Nike Takes a hit

During the normally boring media period of Thanksgiving break, Nike's biggest endorsee, Tiger Woods, faced intense media attention. Tiger Woods was involved in a car accident that took place only a few streets away from his house at 2:00 AM in the morning. The accident provoked controversy considering there arent many practical reasons why I am man worth more than a billion dollars would be driving this late at night. Tiger offered a statement that weekend refuting any "rumors" being created by the media. Contrary to Tiger's statement, the truth was un-veiled when three women came out to admit they had been sexually involved with Tiger Woods. Tiger Woods offered a statement with his sincere apoligies yet the truth could not be undone. Nike displayed their support for Tiger when they offered this statement: "Tiger and his family have Nike's full support. We respect Tiger's request for privacy and our thoughts are with Tiger and his family at this time." After all, Tiger Woods isn't the only sports giant to be the target of negative media attention. Kobe Bryant, Michael Vick, and Michael Phelps are a few names that come to mind.

More Than Just Profits

Now that Mark Parker has settled in as the head of the Nike operations, he plans to make a difference in more than just their market share. One of Nike's more well known public contributions was established before Mark Parker came to office. The Livestrong cancer charity is heavily endorsed and supported by Nike. Mark Parker has urged to Nike to continue their social responsibility. Parker demonstrated it wasn't just took with the launch of the new Nike RED in thirteen countries around the world. Nike has created Nike RED, which are red laces in order to support the African Aids Charity. 100 percent of the Nike RED profits are donated to the Global fund.

More Than Just Products

Nike has clearly established a name for itself when it comes to to sports apparel. Now, Nike wants to offer their customers more then that. Rather than just offer Nike products and send their consumers on their way, Nike has the opportunity to become more involved in the lifestyle of their customers. By creating online chat communities or Nike sponsored sports competition, it creates a buzz for the brand name which, in turn, can increase Nike's product sales.

Nike's global director for brand connections, Stefan Olander, Explains:

"Much of the company's future advertising spending will take the form of services for consumers, like workout advice, online communities and local sports competitions. We want to find a way to enhance the experience and services, rather than looking for a way to interrupt people from getting to where they want to go. How can we provide a service that the consumer goes, 'Wow, you really made this easier for me'?"

Supply Chain management

Supply Chain management is a system that coordinates and integrates all of the activities performed by supply chain members into a seamless process, from the source to the point of consumption, resulting in enhanced customer and economic value. Nike has made plans to invest 225 million dollars to create a more efficient supply chain. Unfortunately, part of there plans involve a 4 percent reduction in their global workforce of 35,000. Overall, the company will benefit long-term from their restructure of the supply chain. Creating more efficient operations reduces product costs so the consumers will benefit as well.

Marketing Channels

A marketing channel is a set of interdependent organizations that ease the transfer of ownerships as products move from producer to business user or consumer. In Nike's case, mostly the consumer. Most large companies have a marketing channel but each has different channel members. Nike has made an effort to cut out as many intermediaries as possible so they can save costs for both the company and the consumer. One source of cutting out intermediaries is direct channel, which is when the producers sell directly to consumers. telemarketing, mail-order and catalog shopping are all forms of direct marketing activities but Nike's most effective form of direct channel is electronic retailing. Electronic retailing allows the customers to save both time and money on their purchases.

New Products

One of Nike's new products currently in development is the Personal Sports Audio (PSA) Play 120. The MP3 is at an all time high in sales and Nike saw this as a golden opportunity for a new product. The device was designed to be compatibale, portable, and convenient to its users. Nike teamed up with the digital audio industry leader: S3 to assure that these qualities will be implemented. The product consists of three parts: the headphones, the portable player, and a remote to control the player. The portable player is designed to be attached to the arm so it will not interfere while the user is exersising. The remote is a hand held device that allows you to change the music or sports channel without ever having to touch the portable device itself. Because there are so many MP3 players already in the market, Nike designed the PSA Play 120 in order to fit the unique needs of an athlete, and not just the average consumer.

Product development

Developing new products is vital in any goods oriented company. No matter how successful a product may be, it is inevitable that the product's life cycle will reach an end at some point. Therefore, the pressure is on the company to create new products that will appeal to their target markets. Nike has adapted to the new digital world and has "Essentially, Nike has stuck a wire in sports," said Clare Hamill, Vice President of Nike Equipment. Nike's plan is to release five new tech-savvy products by the Holiday season.

