INTRODUCTION TO NIKE

Est. in 1960 in Oregon. Phil Knight and Bowerman - Founder Nike has gone through many changes Started small and now has covered the U.S. and International market

INTRODUCTION contd
Nike = Winged Goddess of Victory.

Greeks say when we go to battle and win, we say it is NIKE!

ANALYSIS OF CASE STUDY

Limited resources and unlimited confidence. Persuasion of top athletes. Endorsement contracts effective. Use of tactics such as guerilla warfare.

ANALYSIS contd.
Failure to recognise aerobics boom. Women -A major customer. Ignorance of market trends. Timberland brown shoes. Not satisfying customer needs. Child labour. Late in getting onboard with extreme sports.

BRAND PERSONALITY
 Brand personality

Personification.

Brand Personality
Sincerity Excitement Competence Sophistication Ruggedness

Down to earth Honest Wholesome Cheerful

Daring Spirited Imaginative Up-to-date.

Reliable Intelligent Successful

Upper class Charming

Outdoorsy Tough

Tata salt

Perk

Nike

Mercedes

Levis
1

Michael Jordan
Put Nike on the map

1984-1985 Nike saw a decrease in their earnings for the first time ever Influenced them to make their first specialty basketball shoe Since then, Michael and Nike together have generated billions of dollars in revenue World Sports Hero No. 1 Jumpman logo is one of the most easily recognized symbols throughout the world

Tiger Woods
The newest Nike sensation Estimated that Nike paid him $40 million More attention than Michael Jordan and Bo Jackson 3 pg. ad in Wall Street Journal 30- and 60- second TV spots
Aired during college football, major league baseball, the U.S. Open, SportsCenter and Monday Night Football

Branding: powerful marketing mechanism used by Nike

Leads to higher and more consistent product quality. Increases innovation by giving producers an incentive to look for more new features that can be safeguarded by the patent. Branding results in more product variety and choice for consumers. Branding provides consumer information about products and where to find them.

Brand equity
Brand equity is defined as the positive differential effect that knowing the brand name has on customer response to the product or service. Philip Kotler

Brand equity
Brands represent the consumers perceptions and feelings about products and their performance. The real value of branding is the ability to capture consumer preference and loyalty. Brands vary in power and value and have varying degrees of brand awareness, brand preference and brand loyalty.

Nikes Market Expansion Strategies Economies of Scale.

Shared distribution channels among varied product lines lower costs. Large size provides opportunity for more leverage against competition. Efficient use of production facilities lowers costs.

Global sourcing: the Nike case

Nike has relocated production of its footwear and clothing to 51 countries where its third party production units employ more than 500,000 people (as against approximately 14,000 people directly employed by the multinational). From its headquarters in Beaverton, Oregon, Nike manages a worldwide virtual company combining internal R&D functions with a low cost manufacturing strategy. They control their activity from Oregon and Tennessee and developed jointly by American and Asian technicians in the USA, Taiwan and South Korea. Sneakers are then assembled in South Korea and Indonesia from dozens of components supplied by firms in Japan, South Korea, Taiwan, Indonesia and the United States. Similarly, Nike outsources distribution to firms that specialise in logistics services.

Brand/Image
Ability to charge premium price by establishing an image Access to new/different markets Premium product placement in retail leading to higher sales Image and celebrity endorsements create hopes/dreams/emotional attachment to product

Innovation
Innovation may be difficult for competitors to imitate. Difficult for competitors to compete with rate of innovation/production. Ability to capture market for different attitudes/values across cultures with product variety. Strong emphasis on R&D leads to continuous improvement in products.

Geographical Outreach
Ability to reinforce brand and create loyalty across cultures leading to a broad customer base. Increased company growth potential. Cross-subsidization of weaker markets.

Product Diversification
New products introduced by Nike will be more readily accepted by customers due to strong brand image

Other strategies adopted by Nike

Sponsorship for sporting events Advertisements. Rebates and Discounts. Conducting fashion shows.

PRODUCT MIX
Product Mix A product mix is the set of all products and items that a particular seller offers for sale to buyers also known as product assortment. Product Width It refers to how many product lines the company carries.

PRODUCT Mix contd.

Product line A product line is a group of products that are closely related because they perform similar functions Product length It refers to the total number of items in its product mix Product depth It refers to how many products are offered of each product line.

PRODUCT Mix for Nike

Footwear Studs for Striker Mid fielders Defenders Apparel Headwear Tops/Polo Jersey Jackets Shorts Shocks Equipment Ball Bags Watches National Team Gear Jersey for Brazil, England, etc. Club Gear Club Jerseys like Man U, Real Madrid, etc

Competitive advantage against regional brands.

Pricing- Bata charges around Rs 400 for a pair of shoes whereas for nike it is Rs 1600. Unaware of utility or use. Shoes are not recommended by coaches in India. Sports culture In India sports like soccer, basketball are not so recognised as cricket.

Porters Five Forces Model of Competition

Threat of New Entrants

HIGH
Bargaining Power of Suppliers Rivalry Among Competitors Bargaining Power of Buyers

LOW

HIGH

HIGH HIGH
Threat of Substitute Products

FUNCTION AND FASHION

Now, Nike concentrates on two aspects function and fashion. In 1960s Nike entered the market with function due to which they Failed in early times. Nike believes if you have a body, you are an athlete.

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