1984-1985 Nike saw a decrease in their earnings for the first time ever
Influenced them to make their first specialty basketball shoe
Since then, Michael and Nike together have generated billions of dollars in revenue
“ World Sports Hero No. 1”
Jumpman logo is one of the most easily recognized symbols throughout the world
The newest Nike sensation
Estimated that Nike paid him $40 million
More attention than Michael Jordan and Bo Jackson
3 pg. ad in Wall Street Journal
30- and 60- second TV spots
Aired during college football, major league baseball, the U.S. Open, SportsCenter and Monday Night Football
Branding: powerful marketing mechanism used by Nike
Leads to higher and more consistent product quality .
Increases innovation by giving producers an incentive to look for more new features that can be safeguarded by the patent.
Branding results in more product variety and choice for consumers.
Branding provides consumer information about products and where to find them.
Brand equity is defined as the positive differential effect that knowing the brand name has on customer response to the product or service.
Brands represent the consumers’ perceptions and feelings about products and their performance.
The real value of branding is the ability to capture consumer preference and loyalty.
Brands vary in power and value and have varying degrees of brand awareness , brand preference and brand loyalty .
Nike’s Market Expansion Strategies
Economies of Scale .
Shared distribution channels among varied product lines lower costs.
Large size provides opportunity for more leverage against competition.
Efficient use of production facilities lowers costs.
Global sourcing: the Nike case
Nike has relocated production of its footwear and clothing to 51 countries where its third party production units employ more than 500,000 people (as against approximately 14,000 people directly employed by the multinational).
From its headquarters in Beaverton, Oregon, Nike manages a worldwide virtual company combining internal R&D functions with a low cost manufacturing strategy. They control their activity from Oregon and Tennessee and developed jointly by American and Asian technicians in the USA, Taiwan and South Korea. Sneakers are then assembled in South Korea and Indonesia from dozens of components supplied by firms in Japan, South Korea, Taiwan, Indonesia and the United States. Similarly, Nike outsources distribution to firms that specialise in logistics services.
Ability to charge premium price by establishing an “image”
• Access to new/different markets
• Premium product placement in retail leading to higher sales
• Image and celebrity endorsements create hopes/dreams/emotional attachment to product
Innovation may be difficult for competitors to imitate.
Difficult for competitors to compete with rate of innovation/production.
Ability to capture market for different attitudes/values across cultures with product variety.
Strong emphasis on R&D leads to continuous improvement in products.
Ability to reinforce brand and create loyalty across cultures leading to a broad customer base.
• Increased company growth potential.
• Cross-subsidization of weaker markets.
New products introduced by Nike will be more readily accepted by customers due to strong brand image
Other strategies adopted by Nike
Sponsorship for sporting events
Rebates and Discounts.
Conducting fashion shows.
A product mix is the set of all products and items that a particular seller offers for sale to buyers also known as product assortment.
It refers to how many product lines the company carries.
PRODUCT Mix contd….
A product line is a group of products that are closely related because they perform similar functions
It refers to the total number of items in its product mix
It refers to how many products are offered of each product line.
PRODUCT Mix for Nike
Studs for Striker
National Team Gear
Jersey for Brazil, England, etc.
Club Jerseys like Man U, Real Madrid, etc
Competitive advantage against regional brands.
Pricing- Bata charges around Rs 400 for a pair of shoes whereas for nike it is Rs 1600.
Unaware of utility or use.
Shoes are not recommended by coaches in India.
Sports culture –In India sports like soccer, basketball are not so recognised as cricket.
Threat of Substitute Products Threat of New Entrants Porter’s Five Forces Model of Competition Rivalry Among Competitors Bargaining Power of Buyers Bargaining Power of Suppliers HIGH HIGH HIGH LOW HIGH
FUNCTION AND FASHION
Now, Nike concentrates on two aspects function and fashion.
In 1960’s Nike entered the market with function due to which they Failed in early times.
Nike believes if you have a body, you are an athlete.