Marketing Analysis For Nike Essay Research Paper

Marketing Analysis For Nike Essay, Research Paper

Nike, a Brief Historical Perspective

The Nike Corporation truly got its start in 1957 when Bill Bowerman and Phil Knight met at the University of Oregon. Bowerman was the proficient pioneer and Knight the drive force behind the selling of an wholly new sort of athletic shoe. In 1962, with the aid of the Onitsuka Tiger Shoe Company in Japan, Knight and Bowerman began the procedure of marketing athletic places under the Nike name.

The initial selling attempt was simple in its range. Knight sold the company? s shoes out of the bole of his auto. The initial market was collegial, distance smugglers, who Knight accessed by driving around the state from university to university. From these low beginnings Nike has developed into the dominant force in athletic dress on a global range.

There are several grounds for the success Nike has enjoyed over its brief corporate history. First and foremost is the company? s dedication to proficient invention. The first of these inventions was Bowerman? s design for the waffle-soled running shoe. This simple design became a favourite of competitory smugglers, Nike? s initial mark market. In 1977 Frank Rudy, a NASA applied scientist, brought his design for an athletic shoe with an air innersole to Nike. The thought was that the tight air would relieve much of the daze encountered as jocks trained. Subsequent polishs and aggressive selling of the Nike Air, line of places to the general public proved tremendously successful. A farther design polish was introduced in 1994. The multi-chambered, multi-volume air sole was developed to counterbalance for different burden degrees associated with different countries of the pes. These technological inventions every bit good as new stuff and fabrication techniques have allowed Nike to remain at the top of the athletic shoe market.

From a selling position Nike has been every bit advanced. The initial selling of its places to competitory distance smugglers laid the foundation for Nike? s credence by the general populace as a maker of quality athletic dress. The spokespeople Nike has gotten to back their merchandises has had an tremendous consequence on their ability to efficaciously market to the multitudes. Michael Jordan? s association with Nike is the most obvious illustration of how a famous person indorsement carries with it positive market consequences. Nike has besides signed assorted jocks from other athleticss to back their merchandises. Tiger Woods, Jerry Rice, Andre Agassi, and Jackie Joyner-Kersee are but a few of the well-known jocks that Nike presently has under contract for the intent of merchandise indorsement.

Possibly the individual greatest country of possible growing for Nike remainders in the selling of its non-footwear related dress. The vesture line has quickly expanded from running trunkss and shirts into good over 200 different manners. The mastermind in this attack is related to Nike? s ability to make a broader market through the selling of what was one time a non-traditional merchandise line for athletic shoe companies. By concentrating on its dress line Nike has enabled itself to ramify out into a market that is non needfully athleticss related therefore broadening its market entree.

As stated in the one-year study Nike? s corporate mission statement reads, ? Through the acceptance of sustainable concern patterns Nike is committed to procuring intergenerational quality of life, reconstructing the environment, and increasing value for our clients, stockholders, and concern spouses? . The individual best manner to acquire a good expression at any company? s overall relevancy in the market is through a SWOT analysis. By looking at Nike? s strengths, failings, chances, and menaces, a clearer image can be do of where it has come from and potentially where it is headed. The balance of this instance analysis will be to sketch this SWOT analysis.

Historical Timeline for Nike

In order to understand how Nike got to be the successful athletic dress company that it is, a brief overview of some of the important events in its history and that of its co-founders Phil Knight and Bill Bowerman is useful.1

1957- Bill Bowerman and Phil Knight meet at the University of Oregon

1962- Knight writes a paper discoursing Germany & # 8217 ; s domination of the U.S. Athletic Footwear Industry. After Knight graduated he traveled to Japan, where Germany imported their places from and told people he represented & # 8220 ; Blue Ribbon Sports & # 8221 ; therefore was the birth of Nike Co.

1966- The company & # 8217 ; s first retail shop is unfastened

1968- The Cortez running shoe becomes their first large hit

1971- Carolyn Davidson, a pupil, designs the Swoosh symbol for a fee of $ 35.

1972- Nike is launched at the U.S. Olympic tests

1974- The Waffle Trainer becomes America & # 8217 ; s best selling developing shoe. Nike besides opens their first American mill in Exeter, NH

1978- Tennis great John McEnroe marks with company, now officially Nike, Inc.

