Nike Case Study 1

8/4/2019 Nike Case Study 1

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Nike : building a global brand

Phil Knight, recognized a neglected segment of serious athletes that

had specialized needs that were not being addressed by the majorplayer (1962).

Knight started Blue Ribbon sports (Nike later) by getting first shoes(Tiger shoes) from Japan and sold them direct to athletes byhimself(1963).

knight asked his coach Bowerman to become a partner andpartnership was developed .each one with $500 (1964).

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Bowerman developed Marathon, Cortez and Boston as a runningshoes and sales reached $300000 (1969).

knight decided to change name of Blue Ribbon to another name ,the new name was Nike the winged Greek goddess of victory .

Nike management team select Nike new logo from 12 ideas and itwas a fat chick mark which is Nike famous swoosh(1971).

Oregon running star Steve Prefontaine becamethe first athlete to be paid to wear Nike shoes(1973).

Nike revenues had reached $4.8 million (1974).

Nike became the number one athletic shoeCompany in U.S.A surpassing Adidas with almost50 percent market share (1980).


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The popularity of running was beginning to give away to fitness andaerobics , this market was dominated by Reebok through style andfashion shoes.

Market share leading moved to Reebok 30%Compared with 18% to Nike.

Nike decided to keep their focus on performancebut give more attention to basketball.

Nike developed Air Max with new technology which selling $75 millionin its first year.

Nike succeed in getting rising star Michael Jordan and introduce

Air Jordan line of basketball shoeswhich sold $100 million in the first year.


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Nike brooding its brand through line of sports uniforms and apparel soNike brand meaning changed to performance in sport.

After overcoming Adidas inside U.S.A , Nike decided to compete withAdidas inside Europe.

Nike decide to penetrate soccer crazed world through sponsor Brazilteam in world cup 1994.


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After establishment in Europe , Nike looking for global growth in Asia.

Nike's image suffer from companys labor practices in Asia and the

ubiquity of its corporate logo the swoosh.

2006 Nike was the number one athletic footwear and apparelcompany in the world.


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Question no. 1:

To what extent did Nike succeed (fail) to predict (recognize) trends inconsumer tastes ? Explain and evaluate the consequences of suchsuccess (failure) .

1-succeed in the beginning when Knight (Nike owner) recognized aneglected segment of serious athletes that had specialized needs (highquality running shoes) .

2-succeed when recognize that consumers chose products and brands inthe mass market based upon by the preference and behavior of a smallpercentage of top athletes.

3-failed when the popularity of running was beginning to give away tofitness and aerobics which dominated by women .


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4-succeed when Nike devote more attention to basketball insideU.S.A that had continued its recent rise in popularity (new generations) .

5-succeed when insist on performance position so they get anewwave of success when consumer desire for performance relatedproducts in the late 1980s.so Nike get dominance in the market fromReebok .

6-succeed when Nike sponsoring brazil national team in world cup1994 in U.S.A in which American start to be interested in soccer.

7- failed when fashions changed again and many consumers viewedtrainers or running shoes as out of style ,useful only for exercise.


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Question no. 2:

Demonstrate how a sound strategy can fail because of improper execution.

1- When Nike change its distribution strategy and successfully regained

control of 90% of Nikes European distribution.

2- Nike have an anti establishment and rebellious spirit which is different ,innovative and effective but in many times made problems more than itsbenefit especially in European market who saw it was very aggressive for

example:A -When Nike work in Europe with U.S.A message and soul Play Hard .Die Old was too aggressive and was not well received

B -Before Olympic games Atlanta 1996 Nike airing some controversialseries with caption if you cant stand the heat, get out of Atlanta.

C - European soccer championships ad. Nike vs. Evil .


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3- when Nike take decision to penetrate soccer world it was a rightstrategy but its extravagant spending made some consumers refused it.

4- when Nike focus on its brand logo (swoosh) but overabundance ofswooshes every where (shoes ,jerseys ,hats ,billboards ,soccer balls)made some writers to say (the swooshification of the world) . All of thismade consumers think of swoosh as a Nike aggressive philosophy

symbol and one of two modern societal ills.

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Question no. 3:

Evaluate Nike distribution strategy.

Inside USA: succeed

Nike distribute its product through retailers and Nike kept its relation goodwith them and trying to give them offers to motivate them to sell Nike shoes(10%discount,exclusive models) but in the same time Nike controlmarketing and advertising .

