Case Study: NIKE

Shikha Sehgal(Mkg)
Shweta Sailani(Mkg)
Nidhi Duggal Kaura(Fin)
Background
 Launched in 1960s by Phil Knight and Bill Bowerman
(Knight’s former track coach at the University of Oregon)

 In1960s , the footwear market had little competition. Every

manufacturer had its own niche
 Basketball players wore Converse
 Track Athletes & Football players wore Adidas and Puma
 Casual wearers preferred Keds

 Nike was initially designed primarily for functional use, not

fashionable
 Today, Nike riding on the success of its “Just Do It ” campaign
is in first place with 42% share of athletic footwear market
Getting into the Race
 In
1960s, when launched, Nike publicized by Word of
Mouth persuading top athletes to wear its shoes

 In 1970s, sales grew rapidly, reaching $14mn by 1976.

 In late 1970s, a physical fitness revolution took place in

US. Nike’s sales & profits surged at an astonishing rate
of 75% per year.
Contd…
 In 1980s, Nike failed to recognize the aerobics boom (esp.
in the women segment) and stumbled.

 From 1980 to 1986, Nike’s market share stumbled from

50% to 22%. Competitors like Reebok and L.A gear
gained.

 In 1985, Nike took corrective action : It launched Air

Jordans (esp. for basketball category) with Michael Jordan
as the endorser.

 In 1988, it debuted the “Just Do It” Campaign

Contd…
 In1990s, Nike expanded its product mix to include
apparel, equipment and accessories

 Nike “swoosh” became highly visible

 Itresorted to Guerilla marketing : by running ads in and

around events it had not even paid to sponsor

 Inlate 1990s, Nike’s market share climbed back to 48%

with the highest ever earnings of $796 mn
Challenges
 In 2001, Nike’s sales declined down to only $451 mn.

 Nike had missed out on a new market trend: “Brown Shoes”. Other
competitors like Timberland and New balance greatly benefited by
responding faster.

 Nike,later on introduced its “ all-conditions” footwear, but could not

make up for the loss.

 Nikealso failed to address the “extreme sports enthusiasts” segment,

which suddenly became very popular and fashionable.

 Niketried again, but its traditional image, decreasing admiration for

Michael Jordan let it down further.
Challenges Contd…
 Nike lost out on very highly priced footwear. Even the
classic Air Jordans were priced at $200
 Nike introduced high technology shoes like Shox &
Presto Slip-ons but they were again too expensive to
address the midpriced arena
Nike lost out on Public Relations
Nikewas accused of using child labor in Third
World “sweatshops”

The company responded by conducting audits at

these factories, but the word had already
circulated far & wide over the internet

Students and others detested Nike

Staying Ahead of Competition
The order was Nike, Adidas, Reebok and New Balance

 New Balance, with market share of 11% in 2001, spent just

$13mn on marketing.
It had the highest level of brand loyalty.

 Reebok, spent only $49mn on marketing but owing to its

lucrative endorsement (Venus Williams and Allen Iverson) and
growing demand did well

 Adidas,gave a tough competition to Nike, by sponsoring the

2002 World Cup, and achieving a 70% share in its high end
soccer shoe market
Competition contd…
Converse, which was once the star in 1950s,
filed for bankruptcy in 2001
Nike spent an exorbitant $155 mn on advertising
and essentially owned the market.
Reformulating Its Game Plan
 Nike launched its “Presto” shoe (available in 6 different
styles and 150 color combinations) in the most exciting
manner

 Itbought commercial time on MTV and Comedy central,

and placed ads in teen magazines. Presto were very
fashionable and an instant success.

 New Brand Ambassador: Tiger Woods

 Nike is introducing baseball gloves, golfing equipment in

addition to promoting the successful “swoosh” apparel
Game Plan contd…
Nike formed a new business unit to direct its
women’s division. (Women’s clothes account for
almost half the total US market)
Nike creating “Concept shops” for women to
focus attention on its products.
Nike has created an entire line of maternity
fashions
Fashionable and athletic clothes for women (eg.
Clothes with pockets for keys and CDs)
 Ques 1: Role of promotion
Effective promotion is required by any
consumer product company to
 Increase sales volumes
 Fight out the competition
 Differentiate between similar looking brands
 To win over consumers who are more price-
oriented
Contd…
 To make up for the decline in advertising
efficiency owing to the rising costs, media
clutter & legal restraints
 Add value to the product
 Help enhance the brand image
 Ques 2: Promotional objectives
for Nike
Promotion is essential for Nike
To strive in a competitive environment
To click onto market opportunities
To sustain its top position in the market
To enter into diversified markets
To enhance its market penetration in existing
markets
To project a positive brand image esp after the
“sweatshop” crises
Ques 3: Other Promotional
methods that Nike should consider
Direct Mailing
Stores Promotion
Participation in Trade fairs & Exhibitions
Offering free samples that maybe
attached to another product, or featured in
an advertising offer
Discount coupons attached to specific
products or inserted in magazine &
newspaper Ads
Price Packs or “With-Pack Premiums” may be
offered with the Nike products sold
Frequency Programs providing rewards
relating to consumer’s frequency and intensity
of purchase
Prizes(contests, sweepstakes, games)
Product Warranties work well in convincing
customers
Tie-in promotions wherein two or more
companies team up to pull back customers
Point-of-Purchase(POP) Displays &
Demonstrations
Trade Conventions where participating
vendors/dealers are given several incentives
Speciality Advertising wherein useful,
common low cost items are given to prospects
and customers (Eg. Pens, calendars, bags.
Writing pads etc)
Thank You