1979- Nike-Air padding is introduced, the first dress line appears, Nike holds 50 % of the U.S. market, Nike is # 1 in running places & # 8230 ;

1980- Nike offers 3 million common stock portions to the populace. Revenues top $ 269 million

1981- Nike joins with Nissho Iwai to organize Nike-Japan, revenues reach $ 457.7 million

1982- The dress line grows to 200 manners and $ 70 million

1984- At the summer Olympics 58 Nike supported jocks take place 65 decorations, and international gross revenues of Nike merchandises explode & # 8230 ; Overall gross reaches $ 919.8 million

1985- The birth of Michael Jordan, he endorses his first set of Air Jordan & # 8217 ; s & # 8230 ; A long profitable partnership has begun for Nike and MJ

1986- Nike goes over $ 1 billion

1988- Nike acquires Cole-Haan. The Just Make It run is launched.

1990- Nike World Campus opens in Beaverton, Oregon. And the first NikeTown clears in Portland, Ore.

1991- Nike is the first universe company to exceed the 3 billion dollar grade in entire gross. MJ leads the Bulls to their first National Championships

1992- International grosss increase 32 % . NikeTown Chicago clears

1993- The Nike Environmental Action squad signifiers. Revenues reach $ 39.9 billion in Nike & # 8217 ; s 6th consecutive record twelvemonth

1994- Nike Launches P.L.A.Y ( Participate in the Lifes of America & # 8217 ; s Youth ) . Nike acquires Canstar Sports Inc ( Bauer )

1995- Nike studies $ 4.8 billion in grosss. Zoom-Air footwear Usshers in a new epoch for Nike-Air padding: sleek, low-profile and really, really fast.

1996- Brazil squads with Nike for the World Cup & # 8216 ; 98. NikeTown New York opens. Nike launches In-Line skates and all the necessary equipment and accesories.

1997- Nike Asia takes off increasing grosss by 500 million. Two major Customer Service centres open one in Japan, the other in Korea. Industry analysts predict Nike grosss will surge by $ 9 billion.

Nike? s Strengths

There are several of import factors that help to separate Nike from its competition in the athletic footwear and dress industries. None are more of import than Nike? s accent on technological inventions in both merchandise design and fabrication. Nike has maintained its lead in this critical field, through a committedness to invention and changeless research in concurrence with some of the universe? s greatest jocks. The procedure of invention begins with the type of people Nike employs. Nike? s interior decorators have a solid background in technology which gives them and advantage over other interior decorators who may stress manner over functional public presentation. The interior decorators are driven to be the best in the concern. This devotedness allows them the freedom to research extremist design that other athletic dress companies like Reebok, Fila or Adidas seem to overlook in favour of stylish voguish merchandises. A good illustration of this is the instance of the original Air insole design. In 1977 Frank Rudy, a NASA applied scientist had an thought to utilize air in athletic places to cut down the impact. Nike was the lone company that saw the wisdom of Rudy & # 8217 ; s design thought, and brought the construct to the market. The thought was radical in the athletic footwear market place and Nike reaped the wages of its forward thought. The engineering itself sophisticated, dwelling of small bags filled with pressurized gases that responded to the motions of the jock? s pess. When the jock moved the air bags responded to the motion, buffering the jock and absorbing a great trade of the daze that had antecedently been transmitted through the wearer? s leg. The net consequences were that jocks could develop longer in more comfort, and cut down hurt at the same clip. In 1994, Nike introduced a new version of its air innersole to the market. The multi-chamber, multi-volume air-sole unit improved on the original air innersole in a large manner. Nike once more beat the competition to the clout by presenting technological betterments that were designed with the jock in head. The design for this new shoe involved a system of pressurized airbags that responded independently to the motion of the jock. Wherever the pes took the hardest blow, the units were inflated to a low volume and wheresoever more stableness was needed, the air bags were inflated to higher volumes. The consequence of this invention was that the shoe was able to be customized to a certain extent to the single demands of the jock. This is another illustration of where Nike has taken its strength in technology and applied it to the design of a wholly new merchandise. The strength of this pattern lies in Nike? s ability to orient the merchandises it offers to the public presentation demands of its client base. Nike & # 8217 ; s research and development installation in Beaverton, Oregon is polar in the continued development of inventions in athletic footwear. The company has invested immense sums of money into R & A ; D and in concurrence with the design applied scientists Nike spends a great trade of clip proving new merchandise thoughts on jocks from many subjects. This existent universe proving helps to guarantee that the design for the shoe or athletic dress will present the benefits in existent usage. This attending to detail aid breed as greater sense of assurance on the portion of the mean consumer because Nike realizes that most of their market is purchasing their places for intents other than sports.

