A Marketing Case Study on Nike

W R I T T E N B Y M I L E S M E D I A O N A P R I L 1 0 , 2 0 1 6 . P O S T E D I N U N C AT E G O R I Z E D .

1.0 INTRODUCTION OF NIKE

Nike is a major publicly traded sportswear, footwear and equipment supplier based in the US which was
founded in 1962 originally know as Blue Ribbon Sports. Nike is the world leader in the manufacturing of
sportswear and gear with more than 47 market shares across the global (Nike.com, 2011).

Nike produces a wide range of sports equipments such as running shoes, sportswear, football,
basketball, tennis, golf, etc. Now Nike follows the global fashion trends and is well known and popular in
the youth culture and hip hop culture to supply some fashion products. Nike recently teams up with Apple
Company to produce the Nike+ products which can monitor a runner’s performance through a radio in the
shoe that can link to the iPods. Besides that, Nike also becomes the top of three companies which are
climate-friendly companies which build better image to customers. 

Nike’s excellence marketing strategies are their energy to achieve their market goals. Nike believes the
“pyramid in uence” that the preferences of a small percentage of top athletes in uence the product and
brand choice. So Nike contracted with many athletes’ spokesperson, professional teams and college
athletic teams to advertise and promote their products to customers. Nike seriously pay attention on the
technology producing, design and selling such as e-commerce, high-tech running shoes, Nike+ with
Apple, etc. Nike outsourcing their products most of the factories are located in Asia such as China,
Indonesia and India.

2.0 PROS OF NIKE’S CORE MARKETING STRATEGY

Nike put heavily proportion in their marketing strategies and products deign. In order to sustain their
dominance in the industry and retain their competitive advantages, Nike actively responds to the market
trends and changes in consumer preference by adjusting their marketing strategies, the mix of existing

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product offerings, developing new products, styles and categories, and in uencing sports and tness
preferences through various marketing strategies. Now we discuss the pros of Nike’s core marketing
strategies and related them to the relevant marketing theories help us to depth understanding.

2.1 Distribution

More e cient product distribution is the more sales and thus more pro ts. The delivery of the right
products and at the right time to the customers is not only effect the utility but also leads to high level of
consumer’s satisfaction and loyalty. Nike distributes its products on different level basis. The high
premium products are given to a certain distributors while leaving the low priced to be sold at highly
discounted price at the retail stores such as Wal-Mart (Jeannet J, 200, pp 44).

Nike has become the leader in the e-commerce by being the rst to the market with its e-commerce
website. Nike launched its e-commerce site in April 1999 by offering 65 styles of sport shoes to the US
market for purchasing (Nike, 2000). This program represents the rst time a company has offered mass
footwear through the Internet and provides competitive advantages to Nike.

2.2  Advertising and Promotion

Nike makes contracts with some celebrity athletes which can draw attention to their products such as
Tiger Woods, Ronaldo. This has created a relatively high level of Nike’s awareness. Besides that, Nike also
employed a large amount of advertisements through the mass media (Goldman S, 2000, pp 154). Nike’s
brand images, including the Nike’s name and the trademark are considered to represent one of the most
recognizable brands in the world. The Nike name and associated trademarks have appeared from
players’ shirts, pants and everywhere. Their aggressive advertising campaigns, celebrity endorsements
and quality products all enhance their brand and image. For example, when a celebrity athlete sponsors a
speci c brand of athletic shoes, the brand will be associated with success.

2.3 Price

Nike targets on the consumers who care more about the utility and quality of the products rather than the
price. In this way, the price is not affect too much (Frank, 2004, pp173). This has make Nike to set
relatively higher price than its competitors. This strategy focuses on the consumers who like Nike and
pushes the products value to a higher level. The customers who consider a product to be high quality are
likely to pay the high price more often and consistently. Once the consumers develop the product
intimacy, they come to associate their person with the products and will pay whatever price quoted on the
products.

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Nike use vertical integration price strategy in which they take ownership of the participants at channel
level that differ and they also engage in various channel level operations both to control costs and thus
in uence the pricing function (Goldman S, 2000, pp154).

2.4  Market Segmentation and Target

Most of the consumer of Nike’s products is mainly athletic. Nike is the master of segmentation, their
segmenting market typically target’s athletes, both women and men from the age 15 to 35. Nike’s
targeting market is active people who enjoy high quality sporting goods, especially footwear. Nike
focuses on creating premium consumer experiences on product innovation, brand leadership and
elevated retail presence. Nike targets on these customers by agreements between Nike and athletic
teams, college’s athletic teams for products sponsorship and eventual promotion to the members of
these teams. Even though others are likely to buy the products, Nike focuses on the athlete more than
any group of individuals even though it also target on the youth. This strategy is especially successful
because of its ability to reach a large number of athletes.

