Brief

Nike, Inc. is an American multinational corporation that is engaged in the design, development,
manufacturing, and worldwide marketing and sales of footwear, apparel, equipment,
accessories, and services. The company is headquartered near Beaverton, Oregon, in the
Portland metropolitan area. It is the world's largest supplier of athletic shoes and apparel and a
major manufacturer of sports. This report focuses on the brand of Nike. It involves analysing
areas of approvals and sections that need developed. Each section will focus on a different area
of critique while also pushing forward an idea of a campaign that could help them reach a new
target market for their business.

External Environment
Before Nike has became the 18th largest brand globally, with an estimated revenue value of
$33.3 billion in 2018 (Forbes) and becoming one of the most enterprising companies ever, with
a wide scope of product differentiation, ranging from footwear to accessories, they started off as
an idea inside Bill Bowerman’s head in the year 1964. This idea grew into the founding of Blue
Ribbon Sports (Britannica, 2019), with his goal to improve and create footwear to improve
athlete performance (Nike, 2019).

As Nike grew, so did their competitors. Their rise to the top was not easy as their sector is full of
competition; with Adidas and Puma as their closest rivals in this market. One way Nike has
sustained a competitive advantage throughout the years is how they dealt with disruptive
innovation. Nike are constantly upgrading and improving upon their own products each and
every year, for example, Nike’s Air Max collection.

Before Nike transformed into this household name, it had problems of getting consumers aware
of their product. In the late 1960’s, co-founders Phil Knight and Bill Bowerman only generated
revenue of around $8,000 through the selling of track shoes in the boot of their car. Whereas if
we were to compare this to now, Nike are making profits of around $21 billion annually, with
outlets and distributors in more than 170 countries in the early 21st century. This massive jump
in the span of the last four decades could be closely related to how well they have approached
their marketing strategies. Nike are always adapting their strategies to fit whatever the most
popular mode of advertisement is in the current time period, whether it is printed advertisement
or through social media (Campaignlive, 2018).
Nike’s target market is very unique, due to their ever expanding demographic segment for which
they constantly target. The Demographic segmentation is an instrument used by businesses to
target people based on their age, life-cycle stage, occupation, gender and generation.
A potential area Nike should look into investing is that of females in the world of sport, as they
only currently hold 20% of Nike’s revenue. As a direct result of this statistic, the campaign
project that will be created for Nike will target how to improve female engagement in sport
through sales while also attempting to increase social traffic from the social media platform of
Facebook by 20% within three months of the campaign launching.

Porter’s Five Theory can be used to help gather a greater understanding of what Nike do well
and what they need to improve upon. This theory also allows for a wide variety of external
factors to help determine the strengths or intensities of forces impacting Nike. However, based
on this Five Forces Analysis, the following are the intensities of these forces currently
influencing Nike’s performance and industry environment in the athletic footwear, equipment
and apparel market:
1. Competitive rivalry or competition (Strong Force)
2. Bargaining power of buyers or customers (Moderate Force)
3. Bargaining power of suppliers (Weak Force)
4. Threat of substitutes or substitution (Moderate Force)
5. Threat of new entrants or new entry (Weak Force)

From the above information, it suggests that Nike must make a decision and prioritize strategies
that address competition, which is highlighted as the strongest force in this Five Forces
Analysis. Furthermore, for Nike, the bargaining power of customers and the threat of substitutes
are also significant in their success. For Nike to sustain their competitive advantage, one
recommendation I would suggest would be to prioritize investment in product development. Nike
should, on top of this, implement strategies to attract and retain more customers, which will be
used to minimize the effects of substitution in the sports footwear industry environment, i.e.
going from shopping with Nike one day, shopping with Adidas the next.
Recommendations
Nike’s Value Proposition is one that can be admired. The Value Proposition is critical when
dealing with competitors, with the concept being that of a framework to make a company or
product more attractive to the customer. Nike offers four primary value propositions:
accessibility, innovation, customization, and brand/status. To elaborate upon this, Nike creates
accessibility by offering a wide variety of options to their consumers. On top of this, they have
also acquired numerous footwear and apparel firms since its founding, including Converse and
Hurley International. These actions have enabled Nike to be given a platform to expand its
product lines, giving consumers more to choose from and will continue to grow in the future. To
compare this with Under Armour, who are yet to become a worldwide household brand like Nike
have transformed themselves into, with their current biggest market being that of the United
States. Their accessibility is also less desirable than Nike’s when comparing the two. Although
Under Armour offers a wide variety of options to their loyal consumers, they are still yet to
branch out into different markets and expand their brand into a global juggernaut.

