Nike Inc. a competitive advantage.

Employees such as production staff produce quality products, and it is hard for the competitor to know that the competitive advantage is due to employees’ improvement. The competitor may think that the competitive advantage is due to equipments and materials. People differentiation is essential when customers are directly served by the employees. The way employees handle a customer at first time determines whether he will return another time (Berman & Evans, 2006).

Image differentiation is another technique that has been applied by Nike to differentiate its brand image from other competitors. A negative image can destroy the company’s image within a short time. As Nike undertakes many activities, it supports its image because the “Nike” mark symbolizes good, and it is easy to identify. In quality differentiation, Nike sells high quality products to its customers. Innovation differentiation entails process innovation.

Process innovations reduce the costs of production and the competitors may take time to discover what the company is doing to gain competitive advantage (Nike, Inc., 2009). Nike strives to sustain its competitive advantage because it is not long lasting. This sustainability is achieved through giving value to customers, creation of non-imitable products, which may not be copied by its rivals, and production of products that cannot customers cannot substitute easily.

In selecting a competitive advantage, Nike, Inc. selects ways of making products that competitors cannot imitate easily because the management understands what its customers needs are.

The company has realized that variety is totally different from differentiation. Nike has strived to stay at the competitive edge because of its efforts and strategies. It has faced many challenges since other competitors have tried to copy it through successful advantages for their business in the dynamic market place. Thus, establishing the market edge is important as well as maintaining it (Mark, 2000).

There are many ways that Nike has attracted its customers for value creation. Customer incentive programs are one of the successful programs within the organisation (Nike, Inc., 2009). Nike offers give away to customers, tickets, sales, sponsorships and discounts. Nike sponsors many players in different sports.

Such players who have benefited from sponsorships include; James Blake and Roger Federer. It also sponsored Indian cricket team for a period of five years and national soccer clubs in countries like India, Netherlands and Malaysia. Top golfers like Tiger woods and Lucas Glover has also benefited from Nike’s sponsorships.

Moreover, Nike has retained both traditional and non-traditional methods of distribution in over 100 companies, but it focuses more on its primary market regions. Apart from product diversification, Nike has diversified supply chain and manufacturing due to international economic crises and other risks. It has many contracted suppliers outside the United States, including Vietnam and Thailand. There are other contractors who manufacture its products in over 35 countries.

In the year 2003, China manufactured 38%, Indonesia 27%, Vietnam 18% and Thailand 16%, while the rest was manufactured by other countries. This has enabled Nike to make large amount of sales. Supplier diversity has also increased its competitiveness in the market and it continues to contract more suppliers in many countries because it believes that supplier relationship is vital.

Nike Inc has also employed value creation as a management goal. Creating value for consumers has increased sales as well as the shareholders through the increase in stock price. Value creation is characterized by brands, people and innovation (Mintzberg, Ahlstrand, & Lampel, 2005). Nike, Inc. has prioritized value creation in its decision-making. This has helped the managers to know where and how to build the companies capability to attain profitable and lasting growth.

Mark (2000) agrees that through value creation, the company has been able to understand the basis and drivers of value creation in the business and market place. They have realized that the consumers value high quality and timely delivery of products and so the processes that lead to the delivery of high quality products are greatly valued. Some of the customers have valued innovation and so the processes involved in creation of new products are also highly valued.

Value creation also entails product and process innovation as well as knowing the consumers needs. Nike, Inc. has also realized that value for employees is essential since they feel motivated and work hard to produce better results. Therefore, proper treatment of the employees and involving them in decision-making creates value.

Nike has awarded and promoted managers who have defeated the other competitors like Puma in value creation. In this case the managers have positioned capital better than the other competitors. Nike has gained an advantage in developing the organizations ability to get more profits and future growth.

Other companies that have achieved the benefits of value creation are Coca-Cola and the Lloyds banks. These companies applied value creation as a technique and have realized growth and increase in their profitability. In acquisitions, Nike has acquired Upscale Footwear Company, surf apparel company, Hurley international and converse Inc. It has sold some of its subsidiaries such as Bauer Hockey and Starter (Nike, Inc., 2009).

Nike, Inc. has achieved its superior performance, mostly through competitive positioning and value creation. This has been achieved through advertising, brand name recognition, product innovation, and striving to be at the competitive edge despite having a stiff competition.