3.0  CONS OF NIKE’S CORE MARKETING STRATEGY

Although Nike’s marketing strategies had brings lot of positive implications to the company, but it will
bring negative implications to Nike too. The negative implications that will identify in this assignment are
high cost incurred, in uence of spokesperson, and competitors.

3.1 Costly

Since Nike has implemented several marketing strategies, it had incurred high costs in producing and
promoting its products. The costs are increase among handling inventory, designing, advertising and
production. (Abhiroopsur, 2009) Beyond that, the in ation had raised the costs of raw materials and
transportation. To deal with these problems, Nike has increased the products’ prices and reduces its
marketing budget. Therefore, this could hurt the long-term growth of the Nike. (Taulli, 2011) According to
Boggan (2001), Nike had also employed child labor in Cambodia to reduce its production and labour
costs. This had affected its brand image, and it might have many people boycott Nike and stop to buy
anything from Nike. (Boggan, 2001) Furthermore, Nike has been using child labour in the production of its
soccer balls in Pakistan. (TED, 2011)

3.2 In uences of spokesperson

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One of the Nike’s core marketing strategies is depend on a group of athletes to promote its products.
Nike prefers to have high pro le athletes as its endorsers, like Runner Steve Prefontaine, Michael Jordan,
and LeBron James. The athletes had positive and negative in uence on changing consumer preferences,
changes in consumer tastes and priorities, and also consumers’ buying decisions. The action and
attitude of Nike’s chosen spokespersons could bring the impacts on its promotional strategies. For
instance, it will attract the athlete’s idolater to purchase the products if Nike using a popular athlete as
endorser. On the other hand, if the athlete were caught in drug addicted or any immoral attitude, it will
affect the customers not to buy Nike’s products, thus will affect Nike’s sales, revenue and pro t. (Cloke
M., 2011)

3.3 Intense Competitors

There is intense competition faced by Nike. Their competitors are Adidas, Reebok, Puma, and so forth,
whilst competition is tighter with the coming of Adidas. More, the product line is slightly different
between Nike and Adidas. Nike is mainly focus on footwear for men and women who between 15 to 35
years old, while Adidas is specialize in footwear for men, women and children between the age of 10 to
30. This had shown that there is less diversi cation of Nike marketing strategy. They could also provide
footwear for children to attract more parents to become their potential customers. Additionally, Nike
distribution strategy is mainly focus in domestic market which is United States of America, whilst
Adidas’s main o ce is located at Germany, but it focus in European market. Therefore, Nike should
distribute its products to more region and countries in order to capture more potential customers and
achieve greater reputation. (Allick et al., 2000)

4.0 RISKS OF NIKE’S CORE MARKETING STRATEGY

Nike faces many risks when they use their core marketing strategies to achieve their goals and these
risks can come from both internally and externally environmental circumstance. The risks will have a
negative in uence about Nike’s future development, for example, the market share in the world,
reputation, brand image and customer loyalty.

4.1 Changes in Market Trends, Consumer Tastes and Preferences

Nike needs to stay on the top of changes in consumer taste and preferences as evidenced by changes in
fashion. So Nike face the risk that fashion trends may change so fast that Nike fails to follow. For
example, for a period, the global athletic sportswear is focus on personality and Nike’s products still be
general to the customers this will lead Nike go behind of their competitors if their competitors can follow
the trends. For another example, such as the social changes, women are becoming more tness-
conscious and are increasingly being targeted as growth potential in the sporting apparel and footwear /
industries. Due to constant changes in consumer tastes and fashion, these industries are always
changing. If Nike cannot follow the tness trends in the market they will face risks of losing market
shares. To compete with this risks and problems, Nike should position it as a trendsetter and not a trend
follower and be responsible to their customers. (St. John University, 2004)

4.2  Fast changing of Nike’s products

From the above risk, the changing in fashion and customers’ preference had brings negative effect on its
marketing strategies. Hence, Nike should introduce new products to maintain its customer loyalty as well
as attract new customer markets. However, it will also have negative implication if Nike’s implement new
products rapidly.