NIke additionally places a strong emphasis on their innovation skills. The maintaining of Nike’s
Explore Team Sport Research Lab at its headquarters has only pushed them in a positive
direction as a research facility that is primarily focused on designing cutting-edge products will
keep them sustaining a competitive advantage. More information will be explained on how NIke
deal with disruptive innovation later in the report. Comparing this with the business New
Balance is very interesting. New Balance (NB) shop-in-shops are innovating the customer retail
experience. Aside from making more NB products available to consumers, they’re showcasing
the products in a more engaging way within the store (Purdy, 2019). Similar to Nike, New
Balance realise the importance of creating and sustaining a competitive advantage which is why
they are trying to change the shopping experience by offering new and creative ways to
immerse the customer in a retail experience that drives curiosity and motivates consumers to
live an active lifestyle — this is what you’ll find at any of the 25 New Balance shop-in shops
opening in Running Room retail locations across Canada (Purdy, 2019).

Thirdly, Nike enables customization through its service NikeID. This is a relatively new idea for
the team behind Nike as it allows customers to personalize various aspects of their shoes,
including sport style, traction, and colors. This creates added value to towards Nike as they beat
their competitors in implementing this customization concept into their business model. To
compare this with Adidas who have recently introduced the concept of ‘miadidas’ which is very
similar to what Nike offer in the sense it’s all about giving the consumer full creativity of what
they want their product to look and to feel. This shows that although Nike’s idea is a new and
creative one, the novelty could wear off very quickly due to how other competitors have also
started to offer this service, making this idea of customization less of a luxury and more of an
expectation for every brand to have and introduce.

Lastly, Nike has established a strong brand as a result of its success. It is the top seller of
athletic footwear and apparel globally. It has partnered with several of the world’s leading
athletes to promote its products, including Michael Jordan, Cristiano Ronaldo, and Tiger Woods.
On top of this, the company has won many honors, including recognition as the “World’s Most
Innovative Company“by Fast Company (2013) and the “Most Admired Company in America“ for
apparel three years in a row. These awards can be used to paint a picture of their brand to the
public to show how influential their business is, resulting in loyalty towards them from
consumers all over the globe. Puma on the other hand are a very strong brand and successful
brand, with a third of the market share. However, saying they are the third largest business in
the market would still flatter them when compared to Nike as it still doesn’t mean they are a
close competitor. The graph belows shows the true distance between the two brands. If Puma
were to improve their market share, they must begin to expand the exposure of the brand. One
of the ways to do this is by signing my celebrity endorsements, similarly to how Nike operates,
with Puma’s biggest name connected to them being that of Rihanna, not even being someone
connected to sports.

For Nike to sustain a competitive advantage in the market, they must adapt different strategies.
The below information are strategies that have been collected and also proposed towards Nike
from the information gathered during the research of Porter's Five Theory.

Product Development: The first strategy is that of how Nike’s primary intensive growth strategy
is product development. This intensive strategy involves the introduction of new products to
grow sales revenues. For example, Nike’s mission statement highlights innovation applied
through new designs for shoes and related products. New technologies enhance the products
and set them apart from the competition. To continue this, the product development from Nike
allows these products to remain attractive despite changing consumer preferences.

Thus, this intensive strategy supports Nike’s differentiation generic competitive strategy via
product innovation from Porter’s Five Theory. Overall, a suitable strategic financial objective
based on this intensive growth strategy is to increase Nike’s market share through cutting-edge
technologies integrated in the design of sports shoes, apparel and equipment.

Market Development: One of Nike’s supporting intensive growth strategies is market

development. This strategy facilitates the company’s growth by targeting new markets or market
segments. For example, if Nike enters a new markets, potentially Africa and the Middle East, it
will increase its shoe sales revenues and their worldwide market share. Alongside product
development, the company applies the market development intensive growth strategy by
investing in new technologies to penetrate new market segments, such as that of NikeID.
However, the saturation of Nike stores and retailers around the world means that this intensive
strategy has only a supporting role in the company’s growth. The generic competitive strategy of
differentiation helps the company enter new markets, based on product attractiveness. This falls
back on Nike’s value proposition as the more attractive the product is for a customer, the more
successful it’ll be. To conclude this strategy, a strategic financial objective under this intensive
growth strategy is to increase Nike’s profitability by entering new markets in Africa and the
Middle East.

