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Management Consulting/NIKE SPRINTS AHEAD OF THE COMPETITION, YET HAS A LONG WAY TO RUN

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NIKE SPRINTS AHEAD OF THE COMPETITION,
YET HAS A LONG WAY TO RUN
Nike, Inc.(www.nike.com), located in Beaverton, Oregon, is the number one U.S. athletic footwear
company and one of the most recognized American brands among foreign consumers. This high degree of
recognition is one of the main reasons Nike has been so successful. For the 2001 fiscal year ended May 31,
2001, the company continued to soar, with sales of over $9.5 billion.
Perhaps such success could be attributed to its concept - based advertising campaigns. The company
uses a process that is often called “image transfer”. Nike ads traditionally did not specifically place a
product – or mention the brand name. A mood or atmosphere was created and then the brand is associated
with that mood. “We don’t set out to make ads. The ultimate goal is to make a connection,” states Dan
Weiden, executive of one of Nike’s ad agencies. One ad featured the Beatles and clips of Nike athletes,
Michael Jordan and John McEnroe, juxtaposed with pictures of regular folks also engaged in sports. It was
used to infer that real athletes prefer Nike and that perhaps if the general audience buys the brand they will
play better too. Nike’s unpredictable image-based ads have ranged from shocking, such as its portrayal of
real blood and guts in a “Search and Destroy” campaign usesd during the 1996 Olympic games, to
humorous, such as the first ad used to launch Michael Jordan’s Jordan brand wear. The latter advertising
made the tongue – in – cheek suggestion that Jordan himself had a hand in production by slipping away
from a Bulls’ game at half time to run over to his company and then return in time for the game’s second
half.
In 1998, Nike shifted to a new phase in its marketing strategy. Nike emphasized more of its product
innovation skills than the jockey, edgy attitude that it displayed in previous years. “We recognize that our
ads need to tell consumers that we’re about product innovation and not just athletes and exposure. We need
to prove to consumers that we’re not just slapping a swoosh (the company trademark) on stuff to make a
buck,” said Chris Zimmerman, director of Nike’s U.S. advertising. With the launch of the “I can”
campaign, Nike showed less of the celebrity athletes that previously adorned its marketing output and
showed more product usage than in the previous “Just Do It” campaign. Competitors Reebok and Adidas
recently featured more product-focused ads and were met with a great deal of success. Despite this
rearranged focus, Nike did not back away from innovative marketing.
Nike continues to excel in the advertising arena. Nike was named one of 2001’s best in advertising
by Time magazine for its ad featuring expert dribblers doing trick moves. Time is quoted as saying the ad
conveyed a message that “Sport is music. Sport is dance. Sport is art.” Nike states that this ad was their
most popular ad in 20 years. Another popular ad from 2001 was known as the “Take Me Out to the
Ballgame” ad. This particular ad featured professional athletes from varying sports singing one line of the
song. “Take Me Out to the Ballgame” in their native language.
As the company looks ahead to 2010, at the heart of Nike’s future strategy is the international arena,
which could prove to be the most difficult element for Nike to undertake. There seemed to be a pretty
strong recognition that by 2010, Nike would be larger outside of the U.S. than inside. As of 2003,
international sales comprised one-third of Nike’s business. Nike would like to expand into the soccer and
international sports arena, but to do so, it would have to refocus its marketing and distribution in order to reestablish
itself as an authentic, technically superior sports shoe.
In February 2001, Nike unveiled its latest technological revolution, the Nike Shox, to United
Kingdom consumers. This shoe was in development for 16 years, and Nike hoped it would revolutionize
the sports shoe market in much the same way that NikeAir did when it was launched in the UK in the 1980s.
One reporter in London states that his pair of Nike Shox makes him feel like he is “walking on cloud nine
with a spring in (his) step.” The shoes are reported to provide support, comfort, shock absorbency, and style
all at the same time. The Nike Shox line of athletic shoes is shaping up to be very popular in both the U.S.
and the U.K.
Most recently, Nike bought out many of its worldwide distribution centers in order to achieve greater
control of its operations. In the future, Nike would like to build up its presence in the key markets of China,
Germany, Mexico, and Japan. Nike will focus its advertising on sports, and will feature sports that are of a
particular interest in specific regions. Nike realizes that while it is ahead of competition, it still has a long,
long way to run.
Questions:
1. Should Nike switch from a focus on celebrities to a focus on its products in its advertising?
Discuss the role of marketing research in helping Nike management make this decision. What
kind of research should be undertaken /
2. How would you describe the buying behavior of consumers with respect to athletic footwear?
3. What is the management decision problem facing Nike as it attempts to retain its leadership
position?
4. Define the marketing research problem facing Nike, given the management decision problem
you have identified.
5. Develop two suitable research questions and formulate two hypotheses for each.
6. How can the Internet be used to help Nike in conducting marketing research, and in marketing
its products?