Nike employs many strategies and techniques such as strategic management tools and models, product differentiation, and proper distribution channels. Many consumers have realized the uniqueness of their products and recognize them through the trade name ‘Just Do it’ and Swoosh Logo. They have maintained customers because of their high quality products and unique marketing strategies.

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Nike: An Innovation Journey

• First Online: 29 November 2017

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Part of the book series: Palgrave Studies in Practice: Global Fashion Brand Management ((PSP:GFBM))

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Nike is an American multinational company that has evolved to become a global leader in athletic wear with annual sales exceeding $21 billion in 2016, more than half of which is attributed to international markets. Since its inception in 1964, Nike has been an innovation leader in product development, marketing and consumer experience. Due to a dedication to continuous innovation, Nike has been able to sustain a competitive advantage within the athletic apparel and footwear marketplace. This case highlights key points in Nike’s journey of innovation and examines how Nike has successfully emerged as a global champion within the athletic wear industry. Based on these analyzed strategies, this case provides implications that are relevant for practitioners and academics.

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In 1928 in Chicago, IL, Cole Haan was established by two founders—Trafton Cole and Eddie Haan. The company focused exclusively on men’s footwear before expanding into women’s footwear in 1979 (Shoemetro, 2016 ).

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Childs, M., Jin, B. (2018). Nike: An Innovation Journey. In: Jin, B., Cedrola, E. (eds) Product Innovation in the Global Fashion Industry. Palgrave Studies in Practice: Global Fashion Brand Management . Palgrave Pivot, New York. https://doi.org/10.1057/978-1-137-52349-5_4

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Research Case Study Report on Nike Inc.

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Tram Dang Ngoc

Hina Brohi , Rizwan Raheem Ahmed , Arslan Hussain Bhutto , Rabel khubchandani

This report is all about to show a Marketing plan for Nike’s products; with reference to older offerings the report shows the plan that how can Nike offer new products in the market. With respect to this the report contains comprehensive marketing plan components including company analysis (Nike’s current and future status), situation or market analysis and competitors analysis; the report shows the Nike’s objectives and marketing strategies in terms of its 4ps that is it is shown that Nike can offer and increase its product range by offering other related products as aerobic products to its customers and set value-based pricing strategy accordingly, and for new offerings it can increase its other media other than commercials that is it can focus more on social media to promote its new products and it may expand its business in other countries as China, Middle-East etc. Beside this, the financial budget of this marketing plan has been discussed which is been forecasted by reviewing Nike’s previous years revenue and marketing expenses figures. Also execution plan as well as contingency plan has been shown which is thoroughly depends upon Nike’s senior management and team work which would make its objectives possible new offerings.

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Strategy is about the most crucial and key issues for the future of organizations. Strategy is also important to explore several strategic options, investigating each one carefully before making strategic choices. The study incorporates a rigorous and systematic effort to uncover the strategies and its impact on the company's performance by analysing case studies, articles and the annual report of Nike Inc. and Adidas Inc. The study attempts to find out the relevance of the strategies adopted by these companies, which are globally successful athletic apparel companies in the context of Bahrain. The findings of the study highlight Nike's strategies which focus on innovation and emphasis on its research and development department, provision of premium pricing for its customers, broad differentiation strategy, market Segmentation Strategy and Closed-Loop strategy. The Adidas strategies focus on the broad differentiation, innovation, trying to produce new products, services and processes in order to cope up with the competition. It embraces a multi-brand strategy, emphasis on expanding activities in the emerging markets, continuously improving infrastructure, processes and systems, foster a culture of challenging convention and embracing change, foster a corporate culture of performance, passion, integrity and diversity. These strategies coupled with its resources and unique capabilities form the basis of sustainable competitive advantage for both the companies. INTRODUCTION: The strategy is a path towards achieving the optimum goals of individuals, groups and organizations. In addition, it leads to a best use of companies' available resources and it also guides the company to stay in a business successfully and continuous improvements for its processes. The definition of strategy could be differ from one author to another, but the most common definition is that the strategy is long term plans and approaches towards the intended visions and objectives. It is a general framework that specified the organizations' plans, policies and approaches to meets its objectives, goals and end results. The way an organization used to shape its strategies could be differentiate from other organizations in order to make its products unique and remarkable. Globally, companies formulate their strategies based on their visions and reaching the satisfaction of customer's needs, requirements and expectations. Subsequently, they use those strategies as a baseline to compare their actual performance with planned ones, to evaluate the end results and ensuring the continuing organizational excellence. There are many kinds of strategies that are pursued by the companies; Such as cost leadership, differentiation and the focus strategies (Porter, 1985), services strategies, growth strategies. Based on the goals, the companies form those strategies and they rank them upon the priorities. It is more than important for any organization to put strategies and not any strategies; the correct strategies which are formulated after a long time of studying and after numerous number of brainstorming among the top management members. Therefore, those strategies then to be implemented by converting the organization's plans and policies into real actions through the best use of available resources such as: human resources, budgets and technological advance; in order to enhance the organization's performance, productivity and sustainability.

