Nike Business Model

Muhammad Firdaus bin Murat

2020952407
 Nike Background
• Nike, Inc., formerly (1964–78) Blue Ribbon Sports, American
sportswear company headquartered in Beaverton, Oregon. It
was founded in 1964 as Blue Ribbon Sports by Bill Bowerman, a
track-and-field coach at the University of Oregon, and his
former student Phil Knight.
• Opened their first retail outlet in 1966 and launched
the Nike brand shoe in 1972. The company was renamed Nike,
Inc., in 1978 and went public two years later. 
• By the early 21st century, Nike had retail outlets and
distributors in more than 170 countries, and its logo a curved
check mark called the “swoosh” was recognized throughout the
world.
 Value Proposition
• Accessibility
- It has acquired numerous footwear and apparel firms since its founding,
including Converse and Hurley International. These actions have enabled it to
expand its product lines, giving consumers more to choose from.
• Innovation
- It maintains the Nike Explore Team Sport Research Lab at its headquarters,
a research facility focused on designing cutting- edge products. It also
operates the Nike Advanced Product Creation Center, focused on technology
incorporation.
• Customization
- It allows customers to personalize various aspects of their shoes, including
sport style, traction, and colors. Socks can also be tailored.
 Target Customer
• Women
- Nike is expanding women's apparel, especially sports bras and
tights.
• Young athletes
- Nike gets young athletes to wear its products through
sponsorships with local leagues, club and federation.
• Runner
- Much of Nike's innovation efforts are focused in the running
category. Nike also sponsors grassroots running events around the
world to recruit new customers.
 Product Differentiation
• Creating new technologies in material and designs that are
continually updated to reflect consumer preferences create
a niche that others try to copy but never can sustain Nike's
pace.
• Creating high-quality sports apparel and shoes to positions
itself in the market as an innovative company.
• Collaborates with high-profile athletes to wear and
promote Nike apparel. 
Cost Structure
The largest expenses for Nike are the costs of sales (mostly inventory and
warehousing), that account for more than $21 billion per year.
Additionally, around $3 billion is for marketing, including advertising and
promotion costs, sponsorship, media, brand events, and retail brand
presentation. Other general and administrative expenses cost over $500
million a year.
 Market Opportunity
• Has been long established and has many branches
throughout country that’s why many people believe in
the brand and the quality of the product.
• Partnership with high-profile athletes that gains more
brand awareness among the customer.
 Market Strategy
• Meaningful story
- Nike’s ads induce emotion in the customer through emotional branding.

• Unique and exciting things

- During the FIFA 2014 World Cup, Nike partnered with Google to create
‘Nike Phenomenal Shot’.

• Original Youtube series

- In 2016, Nike created a Youtube series Margot vs Lily to complement its
marketing campaigns and received over 80,000,000 views.

• Make some fun ads

- Nike makes some of the best ads in the business that people love to share
and talk about. They team with world-class athletes displaying their
extraordinary skills.
 Distribution Strategy
Nike’s distribution channels can be primarily divided into two
categories :

• Selling products to wholesalers in the US and international markets.

This is Nike’s biggest distribution channel.
• Direct-to-consumer (or DTC) sales, which include inline and factory
retail outlets and e-commerce sales through its website. Nike also
distributes its products through e-commerce companies like
Amazon. Online sales through Nike Direct is the company’s fastest-
growing distribution channel.
Customer Support and Service
 Management
MISSION
Mission of the company is to become the best shoe provider, which delivers best
services to its customers.

VISION
The vision of the company is to assist every athlete in developing motivation and
creativity throughout the world.

GOAL & OBJECTIVE

Goal of the company is to utilize the innovative ideas in order to manufacture
quality athlete shoes and attire for the world. There are various objectives of the
company, but the most significant one is to become the leader through different
activities, which exhibit concern for those who are associated with Nike, such as
customers, employees and suppliers throughout the world.
 Management
Nike’s management style is characterized by the approach
towards team management. Top management is composed
of the dedicated executive groups having huge knowledge
and skill. The group is highly oriented towards the team. This
management style has led to the development of faith and
esteem (Heller, 2008). This culture of company extends
throughout organization.
 Revenue Model
Nike is primarily in the business of selling footwear and
apparel for the following categories Running, NIKE
Basketball, the Jordan Brand, Football (Soccer), Training,
and Sportswear. The company also owns the Converse
brand.
 Revenue Model

In the past ten years, Nike grew its revenue at a compounded annual growth
rate of 7.0% from US$19.0 billion in 2010 to US$37.4 billion in 2020.
 Conclusion
Nike aims to bring inspiration and innovation to
every athlete in the world and it considers
everybody to be an athlete. As a high profile,
industry-leading sports company, Nike continually
strives to keep itself at the forefront of product
innovation and design.