Inside Europe: failedWhen Nike starting penetration Europe its market share was affected by

distribution strategy ,Nike was unable to control the growth of its brand because Nike distributerwho controlled marketing and advertising rights was not necessarily highlymotivated about selling Nike ,overcoming this problem affected Nike position in customer mind.After change distribution strategy by regaining control of 90% of NikesEuropean distribution they have bad relation with European retailers .


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inside China : succeedBased on presence of Nike store every where 1200 store and 10new shops a week


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Question no. 4:Explain and evaluate the formulation and evolution of the Nike brandpositioning.

1-Nike start and formulate its positioning as high quality running shoesdesigned especially for athletes by athletes.

2- Nike keep its position as high quality running shoes by developingMarathon , Cortez and Boston which cover the same segment runners.

3- Nike change its positioning by introducing general public with (WaffleTrainer) to be innovative and high performance athletic shoes .

If you have a body, you are an athlete


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4- Nike modify its position as a innovative and high performanceshoes for athletes and people who involved in sports .

5- Nike then change its position from performance shoes to innovationand performance in sports because Nike is started to produce apparelbeside shoes for athletes . Also go to new markets like football and baseball .

6- Nike keep this position by penetrate new sports and new products likeballs ,bags, contact lenses for athletes. to be world leading company inathletic footwear and apparel.


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Question no. 5:

Evaluate Nike brand extension strategy.

I think brand extension was very effective due to:

1- Nike start with its core product tiger shoes for runners. Then introducenew models for the same segment .

2- After filling running shoes segment Nike start its extension through

penetrate new segment which is basketball shoes with new productsspecific for it which is right step that moving from mature market topromising market withy keeping previous market.

3- After this expansion Nike expand in many markets like tennis andbaseball based on its famous in the previous two markets.

4- Its the time for Nike to expand through biggest market worldwide(soccer) especially out side U.S.A and they work hard to get market share

in this market .


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5- all previous extension was inside footwear but this time Nikemade a brand extension through apparels based on consumerperception and attitude on Nike shoes and it was very successfulextension.(brand generalization) .

6- Nike then made extensions through sport equipment (balls, bags)which also right step like.

7- through this extensions Nike acquiesce many companies some of

them not matching with its image or segment like Haan and otherwas right decision like Converse and Bauer (sport companies).


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STRENGTHS:

Strong brand recognition

high market share worldwide.

Growing international presence

Superior research and developmentdepartment

Strong financial returns

Strong sense of culture in the workingenvironment

Great celebrity spokespersons

Sales divided in many marketsworldwide which decrease risk.

WEAKNESSES: Lack of good positioning to the activefemales.

Nikes failure to foresee problems inrelation to labor and factory conditions atproduction locations has resulted in badpublicity and declining sales as societyand consumers call for more "sociallyresponsible" companies.

Heavy dependency on footwear sales.

High price related to competitors.

Insufficient line of affordable shoes

SWOT ANALYSIS


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OPPORTUNITIES:Customer use of companysproducts change from athletic purpose

to be a fashion item.

New Generations children (bornbetween 1979 and 1994) will reach 60million.

Growing e-commerces positive effectsince one of companys competitiveadvantages is Internet sales

Women demand for athletic footwearand clothing is increasing significantly

Athletic shoes and apparel havebecome a trend worldwide. This is dueto both the increasing numbers ofpeople exercising and the trendtowards casual apparel.

SWOT ANALYSIS

THREATS: market saturation. The problem isthat the athletic shoe market is alreadyfull of different brands and companies.

Competitors which copy company'sbusiness model (high value brandedproduct manufactured at a low cost)

Adidas the strong competitor who

follow Nike every where

Economic disaster coming to theworld. economy, which may spark acutback in consumer spending.

Consumers are becoming savvierand may be scanning the market for

new and different footwear and apparelproducts.

the new generation will not beexclusively loyal to Nike


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WeaknessStrength

Establish a better presence in the

affordable shoe market. Increase focus in female fashionmarket.Increase market share in productsother than shoes.

keep strong brand equity with newgenerations.Increase focus in e-commerce andmass customization.New innovation from R&DPush casual trend worldwide

oFocus on improving workingconditions and human rights atinternational manufacturer.Increase number of Nike outlet

stores offering discountedmerchandiseIncrease CSR worldwide especiallyEurope.

Keep expanding into current andfuture foreign markets .Keep focus on performance andquality to counterattack copy

products.T

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Nike Case Study 1