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Nike is the world's largest sports and fitness company, earning $US14 billion in revenue. The company, with one of the world's most identifiable logos - the 'swoosh', is a leader in sports equipment research and development (R&D). Nike identified a gap in the sports shoe market - a shoe which mimics barefoot running in order to strengthen runners' feet and legs, giving them more power and speed while reducing the risk of injury. After extensive R&D, the shoe, Nike Free, was developed. Nike Free was given an initial, strictly controlled, limited 12 month release before being promoted to consumers worldwide. After reading this Case Study, students should be able to:

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Innovation is what sets Nike apart in the industry.

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Advertising is synonymous with Nike. In partnership with its advertising agency, Nike has created some of the world's most attention-grabbing advertising.

Nike aims to bring inspiration and innovation to every athlete in the world - and it considers everybody to be an athlete!

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A Marketing Case Study on Nike

Written by Miles Media on April 10, 2016 . Posted in Uncategorized .

1.0 INTRODUCTION OF NIKE

Nike is a major publicly traded sportswear, footwear and equipment supplier based in the US which was founded in 1962 originally know as Blue Ribbon Sports. Nike is the world leader in the manufacturing of sportswear and gear with more than 47 market shares across the global (Nike.com, 2011).

Nike produces a wide range of sports equipments such as running shoes, sportswear, football, basketball, tennis, golf, etc. Now Nike follows the global fashion trends and is well known and popular in the youth culture and hip hop culture to supply some fashion products. Nike recently teams up with Apple Company to produce the Nike+ products which can monitor a runner’s performance through a radio in the shoe that can link to the iPods. Besides that, Nike also becomes the top of three companies which are climate-friendly companies which build better image to customers. 

Nike’s excellence marketing strategies are their energy to achieve their market goals. Nike believes the “pyramid influence” that the preferences of a small percentage of top athletes influence the product and brand choice. So Nike contracted with many athletes’ spokesperson, professional teams and college athletic teams to advertise and promote their products to customers. Nike seriously pay attention on the technology producing, design and selling such as e-commerce, high-tech running shoes, Nike+ with Apple, etc. Nike outsourcing their products most of the factories are located in Asia such as China, Indonesia and India.

2.0 PROS OF NIKE’S CORE MARKETING STRATEGY

Nike put heavily proportion in their marketing strategies and products deign. In order to sustain their dominance in the industry and retain their competitive advantages, Nike actively responds to the market trends and changes in consumer preference by adjusting their marketing strategies, the mix of existing product offerings, developing new products, styles and categories, and influencing sports and fitness preferences through various marketing strategies. Now we discuss the pros of Nike’s core marketing strategies and related them to the relevant marketing theories help us to depth understanding.

2.1 Distribution

More efficient product distribution is the more sales and thus more profits. The delivery of the right products and at the right time to the customers is not only effect the utility but also leads to high level of consumer’s satisfaction and loyalty. Nike distributes its products on different level basis. The high premium products are given to a certain distributors while leaving the low priced to be sold at highly discounted price at the retail stores such as Wal-Mart (Jeannet J, 200, pp 44).

Nike has become the leader in the e-commerce by being the first to the market with its e-commerce website. Nike launched its e-commerce site in April 1999 by offering 65 styles of sport shoes to the US market for purchasing (Nike, 2000). This program represents the first time a company has offered mass footwear through the Internet and provides competitive advantages to Nike.