As we know, Nike’s products are focus on the athlete’s shoes, apparels and equipments and their target
consumers are for the athletes. But now the global trends are to be fashion and personality. So Nike
change its marketing strategies and products design to become more fashion and focus on the youth
consumers. It brings risks to Nike because in the traditional mind of customers, they consider Nike only
sell the athletic products. The fashion or the changing style products is unimaginative for customers to
purchase. Not all the customers can follow the changing of Nike. Sometimes customers maybe feel fed
up because they cannot follow the changing of Nike’s products will lead Nike lose customers which drop
down the customer loyalty and market shares. (St. John University, 2004)

Therefore, Nike should analyse the market and customers’ preference as well as customers’ buying
behavior from time to time. Nike could prepare survey form to their customers in order to have more
understanding on customers’ taste, requirements when buying sportswear or footwear, and also collect
the feedback and recommendation from consumers.

4.3 Expanding to the Overseas

One of Major Nike’s marketing strategies is to expand to overseas and become the leader in the world. It
also will bring risks to Nike when they expand their business globally. For example, Nike outsources their
products to developing countries such as China, Indonesia, and Thailand. Currency exchange rate
uctuations can disrupt the business of the independent manufacturers that produce Nike products by
making their purchase of raw materials more expensive and more di cult to nance. Besides that, the
global economic recession in uence the overall business operation in the outsourcing countries. For
example, in ation rate too high in an outsourcing country will increase the cost and reduce the pro ts for
Nike. What’s more, the war and fuel price uctuations also can lead to unstable situation for Nike over the
long period. (Florzak, 2011)

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5.0 COMPETITORS – ADIDAS

5.1 IFFICULTIES FACED BY ADIDAS WHEN COMPETE WITH NIKE

5.1.1 Marketing Strategies

One di culty most likely to be faced by Adidas is in its marketing, compared to its competitor Nike, Nike
spends more money on advertising and promoting their products reputation, Nike spend about $1.13
billion as of 1998 involving celebrities like Tiger Woods, Micheal Jordan, Carl Lewis etc. while paying
these celebrities large amount of money (Bedar, 2002), as of 2010, Nike spent about $800 million on
Nontraditional advertising by using other medium of advertising their products other than TV and has
reduce TV and Print advertising by 40%, and in 2006, Nike introduced the Nike + Platform which is a multi-
channel, multi-sensory integration between apple and Nike technologies that allows persons to track
performance (Fluffylinks, 2012) in essence, Adidas will have a hard time trying to compete with Nike in
terms of advertising and promotion, considering Nike’s utilization of low labor cost of production, Nike
can afford to spend so much money in creating awareness for their products and gaining consumers
loyalty by utilizing celebrities. Adidas will have to invest more money on advertising and create innovative
means of advertising their product, having consumers in mind and following the trends of technologies,
for example, Adidas can collaborate with IT companies such as Samsung to create innovative means of
advertising their products.

5.1.2  Adidas and Reebok Reputation on Its Finances

Adidas and Reebok joining up together as a merger would be a good deal for leading over Nike but the
two companies have a bad reputation due to nancial problems which almost led them to bankruptcy
and since they are to work together. The expansion of their business will take a while to develop because
they have to have strong advertising strategies until the Asians .If the Asians like their ideas then they
might as well adjust to the culture in countries like china since it has the biggest population. In the long
run Asian countries like China might as well take a long time to work with the company in terms of
coming up with factories in china. This might be one of their biggest problems which will enable them
take a long time to lead Nike in terms of their market Nike. To go through all that they will be a lot of
expenses thus the company might run bankrupt again. (Adidas-Rebook, 2011)

5.2 HOWADIDAS COMPETE WITH NIKE?

5.2.1 Develop the Small Computer “Smart Shoe” Product Line

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The development of a product line of smart shoes will build on this reputation and show buyers that
Adidas is humorless about innovation and using technology to advance athletic accomplishment. The
line of smart shoes combines a microprocessor or implanted controller, sensors, and tiny motors along
with memory and battery. The sensors work to steadily monitor, measure, and supply data looking at the
landscape, impact of each step, athlete’s body temperature, environment temperature, and athlete’s heart
rate. This data can steadily be fed to a microprocessor which agent motors to adjust padding and air ow
within the shoe. (Dogiamis et al., 2009)