The attachment to strict production quality criterions is another of Nike? s strengths. This is a direct response to consumer demands that quality of the merchandises be sufficiently high to counterbalance for the higher retail monetary values demanded. Nike? s superior client reactivity has positioned them at the top of the market. Nike has ever guaranteed its merchandises to be free of defects from the fabrication procedure due to hapless stuffs and workmanship. The company encourages retail merchants to take faulty returns so to extinguish any incommodiousness to the consumer. Even if an single shop policy restricts returns the consumer can direct the point to the nearest corporate office for replacing if there is any defect either in stuff or production. These patterns have helped Nike construct a trust with the consumer and harvest the benefits of in the signifier of increasing gross revenues and corporate net income on a annual footing.

International selling of the Nike merchandise line has proved to be an of all time progressively of import portion of the corporate success of Nike. Around the universe Nike has topographic point a greater accent on foreign markets as an obvious solution to an already saturated domestic market. This accent has proven successful sing the significant and turning per centum that foreign markets occupy in Nike? s gross composing ( see gross composition chart ) . The aggressive international selling scheme has benefited Nike in ways other than gross revenues and grosss. Their presence in foreign states with fabrication and distribution installations provides logistical benefits when compared with the remainder of the industry. In order to cover with some of the bad imperativeness that Nike has received sing its foreign labour patterns the company has taken stairss to cover with what some see as the unjust intervention of their labour in foreign fabrication installations. Improved rewards, educational chances, and a more sensitive attack to local governmental influences have improved what could hold been a public dealingss catastrophe. This is another good illustration of how Nike shapes its scheme to cover most efficaciously with a altering environment.

Another strength for Nike is their big internal construction and fiscal strength. Nike has six corporate installations in three different provinces and had nine billion dollars in gross revenues last twelvemonth. Because of their big size and the use of both economic systems of graduated table and diversified labour suppl

Internet Explorers Nike has been able to maintain production cost down while keeping the overall quality of the merchandise line. This fact coupled with the comparatively high retail monetary value for most of their merchandise line produces a formula for fiscal stableness. Nike’s has established a market portion of 43 % in the athletic dress industry and this allows them the freedom to experiment with undertakings that are riskier than most of their rivals can take on. This ability to presume hazard has paid fine-looking benefits in the instance of some of the non-traditional merchandise lines Nike has offered such as their hike boots and vesture lines. Nike place as an industry leader allows them to exercise purchase on their providers therefore earning favourable natural stuff costs and higher net incomes.

Nike? s Failings

One of Nike? s chief failings would look to be that they are seeking to make excessively much. Nike has made a conjunct attempt to market to every athletics that is being played anyplace on Earth. The hazard here is that by seeking to be all things for all people Nike may non be able to retain its laterality in any one specific country. Particularly relevant to this point is that by distributing R & A ; D and design resources excessively thin Nike could lose clients that are looking for advanced design constructs in the more popular athletic places. It seems that as a consequence of this distribution of corporate resources Nike has been offering fewer new theoretical accounts of places with fewer technological inventions. Nike, alternatively, is conveying different manners of the same shoe in different colour strategies. This pattern may turn out to drive current clients to other companies that offer the specific sport-related characteristics they want. Continuing this tendency toward distinction by manner alternatively of functional characteristics may function to develop coverage spreads in critical market niches that Nike one time dominated. The competition for Nike is certainly watching at that place every move and waiting for an chance to catch market portion from wherever possible.