2.2  Advertising and Promotion

Nike makes contracts with some celebrity athletes which can draw attention to their products such as Tiger Woods, Ronaldo. This has created a relatively high level of Nike’s awareness. Besides that, Nike also employed a large amount of advertisements through the mass media (Goldman S, 2000, pp 154). Nike’s brand images, including the Nike’s name and the trademark are considered to represent one of the most recognizable brands in the world. The Nike name and associated trademarks have appeared from players’ shirts, pants and everywhere. Their aggressive advertising campaigns, celebrity endorsements and quality products all enhance their brand and image. For example, when a celebrity athlete sponsors a specific brand of athletic shoes, the brand will be associated with success.

Nike targets on the consumers who care more about the utility and quality of the products rather than the price. In this way, the price is not affect too much (Frank, 2004, pp173). This has make Nike to set relatively higher price than its competitors. This strategy focuses on the consumers who like Nike and pushes the products value to a higher level. The customers who consider a product to be high quality are likely to pay the high price more often and consistently. Once the consumers develop the product intimacy, they come to associate their person with the products and will pay whatever price quoted on the products.

Nike use vertical integration price strategy in which they take ownership of the participants at channel level that differ and they also engage in various channel level operations both to control costs and thus influence the pricing function (Goldman S, 2000, pp154).

2.4  Market Segmentation and Target

Most of the consumer of Nike’s products is mainly athletic. Nike is the master of segmentation, their segmenting market typically target’s athletes, both women and men from the age 15 to 35. Nike’s targeting market is active people who enjoy high quality sporting goods, especially footwear. Nike focuses on creating premium consumer experiences on product innovation, brand leadership and elevated retail presence. Nike targets on these customers by agreements between Nike and athletic teams, college’s athletic teams for products sponsorship and eventual promotion to the members of these teams. Even though others are likely to buy the products, Nike focuses on the athlete more than any group of individuals even though it also target on the youth. This strategy is especially successful because of its ability to reach a large number of athletes.

3.0  CONS OF NIKE’S CORE MARKETING STRATEGY

Although Nike’s marketing strategies had brings lot of positive implications to the company, but it will bring negative implications to Nike too. The negative implications that will identify in this assignment are high cost incurred, influence of spokesperson, and competitors.

Since Nike has implemented several marketing strategies, it had incurred high costs in producing and promoting its products. The costs are increase among handling inventory, designing, advertising and production. (Abhiroopsur, 2009) Beyond that, the inflation had raised the costs of raw materials and transportation. To deal with these problems, Nike has increased the products’ prices and reduces its marketing budget. Therefore, this could hurt the long-term growth of the Nike. (Taulli, 2011) According to Boggan (2001), Nike had also employed child labor in Cambodia to reduce its production and labour costs. This had affected its brand image, and it might have many people boycott Nike and stop to buy anything from Nike. (Boggan, 2001) Furthermore, Nike has been using child labour in the production of its soccer balls in Pakistan. (TED, 2011)

3.2 Influences of spokesperson

One of the Nike’s core marketing strategies is depend on a group of athletes to promote its products. Nike prefers to have high profile athletes as its endorsers, like Runner Steve Prefontaine, Michael Jordan, and LeBron James. The athletes had positive and negative influence on changing consumer preferences, changes in consumer tastes and priorities, and also consumers’ buying decisions. The action and attitude of Nike’s chosen spokespersons could bring the impacts on its promotional strategies. For instance, it will attract the athlete’s idolater to purchase the products if Nike using a popular athlete as endorser. On the other hand, if the athlete were caught in drug addicted or any immoral attitude, it will affect the customers not to buy Nike’s products, thus will affect Nike’s sales, revenue and profit. (Cloke M., 2011)

3.3 Intense Competitors

There is intense competition faced by Nike. Their competitors are Adidas, Reebok, Puma, and so forth, whilst competition is tighter with the coming of Adidas. More, the product line is slightly different between Nike and Adidas. Nike is mainly focus on footwear for men and women who between 15 to 35 years old, while Adidas is specialize in footwear for men, women and children between the age of 10 to 30. This had shown that there is less diversification of Nike marketing strategy. They could also provide footwear for children to attract more parents to become their potential customers. Additionally, Nike distribution strategy is mainly focus in domestic market which is United States of America, whilst Adidas’s main office is located at Germany, but it focus in European market. Therefore, Nike should distribute its products to more region and countries in order to capture more potential customers and achieve greater reputation. (Allick et al., 2000)

