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Brad BrophyMeredith CoonKhalid Elwanni
Zach GilliganRachel Taylor
M&L 751Autumn 2010
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Table of Contents
Executive Summary.................................................................................................................... 3
Customer Analysis ..................................................................................................................... 4Segments
MotivationsUnmet Needs
Competitor Analysis .................................................................................................................. 7Competitor IdentificationStrategic GroupsMajor CompetitorsCompetitor Strength Grid
Market Analysis ....................................................................................................................... 10
Market IdentificationMarket SizeMarket Profitability Analysis
Cost StructureDistribution SystemMarket Trends and DevelopmentsKey Success Factors
Environmental Analysis........................................................................................................... 15Trends and Potential EventsScenario AnalysisKey Strategic Uncertainties
Internal Analysis...................................................................................................................... 17Performance AnalysisSummary of Past StrategyStrategic ProblemsCharacteristics of Internal OrganizationPortfolio AnalysisAnalysis of Strengths and WeaknessesFinancial Projections Based on Existing Strategy
Strategy Development.............................................................................................................. 21Business ScopeStrategy DescriptionKey Strategy Initiatives
Marketing Plan ........................................................................................................................ 25
Product/Service to be MarketedPricing and FinancialsDistribution Channels and IssuesPromotion for Womens The Girl EffectCampaignPromotion for Mens Stay StrongCampaign
Works Cited ............................................................................................................................. 29
Appendix ....................................................................................................................................32
Nike, Inc. Financial StatementsGroup PowerPoint Presentation
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Executive Summary
Overview
Nike is leading the athletic shoe and apparel industry with $19 billion in sales in 2010 Nike Running has 31% market share of running shoes equaling $731 million Nike is the most valuable brand in athletics
Internal Analysis
Record profit and gross margin in 2010, $8.8 billion and 46.3% respectively Continuing improvement of operations with evaluation and audit tools to improve image
of Nike
Increasing customer voice with Write the Futureonline community Global manufacturing and distribution network with industry leader in marketing Large product portfolio includes shoes, clothing, gear, and accessories
External Analysis
Ages 18-44 represent the largest demographic for running shoes Running shoe choice criteria include comfort, price, style, and performance Competition heavy market (Adidas, Puma, New Balance, Under Armour, etc.) Market has more than doubled: $987 million in 1988 to $2.36 billion in 2009 Innovation driven industry from performance technology to special fabrics
Strategy and Marketing Plan
The Girl Effect Campaigno Percentage of proceeds from Nike Womens Running go to The Girl Effect
Social responsibility program for female rights in Africao Exploit program to increase market share and sales for Nike Womens Running
Gives women ethical choice when purchasingo Mutually benefits business goals and sustainability programo Increase Nike Womens Running advertising during select ads and programs
Stay Strong Campaigno Increase usage of current users by promoting running and leisure activities with
Nike Running
Increases sales and brand loyaltyo Promote through traditional advertising and special PR events/promotions
Running camps, extreme 5ks to promote masculinityo Accessorize Nike Running through key chains and bumper stickers
Relatively inexpensive way to expand Nike brand amongst consumers
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Section 1. Customer Analysis
A. Segments
Age
Market
(respondents who
purchased athleticshoes in 2008)
Usage Comments
1-18 N/A
More likely to purchase athletic shoes forteam sports
25% of all individuals ages 12-19purchased running/jogging shoes in past12 months
Presence of children in householdincreases chances of purchasingathletic shoes
98% of children wear athletic shoes Almost of teenage respondents
are brand loyal and only alternatebetween a few brands
Children ages 9-11 have a greatdeal of say in brand of sneakerspurchased for them
18-24 73%
67% of respondents purchased shoes forthemselves
79% purchased for everyday wear 52% purchased for exercising/working
out
35% purchased for certain sport 12% purchased for commuting 6% purchased for some other reason
Represent key target market 54% run or jog on a regular basis Most likely to try new brands of
sneakers
25-34 69%
Most likely to have purchased athleticshoes for a child, but greater than 50%also purchased for themselves
81% purchased for everyday wear 53% purchased for exercising/working