Another possible failing for Nike might be in its pick of jocks as spokespeople. With the retirement of Michael Jordan, Nike is left for the first clip in old ages without a primary interpreter. Nike has moved to ease this passage by the sign language of Tiger Woods but no 1 can replace Jordan? s mass entreaty and influence. Nike? s chief push these yearss, at least domestically, seems to be related to professional hoops. In visible radiation of the recent labour work stoppage and the many studies of negative behaviour on the portion of some NBA athletes this narrow accent may set Nike in the place of being tarred with the same coppice as the jocks who wear their places.

Possibly the greatest possible failing Nike faces is related to the recent negative promotion it has received sing its labour patterns in 3rd universe states. Reports of opprobrious labour patterns in its abroad fabrication installations, has left Nike with a terrible public dealingss crisis. It was reported that Nike forced labourers to work in insecure mills for sub-standard rewards. Further allegations stated that supervisors in these production installations had on a regular basis subjected workers, specifically immature female workers, to both physical and sexual maltreatment. These allegations whether true or non put Nike in a place of being viewed as a corporate giant that does non care for its workers. The populace? s perceptual experience of these allegations could take to a recoil felt by Nike in the from of reduced gross revenues. Even though Nike moved rapidly to look into these allegations it is hard to un-ring the bell. Without continual and vigorous attempts to turn to these jobs Nike runs the hazard of estranging the public therefore impacting their ultimate purchasing forms.

Nike? s Opportunities

Nike? s chief chance exists in its ability to go on to broaden its merchandise line into feasible countries of growing. It seems that the vesture line offers the greatest potency for growing in the hereafter. Simply go oning to stress athletic places would merely restrict Nike? s ability to increase the size and range of the market that it can sell to. Expanding the types and manners of vesture will assist to set up Nike as a participant in a related but non dependent market when compared to the athletic based merchandise line presently offered.

Another chance for Nike exists because of their high degree of trade name trueness. The Nike name and distinctive? whoosh? logo possess cosmopolitan reccognizability. The chance to capitalise on this name acknowledgment in relation to new merchandises or expanded bing merchandise lines gives Nike a distinguishable advantage for growing chances. Foreign market growing is particularly relevant in footings of name acknowledgment. Expansion into new states will be made slightly easier because possible consumers already are familiar with the Nike name. Since non-domestic markets have late provided the largest per centum growing for Nike this advantage should turn out particularly utile ( see per centum gross composing chart ) .

Nike? s size besides represents chances for continued success in the hereafter. Because of their huge international fabrication base Nike enjoys an advantage related to logistical every bit good as production based cost construction. Nike can distribute its fixed costs over a larger internal construction and combined with their economic systems of graduated table in production and design can accomplish cost nest eggs over their rivals. Nike besides employs advanced production techniques that allow them to fabricate high quality merchandises at low costs. By using their production expertness to other countries Nike can derive the same cost construction benefits.

Possibly the greatest chance for Nike remainders in its entreaty to the younger coevals of athletic dress buyer. Nike has strategically positioned itself toward this market. The fact that more immature consumers are buying athletic dress for themselves allows Nike to efficaciously aim this market because of their existing place. While the younger market will play an of import function in Nike? s hereafter success older coevalss provide a good chance for growing every bit good. The increasing apprehension that single wellness is an of import factor in people? s lives should show significant growing chance for Nike in the non-teen market.

Nike? s Menaces

The chief menace that Nike faces is internal in nature. An attitude of complacence with regard to their success and growing could derail Nike every bit rapidly as the absence of that attitude propelled them to the top of the athletic dress market. As the old expression goes its easier to scale the mountain than it is to remain on top. Without continual attempt and diligence Nike runs the hazard of losing what has worked so difficult to accomplish. As an industry leader, with over 40 % of the market, Nike makes a good mark for all of its rivals. Without a continued accent on invention and aggressive selling Nike could lose the border which has enabled their colossal growing in such a short period of clip.

Another internally based menace for Nike is that it has to this point in clip sufficiently diversified its corporate construction. Without variegation Nike could confront a displacement in comer penchants that they are ill-equipped to manage. The new non-traditional athleticss as represented in the X-games are a premier illustration of this. Activities such as in-line skating, skateboarding, snowboarding, and free-style BMX biking are deriving popularity with the 10-18 twelvemonth old market. To this point in clip, other than in-line skating, Nike has yet to turn to this market in the same mode as many of their rivals.

