What are pros and cons and risks associated withnikes

Assignment Help Marketing Management

Reference no: EM131300957

Do complete analysis of the case study on following basis:
1. identify main problem
2. analysis & interpretation
3. solution

Marketing Management Case Study
Marketing Excellence>>Nike

Nike hit the ground runningin 1962. Originally known as Blue Ribbon Sports,the company focused on providing high-quality runningshoes designed for athletes by athletes. Founder PhilipKnight believed high-tech shoes for runners could be manufacturedat competitive prices if imported from abroad. Nike'scommitment to designing innovative footwear for serious athleteshelped it build a cult following among U.S. consumers.

Nike believed in a "pyramid of influence" in which thepreferences of a small percentage of top athletes influencedthe product and brand choices of others. From the start itsmarketing campaigns featured accomplished athletes.Runner Steve Prefontaine, the first spokesperson, had an irreverentattitude that matched the company's spirit.

In 1985, Nike signed up then-rookie guard MichaelJordan as a spokesperson. Jordan was still an up-andcomer,but he personified superior performance. Nike'sbet paid off-the Air Jordan line of basketball shoes flewoff the shelves and revenues hit over $100 million in thefirst year alone. As one reporter stated, "Few marketershave so reliably been able to identify and sign athleteswho transcend their sports to such great effect."

In 1988, Nike aired the first ads in its $20 million "Just DoIt" ad campaign. The campaign, which ultimately featured 12TV spots in all, subtly challenged a generation of athletic enthusiaststo chase their goals. It was a natural manifestationof Nike's attitude of self-empowerment through sports.

As Nike began expanding overseas to Europe, itfound that its U.S.-style ads were seen as too aggressive.Nike realized it had to "authenticate" its brand in Europe,so it focused on soccer (known as football outside theUnited States) and became active as a sponsor of youthleagues, local clubs, and national teams. However, forNike to build authenticity among the soccer audience,consumers had to see professional athletes using itsproduct, especially athletes who won. Nike's big breakcame in 1994 when the Brazilian team (the only nationalteam for which Nike had any real sponsorship) won theWorld Cup. That victory transformed Nike's image inEurope from a sneaker company into a brand that representedemotion, allegiance, and identification. It alsohelped launch Nike into other international markets overthe next decade, and by 2003, overseas revenues surpassedU.S. revenues for the first time.

In 2007, Nike acquired Umbro, a British maker ofsoccer-related footwear, apparel, and equipment. The acquisitionhelped boost Nike's presence in soccer as thecompany became the sole supplier of uniforms to over100 professional soccer teams around the world.

Nike focused its efforts on international markets, especiallyChina, during the 2008 Summer Olympics inBeijing. Although Nike's rival, Adidas, was the officialsponsor of the Olympic Games, Nike received specialpermission from the International Olympic Committee torun Nike ads featuring Olympic athletes during the games.

In addition, Nike sponsored several teams and athletes,including most of the Chinese teams and 11 of the 12high-profile members on the United States men's basketballteams. That year, sales in the Asian region grew15 percent to $3.3 billion and Nike's international divisionsgrew to 53 percent of the company's revenue. Some believedNike's marketing strategy during the Olympics wasmore effective than Adidas'sOlympic sponsorship.In addition to expanding the brand overseas, Nikesuccessfully entered new athletic footwear, apparel, andequipment product categories by using endorsementsfrom high-profile athletes and consumer outreach programs.

The Nike Golf brand, endorsed by Tiger Woods,has changed the way professional golfers dress. Tiger'spowerful influence on the game and his Nike emblazonedstyle have turned the greens at the majors into "golf'sfashion runway." In addition, Nike has used the superstarto help build its relationship with consumers. In 2009, itlaunched a Tiger Web Talkback session at nikegolf.com,where fans could ask questions and hear Tiger talk aboutgolf. The session was part of a nationwide Nike Golf consumerexperience day, which included equipment demos,long-drive contests, and in-store specials.