Diversification: The last strategy to put forward is that of Diversification. This is the least
significant in Nike’s intensive strategies for growth. This strategy involves developing new
businesses to achieve growth. This can be through Nike’s mergent with Converse which was
previously explained in Porter’s Five Theory. Additionally, Nike implemented this intensive
strategy in its early years, such as when it introduced apparel and sports equipment to its
product mix. This was a crucial moment for Nike as at that current time period, the brand was
athletic shoes only. This suggests that diversification can support Nike’s generic competitive
strategy of differentiation through new businesses that supply materials for product innovation in
athletic shoes, apparel and equipment business. A strategic financial objective based on this
intensive growth strategy is to improve Nike’s financial risk by entering other industries.
Proposed Strategies
Brands play a big role in the lives of many, “brands are omnipresent in human environment and
it is expected that people react and identify with them” (Milan, 2016). Nike must use its brand
power/image to engage with other brands, like they have done recently. One proposed strategy
that Nike can possibly implement is that of entering a new market such as high-end fashion. As
mentioned by Han in 1991, fashion is a reason for Impulse Buying, “fashion orientated Impulse
Buying” (Han et al, 1991). Therefore, if Nike were to increase its marketing activity, it should in
turn increase their collaborations. If Nike were to also look at engaging with other brands from
different sectors, this will increase their brand awareness, and market share. However, if Nike
were to pursue this idea, they must choose to collaborate with other brands that they have a
positive image. This is because not all brand collaborations work. One example would be that of
Lego and Shell. This is which Lego drew negative reception for being a toy company which
partnered with an oil corporation (Vaughan, 2014) as it was deemed unethical. In the end Lego
decided not to renew its contract with Shell.

To further this, another market, besides high-end fashion, that Nike need to emerge into is that
cricket. Cricket has over one billion fans, and although 90% are from India alone, it is a global
sport. It feels like Nike undermine cricket as a great sport, but matches between India and
Pakistan can command viewing figures in the hundreds of millions. To elaborate upon this point,
Nike and Adidas have been competing in the Chinese market — where there is huge potential
but if Nike could infiltrate the Indian/Pakistan market they could potentially increase their
foothold as the number one sports brand in the world. Nike’s competitor,Adidas, are currently
the number 1 sports brand in India (Adidas-group, 2018). India is an emerging economy and is
tipped to be one of the biggest by 2050 (Hawksworth and Audino, 2017). India is a very
attractive market, from instore shopping to online, by “2025, online spending will be $550 billion”
(Singhi et al, 2017) and that is just online itself. This shows that India are a market Nike must
invest into with even consumption increasing in India, affluent households are increasing,
meaning more is available for spending. “Emerging cities will be the fastest growing, while
consumer spending in India’s biggest cities is increasing at about 12% a year” (Singhi et al,
2017). Therefore, Nike must make the most of the opportunities it has.

India also has the “Indian Premier League” which commands higher average attendances than
Spanish’s La Liga Football (TOTAL SPORTEK, 2016).

With around over 100 million online consumers in India (Statista, 2017), Nike should focus its
attention on social media, consumers like to engage with their brands and can be pivotal in the
decision-making process. Social media is all about “giving out, receiving and exchanging
information” (Smith and Zook,2011). Nike’s Social Media influence will be examined later on in
the report.

Millennials are heavy users of the internet, and “47% of millennials are influenced by social
media in their purchases” (Lobaugh et al, 2015). As mentioned before, online is where Impulse
buying can take place, as all it takes is a few clicks. This shows the usefulness of social media.
As well as the “hero” theme in Nike’s marketing projects, if it could bring this to the social media
side, it has the potential to be compete with Adidas in India.

Nike has an excellent marketing strategy in place and are the pioneers for their sector, every
year they release new innovations and ideas. Recently Nike have even opened a new concept
store in Los Angeles. The new store utilises the Nike app and makes judgements on the
consumer behaviour in the local area using algorithms from the app. Nike is focusing on
“reinventing itself as a data-driven, direct-to-consumer brand” (Gagne, 2018). However if Nike
want to sustain a competitive advantage for the future, they must take a risk and invest in more
unique markets as this would elevate them to the next level beyond their competitors.

Nike has the resources to be the best in its sector for a long time to come, but must continue to
look forward to the new challenges ahead. The recommendations made are in line with what
they can do and have the knowledge and expertise to implement these marketing strategies.