out
31% purchased for certain sport 16% purchased for commuting 4% purchased for some other reason
39% run or jog on a regular basis
35-44 70%
85% purchased for everyday wear 51% purchased for exercising/working
out
22% purchased for certain sport 17% purchased for commuting 7% purchased for some other reason
28% run or jog on a regular basis
45-54 58%
80% purchased for everyday wear 48% purchased for exercising/working
out
17% purchased for certain sport 9% purchased for commuting 9% purchased for some other reason
15% run or jog on a regular basis
55-64 47%
90% purchased for everyday wear 38% purchased for exercising/working
out
7% purchased for certain sport 6% purchased for commuting 10% purchased for some other reason
8% run or jog on a regular basis
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Age
Market(respondents who
purchased athleticshoes in 2008)
Usage Comments
65+ 37%
77% purchased for everyday wear 49% purchased for exercising/working
out 4% purchased for certain sport 2% purchased for commuting 7% purchased for some other reason
2% run or jog on a regular basis
All
Ages59%
Everyday use is most common reason forpurchase of athletic shoes
82% purchased for everyday wear 49% purchased for exercising/working
out
22% purchased for certain sport 12% purchased for commuting 7% purchased for some other reason
Running shoes are the largestsegment
25% run or jog on a regular basis Convincing consumers to switch
brands is difficult
Almost 50% of respondents had afew brands they alternate between
33% commit to one favorite brand Nike tops list in brand popularity
Gender Market Usage Comments
Male 59%
82% purchased for everyday wear 50% purchased for exercising/working out 30% purchased for a certain sport 14% purchased for commuting 5% purchased for some other reason
23% purchased jogging/runningshoes
64% likely to buy new pair when oldpair wears out
Segment has consistent gains
Female 41%
82% purchased for everyday wear 49% purchased for exercising/working out 13% purchased for a certain sport 10% purchased for commuting 9% purchased for some other reason
27% purchased jogging/runningshoes
53% likely to buy new pair when oldpair wears out Sales have significantly grown and
are catching up to mens market
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B.MotivationsAge Motivations
1-18
Comfort Style/fashion-focused Brand Celebrity endorsements
18-24
Wearing same brand as friends Comfort Fashion with function Performance Celebrity endorsements
25-34
Likely to purchase for child or spouse and themselves (convenient retailing) Comfort Price
35-44
Likely to purchase for child or spouse and themselves (convenient retailing) Comfort Price
45-54 Comfort Price55-64 Wear same sneakers for exercise and leisure (cross-functional)
65+ Comfort Price
All Ages
Comfort Price Style Performance Brand Celebrity Endorsements Latest technology
Gender MotivationsMale Buy new pair when old pair wears out
Purchase for a specific sport Purchase for everyday wear Comfort Sturdier shoes
Female Lightweight shoes Specific shoes for specific activities Fashion and sophistication Shoes for going to and from classes (like yoga) that can be easily slipped off
C. Unmet Needs
Weather-specific running shoes More fashion-forward running shoes for women High-performance foot support running shoes
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Section 2. Competitor Analysis
A. Competitor Identification
Most Directly Competitive: Adidas, New Balance, Asics, Brooks
Less Directly Competitive: Under Armour
B. Strategic Groups
Strategic Group Major Competitors Dollar Share (2007 AthleticFootwear Market)
1. Mainstream Brands fromLarge Consumer Firms
NikeAdidasReebokPuma
31%16%6%7%
2. High-End SpecialtyBrands
AsicsNew BalanceBrooks
5%6%N/A
3. Other Brands SketchersConverseK-SwissOthers (Under Armour, etc.)
5%4%2%18%
Strategic Group Characteristics/Strategies Strengths Weaknesses
1. MainstreamBrands fromLarge ConsumerFirms
-Focus is on large market-Target the averageconsumer athlete-Use of sponsorship(USATF, Olympics, etc)
-Access to capital-Brand name-Consumeraccessibility toproduct-Loyal following(generalized)
-Core competencynot in running shoes-Dependence on thirdparty manufacturing
2. High-EndSpecialty Brands
-Target specialty athletes -Loyal following
(specialized)
-Accessibility to
consumer
3. Other Brands -Everyday footwear -Offered at lowerprice point
-Hold small percentof athletic footwearmarket share-Small amount ofathletic specialization
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C.Major Competitors
DirectCompetitor
Characteristics/Strategies Strengths Weaknesses
Adidas -Geographically diverse-Mass marketing campaigns
-Sponsorship-Endorsement
-Access to capital-Loyal following
-Increasedcapabilities due toother departments
-Core competency notin running shoes
-Dependence on thirdparty manufacturing-Underperformance ofReebok
NewBalance
-Way of living brand image*-Positions itself as a moremature brand
-Sponsorship ofmajor events (SusanG. Komen Race forthe Cure, Lace up forthe Cure, etc)
-Lack of celebrityendorsements-Made in theUSA(increased cost)-No current presence inLFA** market
Puma -The fashionable alternative-Sport lifestyle company-Celebrity lines
-Ability to tap intothe new, morefashionable customerbase-Marketing towomen
-Innovation follower-Lack of market share-Financially limitedcompared to Nike,Adidas, etc.