Wireless GPS system is another feature on the small computer production line that enables runners to
decide their accurate location, distance traveled, and speed from the shoe’s GPS by wearing a small
wireless GPS wrist strap. The shoes implanted memory can keep data about workouts such as average
heart rate, body temperature, calories burnt and force of each step. For situation, in basketball the micro
can watch how high the athlete jumps and how hard of a landing they make.  As many athletes demand
goods created that can deliver   both watching and accomplishment bettering capabilities, they will nd
Adidas the solution thus leading to much higher revenue, pro t, and market share in sports that Adidas
already leads and in sports where Adidas lags in revenue, pro t, and market share (Dogiamis et al., 2009)

5.2.2 Implementation of Rebranding Reebok Program

Adidas Group should phase out its high accomplishment athletic shoe line and reposition itself in the
casual footwear and active footwear market within the next years. The high accomplishment athletic
shoe line can be sponged up into the Adidas brand. Adidas It should consider opening Reebok retail
outlets that market Reebok as well stylish Reebok at more upscale department stores such as Macy’s
and Nordstrom. Reebok should ensure keeping up a very high level of quality and durability of its shoes.
However, it should work with major fashion designers such as Calvin Klein to come up with a well stylish
product line of shoes meant for active, casual use, gain brand image as an upscale and more cultured
shoemaker. Reebok should rst come up with a line of casual but well stylish shoes designed by Calvin
Klein that blend quality and style. (Dogiamis et al., 2009)

The rebranding of Reebok can help Adidas to make larger advancements with women. They want a shoe
that can be useful for all visible feature of an active lifestyle. Therefore, marketing Reebok as a well
stylish line of shoes meant for active lifestyle might allow Adidas to make larger in roads with women. 
Reebok should start a line of well stylish shoes prepared toward women with active lifestyles. (Dogiamis
et al., 2009)

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The overall rebranding of Reebok should be nished to avoid internal competition within Adidas Group
where the Reebok division is seen as the less pro table sibling of Adidas and to keep buyers from
believing that Reebok is not an expensive substitute for an excellent Adidas product. (Dogiamis et al.,
2009)

5.2.3 Expand Its Sponsorship Program (Marketing)

Adidas mainly focuses in the European market even though it is known in other parts of the world, which
is because of its collaboration with soccer events all over the world and football associations with bodies
such as FIFA, UEFA, leagues, clubs and individual players, in 2010, Adidas experience its most successful
year in the history of football with sales above 1.5 billion Euros. It also had a sure climax during the 2010
FIFA World Cup of which it sponsored the wining team Spain and the adiZero F50 which is also an Adidas
product had the top scoring boot in the event, lastly, Adidas Football group on Facebook massively
increased from 100,000 members to over 6 million members presently. Adidas has been an o cial
sponsor of the Olympics and has also been included as a sponsor of the 2012 Olympics; this gives it an
edge over its competitor Nike. (AdidasGroup, 2011) It should use this opportunity to carry out precise
marketing, by focusing on its segment market which includes the soccer, tennis and athletics teams and
probably expand its focus to the up and emerging local teams in the grassroots, because, this group of
people are keen about sports and spend time watching them on the TV but hardly get access to them
unless they purchase the product themselves.

5.2.4    Change in Consumer Perception to Products

Adidas can also change the consumer’s perception about its products, most consumers perceive Adidas
product as being too stiff and therefore are uncomfortable with it, Adidas can come up with a durable but
use soft materials for its product as well as rebrand it product as not just a sporting shoe but also a
fashionable shoe which consumers can wear on a casual basis example for outings, parties etc. when
this is instilled in the minds of the consumers, more of Adidas product will be purchased by consumers
as it will be perceived as durable and fashionable.

5.2.5 Encourage Product Customization

Adidas can also make provisions for consumers to customize their products online before it is delivered
to them, this will give customers unique and a wide range of their products to choose from and will also
allow them to understand what their consumers really want and focus on satisfying their consumer. With
each consumer trying to be very creative and unique in their way, Adidas will shift its focus on their
consumers from how much they are to pay for the product to how much they can bene t from the
product. Adidas can promote this feature through its Facebook page which has over 6 million members./
5.2.6 Focus on Emerging Market

Adidas can capitalize on Nike’s weakness which is its focus on local market, Adidas can capture
emerging markets, and already it has a lead in market such as India and Japan. In Latin America, it
experiences a growth sale of 38% in 2007. (ReComparison, 2012) Although it is competing with Nike in
China, it should focus on ranking its investment solely on markets which offer superior channels to long-
term growth and pro t prospects and should also focus on expanding its share to unreached areas
especially in China, Russia, Africa and the United States. It should also ensure that it differentiates
consumers’ buying behaviors as it differs in different regions and countries and understanding this will be
an added advantage to Adidas. 

