TERMVI RetailManagement NIKE


2/19

NIKE: THE STORY

Profile & Background

- Design, development &

worldwide marketing of

footwear, apparel and

accessories

- 18000 retail accounts in the

US, mixture of independent

distributors, licenses and

subsidiaries in other countries

The Journey

1960s-Phillip Knight(ceo) & William Bowerman partnered to sell

running shoes to athletes

1970s- cash in on Americas running craze:

1)1972- $ 3 million

2)1980- $ 270 million

3)1986- $ 1 billion

Problems in mid 1980s:

1. Demographic changes

- baby boomers pushed into their late forties & felt less like running.

2. Market for running shoes become highly segmented (mature market)

-many different models for every nuisance of customer need.

3. Competition

-Reebok create new market orientations to sell sneakers based on fashion

rather than performance

Results from the problem

1. 1984- Nikes unit sales decreased 17%

- market share declined 31% to 24%

2. 1987- have only 18.6 % share of shoes market

Action taken

1. Introduced technological features to enhance shoes performance.

2. Use of celebrities as spokesperson. Air Jordan was a major hit.

3. Using advertising as marketing strategy

Focus

Dedication & effort needed to

excel in sports & satisfactionPersonal benefit associated

using its product and the

values satisfied by the product

used.

Creates an image of

performance, competition,

achievement, & doing your

personal best

Mission Vision


3/19

NIKE INC.

The largest seller of athletic footwear and apparel in the world

Employs more than 33,000 people globally

Sells products in more than 180 countries around the globe Revenues of $19.2 billion reported for the fiscal year ending May 31, 2009

Nike

Footwear Apparel Equipment

54 %

Revenue

27 %

Revenue

6 %

Revenue

Running

Cross-Training

SoccerBasketball

Casual

T-shirts

Shorts

SweatpantsLicensed

Apparel

Balls

Golf-Clubs

Affiliate Businesses

Cole Haan, which designs, markets anddistributes luxury shoes, handbags, accessoriesand coats

Converse Inc., which designs, markets anddistributes athletic footwear, apparel and

accessories

Hurley International LLC, which designs, marketsand distributes action sports and youth lifestyle

footwear, apparel and accessories

Umbro Ltd., a leading United Kingdom-basedglobal football (soccer) brand


4/19

Innovation is at the heart of NIKE, Inc.s business growth strategy.

Vision:1. Innovate to deliver enterprise-level sustainability solutions

2. Integrate sustainability into the heart of the NIKE, Inc. business model

3. Mobilize key constituents (civil society, employees, consumers, government and industry) to partner in scaling

solutions

Closed Loop Business Model: The future demands closed-loop business models that move closer to achieving zero waste by completely

reusing, recycling or composting all materials

The work of Nike includes up-front design of products that can be manufactured using materials

reclaimed throughout the manufacturing process and at the end of a products life.

Recent Ambitious Goals:

Lanch the GreenXchange as a platform for enabling the sharing of intellectual property to fast track

changes efficiently

Fast track innovation through investment and collaboration

CORPORATE STRATEGY


5/19

Nike Adidas Puma

Share 2.2% 1.8% 0.32%

Sales $ 24.128 billion $ 19.14 billion $ 3.57 billion

Net Margin 9.21% 11.52% 7.47%

Competitive

Strength

Very strong brand equity

Technical innovation in

products

Broad Distribution Network

Strong Usage of Technology

online retail (Apple, Jabong

etc)

Wide geographical

footprint with increasing

focus on emerging markets

(High Market Penetration )

Robust retail footprint

Focus on R&D

Very innovative

(first screw boots , brush soles

Strong and diverse

presence in Team

Sponsorship

(Cricket (DC & RR), Football

(Germany) , Rugby (Irish ruby),Golf)

Sponsorship

Strategy

Relies on Global Sports Icons

Less emphasis on event

sponsorships, more individual

sponsorship

Ex : Michael Jordon globally.

More regionalized

promotion, regional Stars.

Less dependence on Global

sponsorship

Ex: Tendulkar in India

Emphasis on Event

promotion and Team

Sponsorship rather than

individual sponsorship

Ex : FIFA World Cup 2006

Ref : Datamonitor, Euromonitor, Capitalline

NIKES COMPETITORS

AdidasThe Real Threat to Nikes Position

Multi Brand Strategy with Reebok acquisition Higher Penetration in Emerging Markets like India


6/19

Athletes of all ages and

Demographics (18-40 [largest are teens], M/F, socialclass AB, single/ married)

Lifestyle (active teens, athletic/ sporty individuals,casual lifestyle with fashionable taste)

Behavior (sneakers as fashion statement, fitness craze,multipurpose shoes, hip,)

Teens

We may also classify the Primary markets as

Nikesprim

arytarget

mark

ets

Young and impulsive

Spend good deal oftime on sports and

exercise

Nike targets them bymarketing to theathlete.