4.0 RISKS OF NIKE’S CORE MARKETING STRATEGY

Nike faces many risks when they use their core marketing strategies to achieve their goals and these risks can come from both internally and externally environmental circumstance. The risks will have a negative influence about Nike’s future development, for example, the market share in the world, reputation, brand image and customer loyalty.

4.1 Changes in Market Trends, Consumer Tastes and Preferences

Nike needs to stay on the top of changes in consumer taste and preferences as evidenced by changes in fashion. So Nike face the risk that fashion trends may change so fast that Nike fails to follow. For example, for a period, the global athletic sportswear is focus on personality and Nike’s products still be general to the customers this will lead Nike go behind of their competitors if their competitors can follow the trends. For another example, such as the social changes, women are becoming more fitness-conscious and are increasingly being targeted as growth potential in the sporting apparel and footwear industries. Due to constant changes in consumer tastes and fashion, these industries are always changing. If Nike cannot follow the fitness trends in the market they will face risks of losing market shares. To compete with this risks and problems, Nike should position it as a trendsetter and not a trend follower and be responsible to their customers. (St. John University, 2004)

4.2  Fast changing of Nike’s products

From the above risk, the changing in fashion and customers’ preference had brings negative effect on its marketing strategies. Hence, Nike should introduce new products to maintain its customer loyalty as well as attract new customer markets. However, it will also have negative implication if Nike’s implement new products rapidly.

As we know, Nike’s products are focus on the athlete’s shoes, apparels and equipments and their target consumers are for the athletes. But now the global trends are to be fashion and personality. So Nike change its marketing strategies and products design to become more fashion and focus on the youth consumers. It brings risks to Nike because in the traditional mind of customers, they consider Nike only sell the athletic products. The fashion or the changing style products is unimaginative for customers to purchase. Not all the customers can follow the changing of Nike. Sometimes customers maybe feel fed up because they cannot follow the changing of Nike’s products will lead Nike lose customers which drop down the customer loyalty and market shares. (St. John University, 2004)

Therefore, Nike should analyse the market and customers’ preference as well as customers’ buying behavior from time to time. Nike could prepare survey form to their customers in order to have more understanding on customers’ taste, requirements when buying sportswear or footwear, and also collect the feedback and recommendation from consumers.

4.3 Expanding to the Overseas

One of Major Nike’s marketing strategies is to expand to overseas and become the leader in the world. It also will bring risks to Nike when they expand their business globally. For example, Nike outsources their products to developing countries such as China, Indonesia, and Thailand. Currency exchange rate fluctuations can disrupt the business of the independent manufacturers that produce Nike products by making their purchase of raw materials more expensive and more difficult to finance. Besides that, the global economic recession influence the overall business operation in the outsourcing countries. For example, inflation rate too high in an outsourcing country will increase the cost and reduce the profits for Nike. What’s more, the war and fuel price fluctuations also can lead to unstable situation for Nike over the long period. (Florzak, 2011)

5.0 COMPETITORS – ADIDAS

5.1 IFFICULTIES FACED BY ADIDAS WHEN COMPETE WITH NIKE

5.1.1 Marketing Strategies

One difficulty most likely to be faced by Adidas is in its marketing, compared to its competitor Nike, Nike spends more money on advertising and promoting their products reputation, Nike spend about $1.13 billion as of 1998 involving celebrities like Tiger Woods, Micheal Jordan, Carl Lewis etc. while paying these celebrities large amount of money (Bedar, 2002), as of 2010, Nike spent about $800 million on Nontraditional advertising by using other medium of advertising their products other than TV and has reduce TV and Print advertising by 40%, and in 2006, Nike introduced the Nike + Platform which is a multi-channel, multi-sensory integration between apple and Nike technologies that allows persons to track performance (Fluffylinks, 2012) in essence, Adidas will have a hard time trying to compete with Nike in terms of advertising and promotion, considering Nike’s utilization of low labor cost of production, Nike can afford to spend so much money in creating awareness for their products and gaining consumers loyalty by utilizing celebrities. Adidas will have to invest more money on advertising and create innovative means of advertising their product, having consumers in mind and following the trends of technologies, for example, Adidas can collaborate with IT companies such as Samsung to create innovative means of advertising their products.