In tennis, Nike has aligned with Maria Sharapova,Roger Federer, and Rafael Nadal to push its line of tennisclothing and gear. Some called the famous 2008Wimbledon match between Roger Federer and RafaelNadal-both dressed in swooshes from head to toe-afive-hour Nike commercial valued at $10.6 million.

Nike teamed up with seven-time Tour de France championLance Armstrong not only to sell Nike products but alsoto help Armstrong's LIVESTRONG campaign. Nike designed,manufactured, and sold over 70 million yellow LIVESTRONGbracelets, netting $80 million for the Lance ArmstrongFoundation. It also featured Armstrong's message of survival,willpower, and giving in a series of Nike commercials.

To promote its line of basketball shoes and apparel, Nikecontinues to feature basketball superstars such as KobeBryant and LeBron James. In addition, it formed a partnershipwith Foot Locker to create a new chain of stores, Houseof Hoops by Foot Locker, which offers only basketball productsby Nike brands such as Converse and Jordan.

Recently, Nike's lead in the running category hasgrown to 60 percent market share thanks to its exclusivepartnership with Apple. Nike_ (Plus) technology includesa sensor that runners put into their running shoes and areceiver, which fits into an iPod, iTouch, or iPhone. Whenthe athlete goes for a run or hits the gym, the receivercaptures his or her mileage, calories burned, and paceand stores it until the information is downloaded. Nike_ isnow considered the world's largest running club.

In 2008 and 2009, Nike_ hosted the Human Race10K, the largest and only global virtual race in the world.The event, designed to celebrate running, drew 780,000participants in 2008 and surpassed that number in 2009.To participate, runners register online, gear up withNike_ technology, and hit the road on race day, runningany 10K route they choose at any time during the day.Once the data is downloaded from the Nike_ receiver,each runner's official time is posted and can be comparedto the times of runners from around the world.

Like many companies, Nike is trying to make its companyand products more eco-friendly. However, unlikemany companies, Nike does not promote its efforts. Onebrand consultant explained, "Nike has always been aboutwinning. How is sustainability relevant to its brand?" Nikeexecutives agree that promoting an eco-friendly messagewould distract from its slick high-tech image, so effortslike recycling old shoes into new shoes are kept quiet.

Today, Nike dominates the athletic footwear marketwith a 31 percent market share globally and a 50 percentmarket share in the United States. Swooshesabound on everything from wristwatches to skateboardsto swimming caps. The firm's long-term strategy focuseson basketball, running, football, women's fitness, men'straining, and sports culture. As a result of its successfulexpansion across geographic markets and product categories,Nike is the top athletic apparel and footwearmanufacturer in the world, with corporate fiscal 2009revenues exceeding $19 billion.

Questions
1. What are the pros, cons, and risks associated withNike's core marketing strategy?

2. If you were Adidas, how would you compete with Nike?

Sources: Justin Ewers and Tim Smart,"A Designer Swooshes In,"U.S. News & World Report, January 26,2004, p. 12; "Corporate Media Executive of the Year," Delaney Report, January 12, 2004, p. 1; BarbaraLippert, "Game Changers: Inside the Three Greatest Ad Campaigns of the Past Three Decades,"Adweek,November 17, 2008; "10 Top Nontraditional Campaigns," Advertising Age, December 22, 2003, p. 24;Chris Zook and James Allen, "Growth Outside the Core," Harvard Business Review, December 2003,p. 66; Jeremy Mullman, "NIKE; What Slowdown? Swoosh Rides Games to New High," Advertising Age,October 20, 2008, p. 34; Allison Kaplan, "Look Just Like Tiger (until you swing)," America's IntelligenceWire, August 9, 2009; Reena Jana and Burt Helm, "Nike Goes Green, Very Quietly," BusinessWeek,June 22, 2009.

Reference no: EM131300957

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