Answer
Q
1. Should Nike switch from a focus on celebrities to afocus on its products in its advertising? Discuss the roleof marketing research in helping Nike management makethis decision. What kind of research should beundertaken?
MR can help NIKE understand

The composition of the market and determine the best way to segment themarket.

Decision making process of the consumers.

To what extent are consumers affected by the brand image and how importantare celebrities in fostering the image.

To what extent are consumers influenced by product characteristics.

Who are the consumers that that are concerned about product characteristics.

Exploratory research can be done to gain a basic understanding of such issuesfollowed by descriptive research in form of a single-sectional survey.

Q
2. How would you describe the buying behavior of consumerswith respect to athletic footwear ?

There appear to be 2 segments

One concerned with the image of the brand of shoes

Other that focus on product characteristics.

Image segment is more influenced by celebrity endorsement .

Other segment considers product characteristics.

Q
3. What is the management decision problem facing Nikeas it attempts to retain its leadership position
?

What Nike should doto retain its Leadershipposition in the USathletic footwearmarket?


Q
4. Define the marketing research problem facing Nike ,given the management decision problem you haveidentified
.

Determine the role that productcharacteristics, image, and otherfactors play in influential consumerschoice of shoe brand

W hat is the market share of NIKEand its competitors.

What are the demographic andpsychographic characteristics of consumers who are concerned withthe image.

W hat are the demographic andpsychographic characteristics of consumers who are concerned withthe product characteristics.

Q
5. Develop two suitable research
Questions andformulate two hypotheses for each?

What is the lifestyle of consumers who are image sensitive.H
o
-consumers who are imagesensitive are young and activeH
1
-consumers who purchase athleticfootwear are not price sensitive.

W hat I the lifestyle of typical NIKEconsumer.H
o
-typical NIKE consumer is youngan independentH
1
-typical NIKE consumer watchessport on television.
Q
6. How can the Internet be used to help Nike in conductingmarketing research and in marketing its products

Internet survey can be doneasking the recommendationfrom the consumers

The product innovation idea,new strategies, any demerit of the existing product can beasked through E-mails, websites, Questionnaire .

Through internet theresponses could be much fasterand the rate of error can bemuch lesser

Users can experiment with hundreds of possible color combinations for their shoes, and also lets them add personalidentification marks on their shoes. Using this data input Nikecan personalize and customize shoes for its consumers.
A small questionnaire could be asked to fill after each purchaseon web.
Attractive website designing could also be helpful, with thehelp of some web designers.  

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Leo Lingham

Expertise

management consulting process, management consulting career, management development, human resource planning and development, strategic planning in human resources, marketing, careers in management, product management etc

Experience

18 years working managerial experience covering business planning, strategic planning, corporate planning, management service, organization development, marketing, sales management etc

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24 years in management consulting which includes business planning, strategic planning, marketing , product management,
human resource management, management training, business coaching,
counseling etc

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PRINCIPAL -- BESTBUSICON Pty Ltd

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MASTERS IN SCIENCE

MASTERS IN BUSINESS ADMINSTRATION

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