5.1.2  Adidas and Reebok Reputation on Its Finances

Adidas and Reebok joining up together as a merger would be a good deal for leading over Nike but the two companies have a bad reputation due to financial problems which almost led them to bankruptcy and since they are to work together. The expansion of their business will take a while to develop because they have to have strong advertising strategies until the Asians .If the Asians like their ideas then they might as well adjust to the culture in countries like china since it has the biggest population. In the long run Asian countries like China might as well take a long time to work with the company in terms of coming up with factories in china. This might be one of their biggest problems which will enable them take a long time to lead Nike in terms of their market Nike. To go through all that they will be a lot of expenses thus the company might run bankrupt again. (Adidas-Rebook, 2011)

5.2 HOWADIDAS COMPETE WITH NIKE?

5.2.1 Develop the Small Computer “Smart Shoe” Product Line

The development of a product line of smart shoes will build on this reputation and show buyers that Adidas is humorless about innovation and using technology to advance athletic accomplishment. The line of smart shoes combines a microprocessor or implanted controller, sensors, and tiny motors along with memory and battery. The sensors work to steadily monitor, measure, and supply data looking at the landscape, impact of each step, athlete’s body temperature, environment temperature, and athlete’s heart rate. This data can steadily be fed to a microprocessor which agent motors to adjust padding and airflow within the shoe. (Dogiamis et al., 2009)

Wireless GPS system is another feature on the small computer production line that enables runners to decide their accurate location, distance traveled, and speed from the shoe’s GPS by wearing a small wireless GPS wrist strap. The shoes implanted memory can keep data about workouts such as average heart rate, body temperature, calories burnt and force of each step. For situation, in basketball the micro can watch how high the athlete jumps and how hard of a landing they make.  As many athletes demand goods created that can deliver   both watching and accomplishment bettering capabilities, they will find Adidas the solution thus leading to much higher revenue, profit, and market share in sports that Adidas already leads and in sports where Adidas lags in revenue, profit, and market share (Dogiamis et al., 2009)

5.2.2 Implementation of Rebranding Reebok Program

Adidas Group should phase out its high accomplishment athletic shoe line and reposition itself in the casual footwear and active footwear market within the next years. The high accomplishment athletic shoe line can be sponged up into the Adidas brand. Adidas It should consider opening Reebok retail outlets that market Reebok as well stylish Reebok at more upscale department stores such as Macy’s and Nordstrom. Reebok should ensure keeping up a very high level of quality and durability of its shoes. However, it should work with major fashion designers such as Calvin Klein to come up with a well stylish product line of shoes meant for active, casual use, gain brand image as an upscale and more cultured shoemaker. Reebok should first come up with a line of casual but well stylish shoes designed by Calvin Klein that blend quality and style. (Dogiamis et al., 2009)

The rebranding of Reebok can help Adidas to make larger advancements with women. They want a shoe that can be useful for all visible feature of an active lifestyle. Therefore, marketing Reebok as a well stylish line of shoes meant for active lifestyle might allow Adidas to make larger in roads with women.  Reebok should start a line of well stylish shoes prepared toward women with active lifestyles. (Dogiamis et al., 2009)

The overall rebranding of Reebok should be finished to avoid internal competition within Adidas Group where the Reebok division is seen as the less profitable sibling of Adidas and to keep buyers from believing that Reebok is not an expensive substitute for an excellent Adidas product. (Dogiamis et al., 2009)

5.2.3 Expand Its Sponsorship Program (Marketing)

Adidas mainly focuses in the European market even though it is known in other parts of the world, which is because of its collaboration with soccer events all over the world and football associations with bodies such as FIFA, UEFA, leagues, clubs and individual players, in 2010, Adidas experience its most successful year in the history of football with sales above 1.5 billion Euros. It also had a sure climax during the 2010 FIFA World Cup of which it sponsored the wining team Spain and the adiZero F50 which is also an Adidas product had the top scoring boot in the event, lastly, Adidas Football group on Facebook massively increased from 100,000 members to over 6 million members presently. Adidas has been an official sponsor of the Olympics and has also been included as a sponsor of the 2012 Olympics; this gives it an edge over its competitor Nike. (AdidasGroup, 2011) It should use this opportunity to carry out precise marketing, by focusing on its segment market which includes the soccer, tennis and athletics teams and probably expand its focus to the up and emerging local teams in the grassroots, because, this group of people are keen about sports and spend time watching them on the TV but hardly get access to them unless they purchase the product themselves.