From a fiscal position Nike has seemed to be financing more of its operations recently with long-run debt. In the old ages 1989-1996 Nike was comparatively debt free. Over the last two old ages the sum of long term debt has risen to about 400 million dollars ( see long-run debt chart ) . Grosss and net income have non risen in response to this greater accretion of debt and Nike might confront some serious jobs in the hereafter if this tendency continues. In 1994 the ratio of long-run debt to net income was 1.74 % , by 1998 that ratio had jumped to 94.94 % .

Some of Nike? s rivals such as Tommy Hilfiger, Polo, Nautica, and Liz Claiborne pose a more serious market related menace to Nike. The athletic dress that they manufacture, is of similar quality to that of Nike and the name trade name entreaty has a higher manner related position attached to it.

An country where Nike has had traditional strength that of famous person indorsement poses a serious menace if stairss are non taken to rectify what is going a bad state of affairs. When Michael Jordan was the primary interpreter for Nike there was small concern sing bad promotion related to his actions. Since his retirement from the NBA Nike has found itself with a big group of jocks with questionable behaviour forms. Peoples like Latrelle Sprewell, Dennis Rodman, and Roberto Aolomar are but a few of the jocks that endorse Nike merchandises. The personal and professional lives of these jocks project a negative image on the type of people Nike associates its merchandise line with.

Recommendations for Nike

The first recommendation I would hold for Nike is to set more attempt into cleaning up its corporate image. With the negative promotion environing the labour contentions in 3rd universe states and the black behaviour of some their famous person subscribers Nike needs to alter the populace? s perceptual experience of it as a monolithic hardhearted corporate giant. The current stigma that Nike has acquired based on its foreign production installations is the first topographic point to get down. More comprehensive control mechanisms need to be instituted to do certain that the condemnable behaviour on the portion of some of its supervisors does non happen in the hereafter. Further higher rewards and better working conditions must be instituted and after execution Nike should publicize these alterations in whatever manner possible. From a strictly matter-of-fact point of view it won? T aid if Nike makes the needed alterations if no 1 else knows about them.

Another recommendation is that Nike should spread out on its PLAY ( take part in the lives of young person ) , plan. This type of community outreach plan develops good will and engenders support from the purchasing populace. The image that Nike should seek and project is one of a corporation with a scruples. By stressing this type of plan and de-emphasising the famous person interpreter method of developing name acknowledgment Nike will insulate itself from the negative stereotype of merely being concerned with ace jocks. A farther benefit of this scheme would be that the parents of kids would be more likely to buy merchandises from a company that doesn? t seem self-absorbed and focussed on merely the bottom line. A big section of the purchasing public wants the merchandises that they purchase to be manufactured by corporations with a committedness to community and the values that help to enrich the lives of the young person of the universe.

The overall selling scheme of Nike is where I would next propose alteration demands to be made. The mean consumer is less likely to place with the ace jock today than in past coevalss. Professional athleticss is filled with jocks that gaining many 1000000s of dollars per twelvemonth for an activity that most people view as a interest. The general perceptual experience of a mill worker doing 30 thousand dollars a twelvemonth is that Nike has to bear down higher monetary values for its merchandises because they are paying so much to their famous person subscribers. Many people do non see the demand to pay $ 150 for a brace of hoops places merely so their kids can have on the same trade name as a professional star. Nike should set more accent on selling to the mean consumer. Emphasis on quality and invention, constructs that served Nike good in the yesteryear hold given manner to manner and trade name entreaty. What Nike needs to make is pare their roll of corporate indorsement contracts and restrict the people they sign to the types of jocks that exemplify the values and ideals shared by the bulk of the consumers they are seeking to make. Unfortunately for every Tiger Woods Nike besides has ten Latrell Sprewells.

A greater focal point on quality is possibly most of import for Nike? s sustained growing in the hereafter. In general people do non mind paying more for a merchandise if they are convinced that they are acquiring quality in return. In recent old ages it seems that Nike has merely taken the same basic theoretical accounts of places and other merchandises, redesigned the colour strategy, and increased the monetary value. This scheme worked chiefly because of the tremendous trade name trueness that Nike enjoyed compared to its rivals. This technique nevertheless is non traveling to work everlastingly as consumers switch to other athletic shoe makers offering the type of inventions that made Nike the dominant name in the concern.