Asics -Specialize in a few sports(Wrestling, Running)-Advertise in specialty medias(Runners World, Triathlonmagazines, Wrestling
magazines)
-Loyal following inspecialty stores
-Accessibility toproduct-No current presence inLFA market
Brooks -Targets younger market withmobile campaigns
-#1 ranked inspecialty store surveyfor Brand Strength-#1 ranked in BrandCustomer Service
-80% of their shoes aresold at specialtyretailers (accessibility)
UnderArmour
-Change the market needs/wants-More team oriented marketing
strategies
-Reputation as aninnovator
-Not an establishedrunning shoe company
*New Balances marketing strategy is to incorporate their products into day-to-day life to create the atmosphere of
sports is a way of living
**LFA market is Lifestyle Fitness Athletic Shoes
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IndirectCompetitor
Characteristics/Strategies Strengths Weaknesses
UnderArmour
-Create a new product category-Attempting to market trainingshoe as a competitor to running
shoes (athletes should train inthese shoes rather than runningshoes)-More team oriented marketingstrategy
-Hip factor-Reputation as anInnovator
-Increasedcapabilities due toother departments
-Not an establishedrunning shoe company-Strategy has still not
gained major traction
-Under Armour has come out and said that athletes should not train in running shoes. They havebegun to make shoes specifically for athletic training. This strategy, although not a directcompetitor to Nike Running, will indirectly affect the sales of Nike Running.
D. Competitor Strength Grid
Assets and
CompetenciesAdidas
New
BalancePuma Asics Brooks
Under
Armour
FinancialResources
S A S A W A
Innovation S A A A A S
R&D S A A S S S
Loyalty S A A S S ABreadth of
Product LineS A A S S W
NameRecognition
S S S A W S
S= Strong, A= Average, W=Weak
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Section 3. Market Analysis
A.Market Identification: The U.S Running Footwear Industry
B.Market Size
U.S. Sales of Running Footwear
Year 1988 1998 2008 2009
U.S. IndustrySales
$987 million $1.47 billion $2.31 billion $2.36 billion
Emerging Submarkets
Athletic and performance apparel Sporting equipment and accessories (gear) Athletic training programs and technology
Sport specific footwear Womens sport participation Competitive running: marathons, half-marathons, 5k, 10k
Market GrowthFootwear
Average runner purchased 3.2 pairs of running shoes last year (2009)o 3 pairs for the average female runnero 3.4 pairs for the average male runner
60.4% of average runners spends $90 + on their running shoeso 64.4% of female runnerso 56.4% of male runners
Running shoe sales topped $2.36 billion in 2009o Increase from the $987 million generated in 1988
Last running shoes purchased by men: Asics (29.9%), Brooks (14.9%), Nike (13.6%) Last running shoes purchased by women: Asics (29.1%), Nike (15.9%), Brooks (14.1%)
Race Participation
467,000 marathon finishers in 2009o Nearly a 10% increase from 2008
More than 1.1 million half-marathon finishers in 2009o 24% increase from 2008
17 U.S. half-marathons (a record) with 10,000 finishers or more in 2009 40% growth in 5k participants over the past decade (2000-2009)
o The most popular race distance The half-marathon has the largest female percent (57%) of any U.S road distance
o Switched to a female majority in 2005o In 1985, female percent was less than 20% for half-marathons
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Running/Jogging Participation
Gender Distribution in Running Populations- Female%/ Male%
Year 1993 1998 2002 2006 2008
Running/Jogging ShoeUser
All Running EventFinishers
Runners, ran at leastonce/yr
38.4/61.6
28.0/72.0
N/A
43.0/57.0
39.0/61.0
45.7/54.3
44.3/55.7
49.8/50.2
46.0/54.0
52.1/47.9
52.0/48.0
47.8/52.2
53.0/47.0
53.0/47.0
48.0/52.0
U.S Running/Jogging Participation for 2009
Total Participants 08-09Total Runners
Core Participants
Frequent Participants
Run/Jog at leastonce/yr
Run/Jog 50 days/yr
Run/Jog 100+ days/yr
43,892,000
25,559,000
16,446,000
+6.7%
+9.2%
+9.8%
Factors Affecting Sales LevelsPositive Affect
Recessiono A decrease in gym membership due to economy leads to an increase inrunning outdoors
Social Mediao Facebook and Twitter provide a community platform to announce ones
running goal When its out there for everyone to see, it makes one more likely to stick
with ito Races and events broadcast information to recruit race participants
Innovative fabrics Technology Growing popularity of running/jogging
Negative Affect
Increasing footwear choiceso Alternate brands and styles
Increase in participation for other sports Increase in costs (materials, manufacturing, etc)
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C.Market Profitability Analysis
Barriers to Entry
Brand awareness Customer loyalty Budget for advertising and marketing campaigns Technology Retailer relationships Specialty brands Access to suppliers and contractors Technology