5.2.4    Change in Consumer Perception to Products

Adidas can also change the consumer’s perception about its products, most consumers perceive Adidas product as being too stiff and therefore are uncomfortable with it, Adidas can come up with a durable but use soft materials for its product as well as rebrand it product as not just a sporting shoe but also a fashionable shoe which consumers can wear on a casual basis example for outings, parties etc. when this is instilled in the minds of the consumers, more of Adidas product will be purchased by consumers as it will be perceived as durable and fashionable.

5.2.5 Encourage Product Customization

Adidas can also make provisions for consumers to customize their products online before it is delivered to them, this will give customers unique and a wide range of their products to choose from and will also allow them to understand what their consumers really want and focus on satisfying their consumer. With each consumer trying to be very creative and unique in their way, Adidas will shift its focus on their consumers from how much they are to pay for the product to how much they can benefit from the product. Adidas can promote this feature through its Facebook page which has over 6 million members.

5.2.6 Focus on Emerging Market

Adidas can capitalize on Nike’s weakness which is its focus on local market, Adidas can capture emerging markets, and already it has a lead in market such as India and Japan. In Latin America, it experiences a growth sale of 38% in 2007. (ReComparison, 2012) Although it is competing with Nike in China, it should focus on ranking its investment solely on markets which offer superior channels to long-term growth and profit prospects and should also focus on expanding its share to unreached areas especially in China, Russia, Africa and the United States. It should also ensure that it differentiates consumers’ buying behaviors as it differs in different regions and countries and understanding this will be an added advantage to Adidas. 

6.0 CONCLUSION AND RECOMMENDATIONS

From the above analysis, we had understanding about the pros, cons and risks of Nike’s core marketing strategies with relevant marketing theories. Besides that, the difficulties Nike faced when they competing with Adidas. We discuss from the distribution, price, products design, promotion and advertising, market segmentation to analysis Nike’s competitive advantages in the global market. We also find that the other side influences of Nike’s core marketing strategies such as costly advertising, raw materials costs affected by the global economic, the spokesperson’s behaviors which has negative influences to the Nike’s brand images. What’s more, the risks of Nike’s core marketing strategies such as Nike cannot follow the world fashion trends, the profits has affected by the currency exchange and economic recession when expand to the global.  

Nike has remained and continues to remain at the top in producing and distributing their sports clothes and equipments. However, Nike should consider the competitive pressure is very heavy and not allow the “sleep at the top”. So Nike should continuously find efficient marketing strategies to keep their top leaders positions.

The following recommendations are suggested in a situation where marketing management is competent. Nike should increase their market shares through issue new products, competitive pricing strategies, and advertisement and promotions activities. Nike also should restructure market dominance by separate themselves from the competitors mainly through mass promotion strategies and pricing strategies which make Nike more attractive to customers. Besides that, Nike must increase their awareness of corporate social responsibility to strengthen their image of themselves. What’s more, Nike should pay much attention to their R&D department to research out different kinds of people with different taste to get the market diversification goals.

All the above show a competent marketing management which can help Nike Keep their top market leaders and keep their competitive advantages.  

7.0  REFERENCES

Abhiroopsur (2009) ‘Nike – How the Brand Survived until Today’, (online) (cited 1st March 2012). 

Adidas Group (2011) ‘Adidas Strategies’, (online) (cited 10th March 2012). Available from

Adidas-Rebook (2011) ‘Adidas-ReebokMerger’, (online) (accessed 11th March 2012).  

Allick M., Keany E., Koslow J., Tansamrit A., Thorkelson D. (2000) ‘Comparison between Nike and Adidas’, (online) (cited 26 Feb 2012). Available from Soc.duke.edu/~s142tm17/compare.htm 

Bedar S. (2002) ‘Putting the Boot In’, The Ecologist, 32:3, (online) (cited 11th March 2012).