Personal Selling

Personal Selling is direct communication between a sales representative and one or more prospective buyers. Personal selling is considered to be more efficient than other forms of promotion because the sales people target qualified prospects which cuts down on wasted time with unlikely buyers. Nike has found it effective to send sales representatives to retail stores in order to prompt the employees on what they are really selling. Consumers are turned off when employees aren't knowledgeable about their products or services.

Sales Promotion

Sales Promotion is one of the four components in the Promotional Mix. The other three components are advertising, personal selling, and public relations. The Sales Promotion aspect gives the consumers a incentive to purchase a good or service immediately. Some sales promotions include coupons and rebates, premiums, loyalty marketing programs, contests and sweepstakes, sampling, P-O-P, and the Internet. Nike has incorporated a variety of these techniques to give their consumers that much more of a reason to buy their products. One of Nike's more recent sales promotion was the AF1 playoffs. The purpose was to promote their new NikeID website which allows you to customize your Nike products. The contest was set up so that anyone could enter by just visiting the NikeID website and creating a shoe design. The top five shoe designs, voted by the contestants themselves, will receive an exclusive pair of Nike Air Force 1's that aren't sold to the public.

Public Relations

Public Relations main purpose in most company's is to gain public understanding an acceptance. A large of part of public relations is publicity; the effort to capture media attention. What could offer more of an opportunity to increase global awareness than the Olympics. Nike sponsored the U.S. basketball team in the 08' Olympics and in return, the players used Nike shoes and the Nike logo on their jerseys. This was a very effective public relations program for a number of reasons. First, the Olympics is the most watched event in the world. Therefore, Nike was able to advertise their brand to the entire world just by having the participants use their products. Second, people generally react more to action than words. Nike could have made 1000 commericals during the Olympics but how do the potential customers know the product really performs the way Nike says it does. By sponsoring the U.S. basketball team, (who practically breezed through to the gold medal besides the final game) it gave the perception to the audience that Nike products really do perform and even the best of the best at their sport used Nike to succeed.

Advertisement

The purpose of this advertisement was to emphasize the "Just Do It" mentality of Nike. The words say "You either can today, or you didn't". The ad implies that if you want to go do something, then just do it. be active. don't sit around and think about the outcomes or the reasons why you shouldn't go. If you want to do something then dont let anything hold you back. Grab your Nike gear and Just Do It!

Best Buy Prices

During my process of pruchasing a t.v. at Best Buy, I noticed a few different pricing strategies. At first we began out search looking for a smaller t.v. for the time being. We realized that there were no sales on the t.v.s that we were searching for. The t.vs "on sale" were the higher position brand t.v.s. Even though the t.v. was still more than what we planned on spending, the sale gave the consumer (which was me in this situation) a perception of a deal or bargain. We decided to buy a Sony which was $200 more than what we expected to spend. The combination of the sale on the t.v. and the difference in position between Sony and Dynex were the deciding factors that altered our purchase decision.

Pricing Concepts

Price is that which is given up in an exchange to acquire a good or service. Consumers are generally interested in obtaining "reasonable price," which really means perceived reasonable value at the time of the transaction. Nike's prices are based on the idea that consumers will perceive a product with a high price as a predictor of good quality. Position also plays a role for Nike's pricing. Nike has spent a lot of money to promote their brand as the top of their market. Because the Nike swoosh has become such a prestigous logo, consumers are willing to pay the extra money for just that.

Best Buy Encounter

The only problem with roommates moving out is the stuff they bring with them. This weekend I found myself in need of a television after my roommate unfortunately brought his 42" Sony flat screen along with him to his new apartment. Best Buy was the most conveniently located store which was the main reason we decided to shop there. We waited in the t.v. area for approximately 5 minutes until we found an employee to help us. Once we described what t.v. we were looking for, she escorted us to the proper section and then informed us of the current t.v.s on sale, but only mentioned t.v.s larger than what we planned on buying (trading up). After we had decided which t.v. we wanted to purchase, she attempted the suggestion selling technique; asking if we wanted the HDMI cables or a surround sound system. Although I had no intention of buying the surround sound system, I figured I could pretend to be interested so that I would have more material for my blog post. I noticed that she brought us to the most expensive surround sound system priced at 2000$! Considering the t.v. we decided to buy was around 500$, it seemed a little ridiculous to lead us to a music system worth four times the price of the actual t.v.

Retailing

Retailing are all the activities directly related to the sale of goods and services to the ultimate consumer. Nike is almost entirely a retail company with the exception of selling plastic products to other manufacturers. Their products are sold in a variety of retailing operations such as non-store retailing, specialty stores, discount stores, and department stores. Nike sells its products to an estimated 20,000 retail accounts in the United States and in almost 200 countries around the world.