Just Do It

Experiencers

Practicalconstructive peoplethat enjoy physicalrecreation

Interested in thequality andfunctional purposeofNike products

Relate to thissegment throughthe commercialsthat depict peopletrying their hardestto reach goals

Makers

Trendy, fun lovingand motivated byachievement

Concerned aboutthe approval ofothers

Nike grabs thissegment throughendorsing theirproducts withprofessional athletes

Placement andName

Strivers

Motivated by Ideals

Predictablepurchasers

Tend to onlyconsume productsthat are familiar andestablished

Attracted to Nikes

proven quality,familiarity, and

established name

Believers


7/19

Nielsen BuzzMetrics Brand Association Map provides an intuitive map, giving you a deep understanding of how your brand is perceived,

discussed and understood among consumers online.

BRAND ASSOCAITION MAP


8/19

NIKE ADIDAS/REEBOK PUMA OTHERS

Endorsing Athletes

Sponsoring Sports

events

City based

advertisements

Banners & Billboards

Themes on bringing

inspiration and

innovation to every

athlete in world

Sponsoring Sports

events

Endorsing Athletes

Themes on improving

performance of every

athlete in the world

Mixing influence of

sports, lifestyle &

fashion

Puma concept retail

stores

Puma fashion shows

New stuff advertising

campaigns

Building seasonal

momentum during

holiday seasons

Minimal or less

advertising based on

stores

NIKE ADIDAS/REEBOK PUMA OTHERS

Athletic, Influential,

Outgoing, Aggressive, hi

tech, futuristic, retro cool

American way of livingAssociated with Athletes at

top of their sport

To bring inspiration and

innovation to every athlete

in world

Clear, orderly, Practical, hi

tech, Sophisticated, Sincere

Conservative European style

To improve performance ofevery athlete in the world

Associated with elite soccer

players/teams, NBA stars,

Hip hop artists

Elegant, colorful, fresh,

spontaneous, individual,

metropolitan,

internationalMixing influence of sports,

lifestyle & fashion

Fashion brand, performance

& casual footwear, fringe,

extreme sports

Based on their product

lines. Generally not a strong

brand message

AdvertisingStrategy

BrandingStrategy

COMPETITIVE ANALYSIS


9/19

NIKE AND TECHNOLOGY

Nike has always looked to integrated technology to develop their product in an innovative manner

Product Technology Description

Nike Ground Nike Air is the most basic cushioning material used by Nike; it is made out of a polyurethane bladder and filled

with air. It provides adequate cushioning for the casual wearer

Zoom Air Zoom Air is among the more technologically advanced (and expensive) cushioning systems used by Nike. It

essentially is a thin bag of pressurized air that, when inflated, has a thickness of

8 mm

Nike Shox Nike Shox is a cushioning system developed by Nike that is comprised of polyurethane

-foam columns that provide cushioning in a way that keeps the foot parallel to the ground

E-PLATFORM PRESENCE

NIKEiD

NIKEiD gives customers the chance to express

their own style by personalizing select Nike

apparel, footwear or gear.

They can customize products with a range of

different colors, materials and even aPersonalized iD (PiD).

Siemens IT solutions and Services

5 year contract to provide end-user outsourcing services. Siemens suppliedinfrastructure outsourcing services

SAP R/3

In May 2004, Nike started with SAP R/3, SAP Business intelligence, mySAPSupply Chain Management.

SUPPLY CHAIN

Nikes concept for its supply chain management are process innovation (do it different), continuous improvement (do it better ), and

execution discipline (do it right)

Nikes supply chain consist of all the activities, functions and facilities directly and indirectly involved in the flow and transformation ofgoods and services from the raw material stage, manufacturers, parts suppliers, assembly, warehouse and distribution to the end-user

INFORMATION SYSTEMS


10/19

NIKE GLOBAL PRESENCE AND STRATEGY

The companys increased focus on Sustainable Business and Innovation (SB&I) is more seamlessly integrated across its business strategies,

creating a more sustainable approach aimed at providing greater returns to its business, communities, factory workers, consumers and the

planet.

ConsideredDesign

It combines sustainability principles and innovative performanceproducts for athletes by reducing toxics and increasing the use ofenvironmentally preferred materials.

GreenXchange(GX)

A web-based marketplace to share intellectual property whichcan lead to new sustainability business models and innovation.

Lean & Human

ResourceManagement

Nike has been working with contract factories to train them in theimplementation of specialized Lean manufacturing and HRM.Lean principles put the decision making closer to the worker

Sport for SocialChange

Nike has furthered its strategy of using sport as a powerfulmovement for social change.