6.0 CONCLUSION AND RECOMMENDATIONS

From the above analysis, we had understanding about the pros, cons and risks of Nike’s core marketing
strategies with relevant marketing theories. Besides that, the di culties Nike faced when they competing
with Adidas. We discuss from the distribution, price, products design, promotion and advertising, market
segmentation to analysis Nike’s competitive advantages in the global market. We also nd that the other
side in uences of Nike’s core marketing strategies such as costly advertising, raw materials costs
affected by the global economic, the spokesperson’s behaviors which has negative in uences to the
Nike’s brand images. What’s more, the risks of Nike’s core marketing strategies such as Nike cannot
follow the world fashion trends, the pro ts has affected by the currency exchange and economic
recession when expand to the global.  

Nike has remained and continues to remain at the top in producing and distributing their sports clothes
and equipments. However, Nike should consider the competitive pressure is very heavy and not allow the
“sleep at the top”. So Nike should continuously nd e cient marketing strategies to keep their top leaders
positions.

The following recommendations are suggested in a situation where marketing management is

competent. Nike should increase their market shares through issue new products, competitive pricing
strategies, and advertisement and promotions activities. Nike also should restructure market dominance
by separate themselves from the competitors mainly through mass promotion strategies and pricing
strategies which make Nike more attractive to customers. Besides that, Nike must increase their
awareness of corporate social responsibility to strengthen their image of themselves. What’s more, Nike
should pay much attention to their R&D department to research out different kinds of people with
different taste to get the market diversi cation goals.

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All the above show a competent marketing management which can help Nike Keep their top market
leaders and keep their competitive advantages.  

7.0  REFERENCES

Abhiroopsur (2009) ‘Nike – How the Brand Survived until Today’, (online) (cited 1st March 2012). 

Adidas Group (2011) ‘Adidas Strategies’, (online) (cited 10th March 2012). Available from

Adidas-Rebook (2011) ‘Adidas-ReebokMerger’, (online) (accessed 11th March 2012).  

Allick M., Keany E., Koslow J., Tansamrit A., Thorkelson D. (2000) ‘Comparison between Nike and Adidas’,
(online) (cited 26 Feb 2012). Available from Soc.duke.edu/~s142tm17/compare.htm 

Bedar S. (2002) ‘Putting the Boot In’, The Ecologist, 32:3, (online) (cited 11th March 2012).

Boggan S. (2001) ‘Nike Admits to Mistakes Over Child Labor’, (online) (cited 2nd March 2012). Available
from: http://www.commondreams.org/headlines01/1020-01.htm

Cloke M. (2011) ‘Marketing Management 01′, (online) (cited 26 Feb 2012). Available from URL:
http://www.slideshare.net/michaelcloke/marketing-management-01-8568487

Dogiamis G., Vijayashanke N. (2009) ‘Adidas: Sprinting Ahead of Nike’, (online) (cited 4th Feb 2012). 

Enderle K., Hirsch D., Micka L., Saving B., Shah S., Szerwinski T. (2000) ‘Strategic Analysis of Nike, Inc’,
(online) (cited 26 Feb 2012). 

Florzak A. (2011) ‘Strategic Analysis: Nike’, (online) (cited 29th February 2012). 

Fluffylinks (2012) ‘How Nike’s Marketing Revolution has Resulted in a 40% Reduction in TV and Print
Advertising in the U.S.’, (Online) (accessed 11th March 2012). 

Jerome A. (2005) ‘Pros, Cons and Risks of Nike’s Marketing Strategies’, (online) (cited 12th March 2012).

Jones, S (2012) http://www.study-aids.co.uk/busman/busman2.html MBA Dissertations

Sarah Hopkins (2008) ‘Nike’s Marketing Strategies’, (online) (cited 9th March 2012).

Smith L. C. (2010) ‘Marketing Strategies of Nike’ (online) (cited 10th March 2012).  

St. John University (2004) ‘Nike (Nke)’, (online) (cited 1st March 2012).
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Taulli T. (2011) ‘Nike Shares’, (online) (cited 2nd March 2012). 

TED (2011) ‘NIKE: Nike Shoes and Child Labor in Pakistan’, (online) (cited 28th Feb 2012).

Source by Steve Jones

marketing, small business marketing

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