Product Concepts

Nike has a reputation for introducing unique and revolutionary products into the market. Nike actually has a specific area for innovators called "the kitchen" at there headquarters in Oregon where few are permitted access. The Kitchen is considered the brains behind the operation and the "cooks" are responsible for the majority of the new Nike products ranging from the Jordan line to the new Nike ID.


Nike ID is a recent concept that allows you to customize your gear. At first, Nike ID only consisted of shoes which was revolutionary in itself. Consumers had access from either their mobile phone or via Internet to build their own "ideal" shoe from the sole design, to the color of the laces. Nike ID now has it's own separate website that first allows you to choose from a variety of languages all over the world. The next step is deciding what product you would like to personalize; whether it is a t-shirt, an athletic jersey, or footwear, it is all up to the consumer. Once the consumer is finished, he/she then submits their billing and mailing information and within a matter of weeks, their cutsom design is in their possession.

Segmenting and Targeting Markets

Marketing: A new age

The lifespan of magazines and newspaper adds have come to a halt for the shoe industry faster than they ever could have imagined. Now that these marketing strategies have become less effective, marketers have begone searching for new opportunities to get the word out about their brands. Just as things couldn't look worse for these poor marketers, blogs hit the scene. Blogs allow marketers to interact with their target markets on more of a personal level while still maintaining their marketing goals. Blogs are also considered to be entertaining so bloggers don't mind spending the extra time to read the posts and not just look at the pictures. The old marketers would argue "Just because you made a blog doesn't mean people are going to read it," but that's where blog communities come in to play. Once you join the blog communities and contribute to fellow blogs, the traffic of your sight is guaranteed to increase. Someday the blog could reach the notoriety of the top five footwear blogs which bring in an estimated 22 million impressions a month, according to google analytics.

Multi-Segmenting strategy

Although some might assume Nike would only implement one broad target market for all sports lovers, each sport requires a different marketing mix. Football, for example, appeals to the more violent, and "ready for war" mentality. Nike responded to their consumers by creating the "Pro Combat campaign" at the start of this years football season. Who better to advertise the campaign than the leading rusher for last year's NFL season:

Adrian Pereron (photo on right)

Distribution

Distribution is a process that normally includes the producer, one or more wholesalers, and a retailer. Nike's role in the distribution system is the producer aspect. Nike has made plans to expand their current distribution center in Wilsonville, Oregon, and establish a state of the art distribution center in Memphis, Tennessee. The one million square foot building will cost Nike an estimated 107 million dollars. Nike has projected that their investment will save for itself and their retail customers more than 200 million in cost efficiencies, as well as reduced shipping times and increased service capabilities.

Strategic Alliances

Although Nike may be one of the sports apparal and footwear giants, they wouldn't be nearly as successful with out the business partners they have today. One of Nike's more recent partnership agreements was with the Apple company. Nike and Apple introduced a product that syncs your running shoes to your ipod. A sensor is placed inside the shoe in order to record the different running variables such as distance, time, pace, and even calories burned. A receiver is attached to the ipod which allows the runner to check the status of his or her run at any time on the face of the ipod or just listen in to the periodic audible feedback that is transmitted through the headphones.
The product creates sales and marketing opportunites for both companies involved. The faithful Nike runners that were on the fence as to which MP3 player to buy have now made up their minds and the current ipod users have that much more reason to purchase those Nike Air Zoom's they always wanted.

Consumer Buying Decsions in U.S.

Even though the factors influencing consumer buying decisions in the U.S. are obviously much less diversified than the entire world, The United States is the most culturally diverse country there is. Because America varies in culture as much as it does, there are many different target markets. In each target market such as golf, cycling, or basketball, Nike has found an icon within the sports to market their product. The best in the business in regards to golf, Tiger Woods, is sponsored by Nike. Every time we see Tiger pump his fist, we also notice the swoosh logo branded on his hat. Nike can advertise their product through newspaper adds or T.V. commercials but people react more to what they see than what they hear. The performance of Nike sports icons influence the consumers on the fence of two products and lead by example that Nike truly is the best in their field.

Consumer Decision Making

Nike sells to one hundred and sixty countries worldwide. Each country has different cultures and different values that come with it. Nike has adjusted to these conditions and now sells products in varying sports such as tennis, lacrosse, cricket, ice hockey, track and field, handball, and rugby among many others. Considering soccer or futbol is the most popular sport around the world, Nike has focused their efforts in improving their sales in this category. Nike currently sponsors some of the most infamous soccer clubs in the world including Manchester United, Barcelona, or the Brazilian national team. These sponsorships serve as reference groups for consumers and to build a global awareness of the Nike products.