The Company has a revenue target of $27billion by the end of fiscal 2015 based on

growth expectations across its portfolio,

which includes the NIKE Brand, Cole Haan,

Converse, Hurley, Jordan Brand, NIKE Golf

and Umbro

Nike sells products in 170 countries,

employs over 30,000 people worldwide,

competes in over 30 major sports with 12

brands, and works with over 600 factories.

GLOBAL PRESENCE

*Source: http://www.businesswire.com/news/home/20100122005661/en/Nike-Outlines-Global-Strategy-Creating-Sustainable Business

Existing Diversification Strategy Related diversification.

Builds upon or extend its core competency and resources/capabilities tocreate value.

Objectives of Diversification Strategy

Reduce the companies dependence on the Swoosh brand.

Internal incentive- lower the firms risk.

External incentive- greater profits.

In Holland Bleed Orange Strategy&

In India Bleed Blue Strategy.
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11/19

NIKE uses Price Leadership strategy and value based pricing.

Customers buy the product for the NIKE symbol and are willingto pay high prices regardless of the products actual value.

Nike also uses "psychological pricing

Most of the products price end in XX95 or XX99

NIKE also utilizes is "segmented pricing".

Depends on the type of customer targeted, the specific product

they are trying to market, and the location their products arefound. E.g. Shoes for adults and children are priced differently

Nike uses vertical integration strategy

a relationship oriented approach in coming up with

effective and efficient ways of managing its supply

chain. *

The strategy is used in pricing its commodities where

they have participants at different channel levels

For example, there are tier 1 suppliers and tier 2

suppliers where the former are firms with a stronger

relationship with Nike who act as more of a strategic

alliance than having a pure contractual relationship

with Nike. Tier 2 suppliers are associated with pricing

and may be managed by tier 1 firms or more closely

related firms.

* This is achieved through forming alliances and relationships rather than using pricing strategy with an aim of purchasing stuff as cheap as possible (Frisch, 2008).

Nike derives revenues from a product mix of approximately 65% athletic

footwear, 29% apparel and 6% equipment.

Since its creation, Nike has proven itself as a popular brand and it has created

niches by selling products such as footwear, apparels and various types of

sports equipment.

Nike currently focuses on soccer, basketball, running, athletics, combat

sports, baseball, & eyewear.

Company also sells shoes for outdoor activities such as tennis, golf,

skateboarding, cycling, volleyball, wrestling, aquatic activities and other

athletic and recreational uses.

Nike teamed up withApple Inc. to

produce the Nike+ product which

monitors a runner's performance via a

radio device in the shoe which links to the

iPod nano.

The products of Nike usually stick with an

image of a famous athlete e.g. Michael

Jordan in basketball(the legendary Air

Jordan shoes), Tiger Woodin golf or

Ronaldo in soccer

PRICING STRATEGIES

Merchandizing Strategy


12/19

To celebrate the 30th anniversary of its iconic Air Force 1 Shoe, Nike have launched the pivot point, a special pop-up store in Tokyos

Shibuya shopping district. Along with the store launch, the sportswear brand also pre-released a limited number of the Nike Air Force 1

Foamposite Low, a redesigned model with a dramatically tweaked cushioning sole for improved comfort.

Lays a lot of focus on creating high quality retail outlets for its customers

In Rio de Janeiro the sportswear giant has recently opened Nike Ipanema, its first brand experience store in all of South America. This is a

special league of Nike stores there are currently only 15 of such outlets in top-tier cities across the planet that offer far more than a

wide range of product in each category, such as differentiated services, product testing and various experiences to consumers.

Nike x Liberty Olympics windows is created by Hotel creative, London.

A futuristic journey of Nike Running from pure performance to explosive style, that inspires everyday athletes to be the

best they can be.

Nike presented its vision of future retail by opening the firstNike+ Fuelstation in East Londons Boxpark. Envisioned by

Nikes Netherlands-based team, the concept space strives to offer an innovative balance of digital interactivity with

physical human experience

The store concept & design is the result of the collaboration of Nike Brand design Europe and Nike Italy. Juventus

Merchandising, under the supervision of their sponsors Nike, appointed New Store Europe to manage the whole

production process project management, construction management and installation.

the new Nike Santa Monica store brings the companys current field house concept to life. Composed of Intricately

detailed wood, glass, and steel components, the highly transparent facade provides opportunities for rotating product

display and oversized imagery

The enigmatic Nike Sportswear Ice Cream Truck was on a constant patrol along the sweat drenched basketball courts of

New York City (including eight hoops tournaments at Dyckman Park, West 4th and Rucker Park) during the Summer of

2011. Dishing out delectable frozen treats to players or audience members absolutely FREE

NIKE RETAIL
http://nikeplus.nike.com/plus/http://nikeplus.nike.com/plus/http://nikeplus.nike.com/plus/http://nikeplus.nike.com/plus/http://nikeplus.nike.com/plus/http://nikeplus.nike.com/plus/http://nikeplus.nike.com/plus/http://nikeplus.nike.com/plus/


13/19

HUMAN RESOURCE MANAGEMENT AT NIKE INC.