Potential Entrants
The footwear industry is already very competitive, probability of new entrants is low Brands that are already competing in the footwear industry could further expand by
introducing specialized running shoeso Reeboko Sketcherso K-Swisso Puma
o Aviao Filao L.A Gearo Under Armour
Threats of Substitutes
Barefoot running- Vibram Five Finger Shoes Shift of popularity to other activities and sports
Bargaining Power of Suppliers
Suppliers in the footwear industry have limited bargaining power They rely on footwear companies to purchase their raw materials and generate
revenueo Natural and synthetic fabricso Plastic compoundso Metal hardware
Footwear companies are large enough to put pressure on suppliers for low priceso They can find alternate suppliers in less developed countries
China, Vietnam, Indonesia, ThailandBargaining Power of Customers
Consumers have some bargaining power over footwear companieso Can easily switch to alternate brand for better style, better price, more
convenience, better qualityo Brand loyalty can result in limited bargaining power for consumers
Retail customers have limited bargaining power over footwear companieso One retailers sales account for only a small percent of a footwear companys
overall sales
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D. Cost Structure
Lower Cost Structure
Discount stores, superstores, and warehouse clubs Older models, styles, and colors Standard features Materials of lesser quality Cheaper suppliers, contractors, and labor Lower fixed and variable costs
Higher Cost Structure
Shoe stores and sporting goods stores Specialized performance technology Innovative fabrics Higher quality materials Reputable brand name More costly suppliers, contractors, and labor Higher fixed and variable costs
E.Distribution System
U.S Sales (in Millions) of Athletic Shoes by Retail Channel
2002 2003 2004 2005 2006 2007
Shoe Stores 9,111 9,328 9,532 9,722 9,898 10,059
Sporting Goods Stores 2,555 2,732 2,920 3,118 3,326 3,546
Discount Stores, Superstores,Warehouse clubs 1,708 1,782 1,859 1,935 2,007 2,072
Clothing Stores 1,204 1,226 1,249 1,273 1,298 1,323
Department Stores 740 667 595 528 467 413
Internet and Other 1,027 1,072 1,125 1,188 1,263 1,351
Observations/Major Trends
Shoe stores bring in the most sales of athletic shoes Athletic shoes sold at department stores are on the decline Sporting goods stores had the largest increase in sales from 2002 to 2007 ($991
million)
Shoe stores and sporting goods stores generally sell more specialized/sport specificshoes
o Superior performance technologyo Higher quality materialso Innovative fabrics
Shoe stores and sporting goods stores often sell shoes at a higher price than discountstores, superstores, and warehouse clubs
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F.Market Trends and Developments
Performance technologyo iPod capability, extreme comfort
Innovative fabricso Smell eliminating, sweat resistant, etc.
Continuous introduction of new models and styles Niche marketing towards specific sports and activities
G.Key Success Factors
Present
Brand recognition Shoe quality Access to major retail channels Relationship with suppliers and contractors Introduction of innovative and stylish shoes Breadth of product line Marketing and advertising campaigns Awareness and recommendation by specialists Specialization for specific sports and activities
Future
Ability to forecast and capture consumer trends Innovative fabrics High performance technology
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Section 4. Environmental Analysis
A. Trends and Potential EventsSource Description Strategic Implication Time Frame Importance
Technological - IT marketinginformation systems
-Innovative fabrics
-Computerized trackingof running
-Engage in comprehensivemarketing strategies toboost sales
-Focus on the performancefeatures of the innovativefabrics (sweat resistance,odor eliminating, etc)
-Continuously introducenew ways consumers cantrack their running data
Since mid-1990s
Current
High
High
High
Regulatory -US policies andgovernment withgeneral macroeconomicstability, low interestrates, stable currencyconditions, andinternationalcompetitiveness of thetax system
-Develop shoes at a lowcost and then pass on thesavings to the consumer-Import Duties:
-Shoes $6.5020%-Footwear covering the
ankle (men)8.5%-Footwear covering theankle (women)10%
High
Economic -Recession
-Economic crisis inmanufacturing andsupplier countries
-Weakening of the USDollar
-Endorse running as a stressreliever and way to relax
-Support higher footwearprices by focusing on highquality
-Sell footwear at manyprice points
Low
Low
Med.
Cultural -Increasing desire to
maintain a healthylifestyle
-Growth of gym andfitness centermembership
-Promote running/jogging
as an exercise anyone cando
-Endorse running/joggingas a total body workout
Med.