Boggan S. (2001) ‘Nike Admits to Mistakes Over Child Labor’, (online) (cited 2nd March 2012). Available from: http://www.commondreams.org/headlines01/1020-01.htm

Cloke M. (2011) ‘Marketing Management 01′, (online) (cited 26 Feb 2012). Available from URL: http://www.slideshare.net/michaelcloke/marketing-management-01-8568487

Dogiamis G., Vijayashanke N. (2009) ‘Adidas: Sprinting Ahead of Nike’, (online) (cited 4th Feb 2012). 

Enderle K., Hirsch D., Micka L., Saving B., Shah S., Szerwinski T. (2000) ‘Strategic Analysis of Nike, Inc’, (online) (cited 26 Feb 2012). 

Florzak A. (2011) ‘Strategic Analysis: Nike’, (online) (cited 29th February 2012). 

Fluffylinks (2012) ‘How Nike’s Marketing Revolution has Resulted in a 40% Reduction in TV and Print Advertising in the U.S.’, (Online) (accessed 11th March 2012). 

Jerome A. (2005) ‘Pros, Cons and Risks of Nike’s Marketing Strategies’, (online) (cited 12th March 2012).

Jones, S (2012) http://www.study-aids.co.uk/busman/busman2.html  MBA Dissertations

Sarah Hopkins (2008) ‘Nike’s Marketing Strategies’, (online) (cited 9th March 2012).

Smith L. C. (2010) ‘Marketing Strategies of Nike’ (online) (cited 10th March 2012).  

St. John University (2004) ‘Nike (Nke)’, (online) (cited 1st March 2012).

Taulli T. (2011) ‘Nike Shares’, (online) (cited 2nd March 2012). 

TED (2011) ‘NIKE: Nike Shoes and Child Labor in Pakistan’, (online) (cited 28th Feb 2012).

Source by Steve Jones

marketing , small business marketing

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Application of machine learning and multi-dimensional perception in urban spatial quality evaluation: a case study of shanghai underground pedestrian street.

1. Introduction

2. literature review, 2.1. data-driven quantitative spatial analyses, 2.2. spatial evaluation based on multidimensional sensory perception, 2.3. spatial evaluation based on machine learning algorithms, 2.4. literature summary, 3. materials and methods, 3.1. case study, 3.2. research framework, 3.3. research methodology, 3.3.1. quantitative analysis of space and clustering of features, 3.3.2. selection of multidimensional sensory perception indicators and data collection, 3.3.3. indicator weighting and impact relationship analysis, 3.4. subject situation, 4.1. the result of quantitative analysis of space and feature clustering, 4.2. questionnaire reliability analysis, 4.3. impact relationship analysis, 4.3.1. questionnaire weighting results, 4.3.2. correlation analysis of multidimensional sensory indicators with spatial quality evaluation, 4.3.3. cross-validation analysis of dual model regression, 5. discussion, 5.1. research innovation, 5.2. limitations and future directions, 6. conclusions, 6.1. conclusions of the research, 6.2. suggestion of design and application, author contributions, data availability statement, conflicts of interest.

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Yao, T.; Xu, Y.; Sun, L.; Liao, P.; Wang, J. Application of Machine Learning and Multi-Dimensional Perception in Urban Spatial Quality Evaluation: A Case Study of Shanghai Underground Pedestrian Street. Land 2024 , 13 , 1354. https://doi.org/10.3390/land13091354

Yao T, Xu Y, Sun L, Liao P, Wang J. Application of Machine Learning and Multi-Dimensional Perception in Urban Spatial Quality Evaluation: A Case Study of Shanghai Underground Pedestrian Street. Land . 2024; 13(9):1354. https://doi.org/10.3390/land13091354

Yao, Tianning, Yao Xu, Liang Sun, Pan Liao, and Jin Wang. 2024. "Application of Machine Learning and Multi-Dimensional Perception in Urban Spatial Quality Evaluation: A Case Study of Shanghai Underground Pedestrian Street" Land 13, no. 9: 1354. https://doi.org/10.3390/land13091354

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