Designed Employee Networks to separate them from their

competition

Employee Networks promote diversity within the organization

Role of the network

Enhance work performance, Identify mentors, Assist in recruiting

diverse professionals, Develop community interaction and Encourage

increased teamwork

Native American Employee Network Mission

To increase awareness and continue to educateNike employees about the Native Americanculture.

Latino Employee Network Mission:

To increase awareness of the Hispanic/Latinoculture at Nike, explore diversity in the Nikeworkplace, 1

ADEVRTISING AND SALES PROMOTION

Nike uses a number of famous

athletes that serve as brand

ambassadors such as, the Brazilian

soccer team, Lebron James for

basketball, CR7 from football and

Rory McIlroy for golf.

Nike utilizes personal selling

techniques in all of their retail

stores. Associates in the store are

suppose to be knowledgeable of

the brand

Nike not having enough stores around its consumers they have franchisee storeslike footlocker and other sports stores to sell them their products. Nike presentsa lot of coupons when there is a season starting to come

During major Holidays, Nike sometimes give out Coupons that can be used on

their online store. The "Black Friday" Event is when Nike mostly gives outcoupons

The "I Got This" contest was held in promotion of Kobe Bryant new "AstonMartin Hyperdunk+Kobe IV" sneaker package. This contest made a lucky 200contestants win a free pair of this package and 20 other lucky contestants winfree tickets to a NBA Staple Center game.


14/19

NIKE FINANCIAL ANALYSIS

The turnover ratios have been quite stable

except in FY09 and FY10. The inventoryturnover ratio has decreased for FY12

which may indicate lower efficiency

Current ratio is above 2 which is a sign ofhealthy liquidity. The ratios have been on

a decline post FY09 but still comfortable


15/19


The investment activity ratios have been

stable, increasing in FY12 which shows

long-term assets and equity are being

utilized efficiently

Profit margins have declined marginally inFY12 but the company is still doing well

compared to competitors


16/19


ROE and ROA have increased post FY10,

showing greater profitability. ROE

declined marginally in FY12

The company has reduced the debtcomponent in its financial structure, thus

increasing solvency


17/19

NIKE PEER COMPARISON

Nike has maintained good margins due to premium brands, low cost manufacturing and increased

direct selling.

Inventory turnover is highest when compared to competitors.

Nike has high ROA due to higher asset turnover than net profit margin whereas Crocs has high ROA

due to higher net profit margin.

Sales/employee is highest for Nike, showing high productivity.

Same store sales growth is 13%

Parameters Nike Adidas Puma Crocs Industry Sector

Revenue Growth Rate (5 yr) 8.13% 5.76% 4.90% 23.06% 14.85% 8.36%

Liquidity

Current Ratio 3.01 1.7 2.21 3.42 0.86 1.58

Quick Ratio 2.14 1.12 1.37 2.49 0.65 1.21

Solvency

Debt to Equity 3.28% 28.21% 3.39% 0.00% 2.02% 55.88%

Interest Coverage 427.14 10.55 61.35 -- 56.52 34.48

Profitability

Gross Profit Margin 43.18% 47.30% 48.83% 54.58% 16.07% 28.99%

Operating Profit Margin 12.22% 8.10% 6.80% 14.29% 3.25% 9.51%

Net Profit Margin 8.95% 5.51% 4.80% 12.75% 2.32% 7.77%ROA 14.90% 7.14% 6.11% 17.61% 2.49% 8.35%

ROI 19.83% 10.75% 8.87% 22.98% 3.33% 12.18%

ROE 22.31% 14.84% 9.12% 24.72% 3.80% 14.18%

Efficiency

Inventory Turnover 4.43 3.35 2.77 2.96 1.13 9.53

Asset Turnover 1.66 1.3 1.27 1.38 0.32 0.97

Sales/Employee 5,48,364 4,35,800 3,59,400 2,40,558 - -


18/19

CONCLUSION

Strengths

Brand recognitionHigh quality

Effective marketing

Strong distribution system

Innovation

Strong R&D and CRM

Weaknesses

Dependent on overseas manufacturing

Decreasing US share

High price compared to some competitors,

Currency exposure

Medium retail presence

Opportunities

Expansion into emerging markets

Growing segment of women athletes

Increased direct selling

Increased demand for innovation

Threats

Fierce competition

Revenue relies on discretionary income

Economic recession

Fluctuation in currency

NIKE


19/19

THANK YOU

Documents

TERMVI RetailManagement NIKE