Med
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Source Description Strategic Implication Time Frame Importance
Demographic -Increase in femalerunning/joggingparticipation
-Shift to younger
demographic (18-34)
-Create new trendy designs
-Focus on more
edgy/youthful styles
Since mid-1980s
Current
High
High
Threats -Accusations of poorlabor conditions, i.e.sweatshops
-Shift in popularity toother sports & activities
-Product line expansionby competing brands
-Maintain a strong brandimage and reputation
-Promote running as thepreferred sport and activityof choice
-Continuously introducenew models and styles
Since mid-1980s
High
Med.
High
Opportunities -Growing market forspecialized runningfootwear
-Innovative fabrics
-Performancetechnology
-Keep up with consumertrends with new styles andmodels of high quality
-Introduce high end fabricsfor sweat resistance, odoreliminating, etc.
-Implement the latesttechnology to track runswhile providing comfort
Since mid-1980s
Current
Current
Med-High
High
High
B. Scenario Analysis
Continuously introduce creative, on-trend styles and models utilizing the newestperformance fabric and innovative technologies
Capture the growing popularity in running/jogging by emphasizing it as a total bodyworkout and ultimate stress reliever
C.Key Strategic Uncertainties
Will the popularity in running/jogging continue to grow? Will new subcategories emerge as significant markets? Once the recession ends, will people turn to other sports and activities?
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Section 5. Internal Analysis
A. Performance AnalysisObjective Area Objective Status and Comment
1. Sales -Expand revenue/market share-Increase direct to consumersales
-$19 billion in 2010, down 1%-Increased 12%
2. Profits -Increase shareholder value -$8.8 billion; record profit
3. Quality/Service -Improve quality of operationsfor improved product quality
-Customer Service Mission
-Continue to evolve AuditTools, Code of Conduct, andCode Leadership Standardsfor factories
-To represent the highestservice standard within andbeyond our industry, buildingloyal consumer relationshipsaround the world
4. Cost -Decrease cost to increasegross margin
-46.3% gross margin; record
5. New Products -Considered design,innovative fabrics,
performance technology
-Create products by reducingtoxics/waste and using
environmentally preferredmaterials
6. Customer Satisfaction -Increase customer voice -Created Write the Future,online community forcustomers and experiences
7. People -Develop industry bestemployees-Embrace diversity and rewardimagination
-Management DevelopmentProgram, MarketingDevelopment Program, andInternships
8. Other -Increase environmental andsocial sustainability programs
-The GreenXchange
The Girl EffectLace Up, Save Lives
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B. Summary of Past Strategy
Keeps R&D in developed countries while contracting out manufacturing to developingcountries in Asia and South America
o This strategy allows high gross profit margin Increased its direct to customer sales by creating Niketown, Nike Outlet Stores, and Nike
Store Online
C. Strategic Problems
Problem Possible Action
Reputation of poor labor conditions
Competitors are more well known for beingspecialized in running
Raw materials of poor quality
Provide customers with a look insidemanufacturing plant by becoming transparent
More segmenting into specialized runningfootwear
Seek suppliers with higher quality materials
D. Characteristics of Internal Organization
Component Description- Fit with Current/Proposed Strategy
Environmentally friendly
Corporate responsibility
Innovative
-Named in Top 10 of Newsweeks 2010 Green Rankings
-Named as one of the 100 Best Corporate Citizens for 2010 inCRO Magazine-World headquarters received Waste Managements 2010Innovation and Sustainability Award-Tops Climate Counts list in Corporate Commitment to ClimateRecognized by The Ethisphere Institute as one of the Worlds
Most Ethical Companies for 2010-Named as one of the 100 Best Corporate Citizens for 2010 byCRO Magazine-Named as one of the Best Green Companies for AmericasChildren for 2010-Named as one of the 100 Most Sustainable Corporations in theWorld by Innovest Strategic Value Advisors and CorporateKnights Inc.-Received top score in Design Innovation from Ceres-Named as one of the Worlds Top Sustainable Stocks for 2007-Recognized for its Leadership in Climate Change Solutions by
World Wildlife Fund in 2007
-Named for Apparel & Innovation on Fortunes 2008 MostAdmired Companies-Named to Fast Companys Fast 50 Most Innovative Companieslist-Named I.D Magazines 2007 Best of Consumer Products-Industrial Design Excellence Awards in 2005
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Component Description- Fit with Current/Proposed Strategy
Top Employer
Diversity