Global Marketing

Global marketing isn't new to the Nike franchise. Nike began as a partner to a Japanese shoe distributor and they haven't lost their touch to the outside world since. The most recent change in the global market is the rapid growth of interactive and mobile marketing. Nike has focused their efforts on the mobile aspect which now offers customers the capability of customizing their own shoe and purchasing them all on their cellphone. Another recent marketing strategy was implemented globally through the mobile market. Bluetooth enabled billboards that would automatically send a message to people walking past telling them to run to the nearest Nike store. A virtual stopwatch would start upon reading the message and the fastest time each day would receive a free pair of shoes. Across three cities in three weeks there was 250,000 Bluetooth messages sent, 15,000 participants, and 63 pairs of Nike shoes were awarded.

Global Vision

Nike is the largest designer, marketer, and distributor of authentic athletic footwear in the world. Nike is most renowned globally for their involvement in well-known sporting events. Now Nike has a new project called the Nike+ Human Race which is hosted in twenty four different cities around the world including New York City, Los Angeles, Buenos Aires, Rome, Singapore, Paris, Milan, Seoul, London, Bangalore among others. The Nike+Human Race was created with a purpose to unite the runner lovers farther than just their city boarders and to experience that joy with people all over the world. Last year Nike+ Human Race became the largest multi-city running event in history with nearly 780,000 participants.

Ethics

Ethics became a main concern for Nike in the late 1990's due to the negative media attention on child labor in Asian, Latin, and other global subcontractors that employed children even younger than 10 years old. In the past 10 years Nike has organized a global public relations campaign in attempt to turn around their reputation. Presently, each manufacturer follows strict employee guidelines including age regulations and required work permits. Nike has redeemed themselves from the child labour issue but now faces criticism in terms of work conditions in countries other than America. In Indonesia, nearly a third of the workers experienced verbal abuse. Currently, Nike is working with Global Alliance to allow more favorable work conditions and create an equal workforce throughout the world. All in all, Nike is taking a step in the right direction and corporate social responsibility influences their decisions more and more each day.

Go Green

Nike, along with other corporate companies have made an attempt to reduce their carbon footprint in reaction to drastic climate change. Nike has made a conscious effort to incorporate sustainability into their operations and have lowered greenhouse gas emissions. Nike has focused their efforts on maintaining the Brazilian rainforests due to the high volume of Brazilian leather imported for Nike products. The new policy allows the entire supply route to be monitored and ensures that the rainforests are kept safe throughout the operation.

Time of Change

Parker has outlined his plan in order to adapt to the fast changing digitally savvy consumer. He plans to reshape the managment structure and add one hundred new company stores worldwide in the next three years. "We're fundamentally changing the way we organize the company," Parker says. Although Parker's plan seems ambitious, some analysts doubt that he could actually meet his goal of more than a nine percent increase in sales each year for the next five years. Analysts have projected that it would be near impossible to accomplish this goal with out turning around the slumping sales in Europe, Japan, and the U.S. basketball market, which acounts for nearly 3.5 billiion dollars in the market segment.

New CEO in town

Nike has never been known for their conservative ways but no one expected the new CEO, Mark Parker, to begin his strageic planning so aggressivley. Parker made a statement when he brought fourth his ambitous plan that would increase revenues by eight billion dollars in the next five years. Parker showed the doubters that he meant business when he offered German National Soccer Federation 778 million dollars in order for Nike to sponcer it's national team for the next ten years. The offer brought controversy between the two sports rivals, Nike and Adidas, because Adidas has been the the longtime sponcer for the German team.

Current status

Nike has now expanded its line into other sports throughout the world. Nike still holds the largest market share in the United States and global despite the fact that Adidas and Reebok merged in 2005. Recently Nike has been forced to offer sales as high as 50% in responce to a decrease in market share. Phil Knight along with other senior managers have planned to cut down own staff and shut down facilities world wide. It seems Nike isn't the only company to make long term changes in order to try and ensure their safety from the hard economic times.

where it all started

Originally, Nike was known as Blue Ribbon Sports concentrated solely on shoes that were sold out of co-creater Phil Knight's trunk before and after his track meets. The company started out as a distributor for a Japanese shoe maker named Onitsuka Tiger. In 1966 Blue Ribbon Sports opened up their first retail store in Santa Monica, California. The profits grew rapidly and the relationship between BRS and Onitsula Tiger grew farther apart. in 1971 the two business partners went their different ways and Nike planned to launch their own shoe bearing the swoosh logo. The first shoe BRS sold with the new logo was a soccer shoe named "Nike".