Community Sponsorship
-#55 on BusinessWeeks 2007 Top 100 Places to Launch a Careerlist-100 Best Companies to Work For by Fortune Magazine for
2006, 2007, 2008-Best Workplace for Commuters, 2004, 2005, 2006
-Top Company for LGBT workers, 2003-2010
-5K for Kids recognized as Youth Program of the Year 2008-Nike Womens Marathon named Charitable Race of the Year in2006-Portland Trailblazers Heart of theCommunity Award in 2004-National Head Start Association Award in 2004
E.Portfolio AnalysisBCGNike is a Starhigh share, high growth
Nike continues to gain market share in athletic shoe, apparel, equipment marketNike continues to increase revenue and profitCurrent domination in US, Europe with high growth probability in Asia
F.Analysis of Strengths and Weaknesses1. Strengths
a. Vertical IntegrationNike has own operations from manufacturing todistribution, and third party contracts to reduce operational costs
b. Diverse Geographic RevenueUS (34.2%); Europe, Middle East and Africa(30.2%); Asia Pacific (15.5%); Americas (6.2%), allows for better marketexpansion
c. Product PortfolioComplement products with athletic shoes, apparel, andequipment for every sport
2. Weaknessesa. Mature CompanyNike has sizeable pensions and retirement benefits which
grew 30% in 2008 alone
G.Financial Projections Based on Existing Strategy
Future will bring increased revenue and profit with China expansiono China revenue currently at $1.7 billion, Nike leads this market
Nike brand continues to become more valuable and is still the greatest competitiveadvantage for Nike
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Key Financials
$ million 2005 2006 2007 2008 2009
RevenuesNet Income (loss)Total Assets
Total LiabilitiesEmployees
13,739.71,211.68,793.6
3,149.426,000
14,954.91,392.09,869.6
3,584.428,000
16,325.91,491.5
10,688.3
3,662.930,200
18,627.01,883.4
12,442.7
4,617.130,200
19,176.11,486.79,103.0
4,147.032,500
Key Financial Ratios
Ratio 2005 2006 2007 2008 2009
Profit MarginRevenue GrowthAsset GrowthLiabilities GrowthDebt/Asset Ratio
Return of AssetsRevenue per EmployeeProfit per Employee
8.8%12.1%11.4%1.3%
35.8%
14.5%$528,450$46,600
9.3%8.8%
12.2%13.8%36.3%
14.9%$534,104
$49,714
9.1%9.2%8.3%2.2%
34.3%
14.5%$540,593
$49,387
10.1%14.1%16.4%26.1%37.1%
16.3%$616,788$62,364
7.8%2.9%
(26.8%)(10.2%)
45.6%
13.8%$590,034$45,745
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Section 6. Strategy Development
A. Business Scope- Product-Market ServedTarget Market:Men and women of all ages
B. Strategy DescriptionValue Propositions
Brand familiarity Quality Product attribute benefit
Appealing design Superior customer relationships Corporate social programs
Assets and Competencies
Research and design Global sourcing and logistics Superior marketing Financial capability Continuous innovation
Exceptional customer relationships State-of-the-art technology Corporate social programs Brand recognition
Alternative Functional Strategies for Women
Option A:o Strategy:
Attract women to the Nike Running brand by first introducing a line ofwalking shoes, then promote them to Nike Running once they becomemore involved in exercising
oPrimary Goal:
Increase market share of womens Nike Running footwear usage bygrowing with the consumer and establishing brand loyalty
o Possible Outcomes/Benefits: Increase market share Increase sales Builds brand awareness Generate new customers
Option B:o Strategy:
Attract women to the Nike Running brand through an advertisingcampaign that focuses on endorsements by women athletes and womencelebrities
o Primary Goal: Increase sales of womens Nike Running footwear through the building of
the brands high quality reputationo Possible Outcomes/Benefits:
Increase sales Increase market share
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Build brand awareness Energize brand reputation Retain existing customers
Alternative Functional Strategies for Men
Option A:
o Strategy: Attract men to the Nike Running brand by launching an advertising
campaign that promotes NikesLace Up, Save Lives corporate socialprogram
o Primary Goal: Increase sales of mens Nike Running footwear through the building of the
brands corporate social responsibilityo Possible Outcomes/Benefits:
Increase sales Increase market share
Build brand reputation Generate brand awareness
Option B:o Strategy:
Attract men to the Nike Running brand by introducing a line of classicswith the same styles as the first Nike shoes while incorporating the newestperformance technology for running
o Primary Goal: Increase sales of mens Nike Running footwear through appealing designs
and product attributeso Possible Outcomes/Benefits:
Increase sales
Increase market share Retain existing customers Create new customers
C.Key Strategy InitiativesWomensStrategy: The Girl Effect Campaign
Strategy:o Attract women to the Nike Running brand by launching an advertising campaign
that promotes Nikes The Girl Effect corporate social program
Primary Goal:o
Increase market share of womens Nike Running footwear usage through thebuilding of the brands corporate social responsibility
Possible Outcomes/Benefits:o Increase saleso Increase market shareo Build brand reputationo Generate brand awarenesso Create new customers
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Mens Campaign: Stay Strong Campaign
Strategy:o Attract men to the Nike Running brand through an advertising campaign that
focuses on endorsements by male athletes
Primary Goal:o Increase sales of mens Nike Running footwear through the building of thebrands high quality reputation
Possible Outcomes/Benefits:o Increase saleso Increase market shareo Build brand awarenesso Retain existing customerso Maintain leadership position in running footwear for men
Growth Strategy
Brand energizero Use products, sponsorships, endorsers, promotions and social programs thatsignificantly enhance and energize the Nike Running brand
Energizing through The Girl Effect Campaign
Increase the usage of Nike Running by womeno Expand buyer base
Pull in new customers by persuading them to switch from their currentbrand of running footwear
o Implement comprehensive marketing plan Print ads Digital ads TV spots PR events Merchandise Promotions
Energizing through the Stay Strong Campaign
Increase the usage of Nike Running by existing male customerso Expand loyal customer base
Motivate heavy users to use moreo Implement comprehensive marketing plan
Print ads Digital ads TV spots PR events Promotions
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Investment Level
Growingo Due to the continuous change in the footwear industry, we need to continue to
invest in R&D in order to continue our dominance in the market
Building/Managing Brand Equity Nike must look at their consumers brand loyalty Reward loyal customers with frequent-buyer programs, special unexpected benefits or
premiums
Make customers feel that they are part of the organization, perhaps through customerclubs
Have continuing communication with customers, using direct mail, the Internet, toll-freenumbers, and a solid customer backup organization
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Section 7. Marketing Plan
A. Product/Service to be Marketedo Nike Running Shoeso Charity Sponsorships
The Girl EffectB. Pricing and Financials
o Cost about $15-$75 to make a pair of shoes 50% of retail price
o Retails for about $30-$150o Generate approximately $5.1 million to $2.5 billion in saleso Womens Campaign
Invest $34.55 million in promotional campaigno Mens Campaign
Invest $65.93 million in promotional campaigno Total
Invest $100.84 million in promotions Estimates Advertising to Sales Ratio = $100.84 million/$731 million=13.79%
C.Distribution Channels and IssuesLow Price Point High Price Point
Discount Stores Clothing Stores Sporting Goods Stores
Superstores Department Stores Shoe Stores
Warehouse Clubs E-Commerce Sites
-Older models, styles, & colors -Innovative fabrics-Standard features -Specialized performance
technologyD.Promotion for WomensThe Girl EffectCampaign
Method Description Where Financials Projected
Outcome/Benefit
Print Ads -Create a printcampaign showcasinghow real, everydaywomen benefit fromrunning
-Show women in the USrunning compared towomen in Africarunning to promoteThe Girl Effect
- Shape
-Fitness
-Self
-Prevention
-Womens Health
-6 full page ads inShape ($1,030, 320)(Circulation 1.65million)
-6 full page ads inFitness ($888,000)(Circulation: 1.5million)
-6 full page ads inSelf ($1,044,384)(Circulation: 1.5million)
-Encourage women to r
-Propel women to selecNike Running for theirfootwear
-Generate brandawareness
-Build brands reputatiofor corporate socialresponsibility
-Bring in new customer
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Method Description Where Financials Projected
Outcome/Benefit
-6 full page ads inPrevention ($809,400)(Circulation: 2.8million)
-6 full page ads inWomens Health($1,014,870)(Circulation: 1.5million)
Digital Ads -Use banner ads andpop-up ads that showwomen running in theNike Running shoes inthe US and Africa
-Shape
-Fitness
-Self
-Prevention
-Womens Health
-Approx. $1.50 perclick (200,000 clicks)
- Lead consumers to theNike Running website
-Generate brandawareness
-Drive online sales
-Build brands reputatiofor corporate socialresponsibility
TV Spots -Show womens runningrights in the UScompared to Africa
-Advertise that apercentage of each shoesale will be given to
The Girl Effect
-Run during populartalk shows andmorning shows
-Oprah
-The Ellen
DeGeneres Show
-The View
-The Today Show
-40 TV ads at approx.$500,000 per spot onpopular women shows($20 million)
-$3 million budget tocreate the ads
(including print ads)
-Make women feel bettabout spending more forunning shoes knowingwill go to a good cause
-Build brand reputation
-Increase sales
-Establish brand loyalty
-Positive corporateresponsibility
-Bring in new customer
PR Events -Sponsor womens raceswhere a percentage ofthe proceeds will bedonated to The Girl
Effect
-Womensmarathons, half-marathons, 5ks
-Across the UnitedStates
- Sponsor 100women-only 5Ks atapprox. $30,000 perrace ($3 million)
-Get women to participin running
-Build brand reputation
-Establish brand loyalty
-Generate brandawareness
-Bring in new customer-Propels sales
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Method Description Where Financials Projected
Outcome/Benefit
Merchandise -Select women fashiondesigners to createunique styles andmodels for a premier
footwear line
-Percentage of theproceeds will bedonated to The GirlEffect
-Sporting goodstores
-5 high-end designerrunning shoes($100,000 perdesigner)
-Attract more fashion-conscious women
-Increase revenue from
having a higher pricepoint
-Positive corporateresponsibility reputation
-Bring in new customer
Promotions -Give away bumperstickers that promoteThe Girl Effect witheach Nike Runningpurchase
-Sporting goodstores
-1,000,000 bumperstickers given out forNike Runningpurchases ($264,000)
-Increase brand awaren
-Generate consumer bu
-Positive corporate
responsibility reputation
E. Promotion for MensStay Strong CampaignMethod Description Where Financials Projected
Outcome/Benefit
Print Ads -Creating a printcampaign showcasingour products throughathletes
-Mens Health
-RunnersWorld
-SportsIllustrated
-ESPNMagazine
-3 full page Print Ads inMens Health ($558,000)(Circulation: 1.8 million)
-3 full page Print Ads inRunners World ($232,000)(Circulation: 660,000)
-3 full page Print Ads inSports Illustrated ($960,000)(Circulation: 3.15 million)
-3 full page print ads inESPN Magazine ($648,000)(Circulation: 2 million)
-Increase sales
-Increase market shareof Nike Running shoefor males
-Generate brandawareness
-Maintain brand loyaltof existing customers
DigitalAds
-Create games in bannerads to entice individualsto click (offer discountsto winners)
-Mens Health
-RunnersWorld
-SportsIllustrated
-ESPNMagazine
-Approx $1.50 per click(200,000 clicks)
-Drive traffic to NikeRunning through onlingames in banner ads
-Used to keep areminder of NikeRunning in consumersmind
-Provide incentive topurchase Nike runningfootwear
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Method Description Where Financials Projected
Outcome/Benefit
TV Spots -Create TV campaignusing endorsers to driveindividuals to stores orNike Running website
-ABC SaturdayNight CollegeFootball
-NBC SundayNight Football
-Superbowl
-ESPN
-20 TV spots on ABCSaturday Night Football($1.35 million per spot)
-10 TV spots on NBCSunday Night Football($1.71 million per spot)
-2 TV spots during theSuperbowl ($4.8 million)
-$3 million to create ads andpay endorsers (includes printads)
-Ads spread over 13 weeks
-Drive traffic to storesonline
-Increase sales
-Increase market share
-Build awareness ofmedia campaign
-Maintain brand loyaltof existing customers
PR Events -Sponsor RunningCamps, Marathons, 5Kruns, Extreme 5Kruns**
-Nike sponsored cooldown lounges for afterthe race[Cool down loungeswill include free snacksand water forparticipants along with
free shoe testing]
-Across theUnited States
-Sponsor running camps in 5Regions (West, Midwest,East Coast, South East, andSouthwest) ($200,000 percamp)
-Sponsor 15 marathonsthroughout the country($300,000 per marathon)
-Sponsor 100 5k runsthroughout the country
($20,000 per race)
-Sponsor 20 Extreme 5Kruns throughout the country($20,000 per race)
-Increase brandawareness throughsponsorship and cooldown lounges afterraces
-Build brand reputatio
-Establish brand loyalt
-Bring in new custome
-Propel sales
Promotions -Give out Nike Runningbumper stickers witheach Nike Runningpurchase
-Give out Nike Runningkey chains to
participants of Nikesponsored events
-Across theUnited States
-1,000,000 bumper stickersgiven out for Nike Runningpurchases ($264,000)
-Give out 500,000 NikeRunning key chains($470,000)
-Increase brandawareness
-Generate consumerbuzz
**Extreme 5K runs are events that include obstacles to test toughness. These obstacles include jumping fire pits, crossing
rivers, crawling under barbed wire, etc.
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Sticker Prices. Seatthole. N.p., n.d. Web. 21 Nov. 2010. .
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2011 Advertising Rates. Womens Health Magazine. N.p., n.d. Web. 21 Nov. 2010. .
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2011 National Rates.Fitness Magazine. Meredith Corp., n.d. Web. 21 Nov. 2010.
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2010 Advertising Rates.Prevention Magazine. N.p., n.d. Web. 21 Nov. 2010. .
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