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Nike_Industry Visit


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Details of a visit to a Nike Retail store

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Nike_Industry Visit

  3. 3. P a g e | 2 NIKE As the world’s leading Equipment Company, NIKE, is dedicated to inspiring every athlete to reach peak performance. Nike co-founder Bill Bowerman saw endless possibilities for human potential embodied through sport. His philosophy still guides their mission today: “To bring inspiration and innovation to every athlete in the world. Through their commitment to innovation and design, they are continually challenging themselves, and their customers, to reach that next level of achievement. They strive for:  Innovation to serve the athlete  Innovation to grow the company  Innovation to inspire the world Company Portfolio NIKE, Inc. includes seven distinct brands, each with a powerful connection to its customers:  NIKE Brand designs, develops and sells high-quality athletic performance gear and sport- inspired casual products, including footwear, apparel, equipment and accessories  Cole Haan designs, markets and distributes luxury shoes, handbags, accessories and outerwear  Converse designs, markets and distributes athletic footwear, apparel and accessories  Hurley International LLC designs, markets and distributes action sports and youth lifestyle footwear, apparel and accessories  Umbro designs, distributes and licenses athletic and casual footwear, apparel and equipment, primarily for the sport of football.  Nike Golf, designs and markets golf equipment, apparel, balls, footwear, bags and accessories  Jordan Brand designs and markets premium footwear, apparel and accessories inspired by the dynamic legacy, vision and direct involvement of Michael Jordan
  4. 4. P a g e | 3 Cole Haan, Converse, Inc., Hurley International, LLC and Umbro International Limited are wholly owned subsidiaries of NIKE, Inc. These Affiliate businesses, as they call them, play a significant role in their future growth plans. Overview of the Nike, Inc. Value Chain Their business has many dimensions. Every product and partner, every decision, every gateway, every stage from concept to reclamation adds to a near-infinite ecosystem of cause and effect. To offer as much clarity into this ecosystem as possible, have a look at their seven fundamental stages: Plan, Design, Make, Move, Sell, Use, and Reuse.  Plan - At the core of the business is a plan – opportunities, resources and values. It’s who they are. What they believe. And how they get things done.  Design - Form. Function. Superior performance. Minimal impact. While their designers always strive to create products that are faster, lighter and stronger, they also pay close attention to smarter.  Make - Ideas don’t become reality by magic. For a global business, it requires people, materials, tools, knowledge, skill and a whole lot of coordination. They contract with more than 900 factories globally to make products from their designs.  Move – They ship products wherever and whenever they are needed, to get to thousands of partners and millions of consumers around the world. Airplanes, boats, trucks and trains are the tools their transport providers use to overcome the obstacle of distance every day.  Sell - Nike operates more than 750 retail stores around the world across all their brands. Beyond selling products, each location strives to be a rewarding experience for its consumers and an asset to its community. The stores are in leased space. While NIKE and their Affiliate brands sell primarily through retail partners not owned by the company, their focus is on the impact of the selling they do in their own stores.  Use - Once you bring home your new shoes, shirt or shorts, a different footprint starts to take shape. This one belongs to you.  Reuse - Finding innovative ways to reuse their products – creating running tracks, sport courts and even new shoes and clothing helps minimize their impact on the environment. Good becomes better over time. And so do NIKE.
  5. 5. P a g e | 4 They believe these stages provide the best way to track, measure and report where they have influence, compared to where they have control, and how the decisions they make have impacts in terms of energy and climate, labor, chemistry, water, waste and community. Nike Inc., located at Pokran Road, Thane West, is neither a super market nor a hyper market. It is manly a factory outlet that houses all Nike products and sells it directly to the customers or the public as a whole. MARKETING MIX: Nike is one of the pioneers in marketing and the marketing mix of Nike is one of the strongest. Depending mainly on pull strategy, it has established its hold in face of major competitors like adidas and reebok. 1. Product: Nike offers a wide range of shoe, apparel and equipment products, all of which are currently its top-selling product categories. Nike started selling sports apparel, athletic bags and accessory items in 1979. Their brand Cole Haan carries a line of dress and casual footwear and accessories for men, women and children. They also market head gear under the brand name Sports Specialties, through Nike Team manufactures and distributes ice skates, skate blades, in-roller skates, protective gear, hockey sticks and hockey jerseys and accessories. 2. Price: Nike’s pricing is designed to be competitive to the other fashion Shoe retailer. The pricing is based on the basis of premium segment as target customers. Nike as a brand commands high premiums. Nike’s pricing strategy makes use of vertical integration in pricing wherein they own participants at differing channel levels or take part in more than one channel level operations. This can control costs and influence product pricing. 3. Place: Nike shoes are carried by multi-brand stores and the exclusive Nike stores across the globe. Nike sells its product to about 20,000 retail accounts in the U.S. and in almost 200 countries around the world. In the international markets, Nike sells its products through independent distributors, licensees and subsidiaries. The company has production facilities in Asia and customer service and other operational units worldwide.
  6. 6. P a g e | 5 4. Promotion: Promotion is largely dependent on finding accessible store locations. It also avails of targeted advertising in the newspaper and creating strategic alliances. Nike has a number of famous athletes that serve as brand ambassadors such as the Brazilian Soccer Team (especially Ronaldo, Renaldo, and Roberto Carlos), Lebron James and Jermane O’Neal for basketball, Lance Armstrong for cycling, and Tiger Woods for Golf. Nike also sponsors events such as Hoop It Up and The Golden West Invitational. Nike’s brand images, the Nike name and the trademark swoosh; make it one of the most recognizable brands in the world. Nike’s brand power is one reason for its high revenues. Nike’s quality products, loyal customer base and its great marketing techniques all contribute to make the shoe empire a huge success. Indian soccer team captain Baichung Bhutia is the new brand ambassador of Nike. MARKETING STRATEGY OF NIKE: It rested mainly upon a product image which is favorable and allowed it to develop into one of the best multinational companies after a while. Nike’s favorable product icon has been kept optimistic because of the strong relation with the company logo that is quite distinct and unique as well as the product slogan that has been utilized in commercials for a long period. The marketing strategy of Nike invests in commercials and product promotions. MARKET SEGMENTATION: Sportsmen are the majority consumers and this is because of the usefulness that goes along with the items. Nike focused on these customers by means of agreements between the company and sports team, college athletic for product support and sponsorship as well as eventual endorsement to the team members. Through this NIKE is capable to reach an extensive number of consumers and clients who are likely to purchase. TARGETING STRATEGY: Nike Company’s lays a lot of strategies to target their immediate users, athletes and all sportsmen. These targeting techniques include product sponsorship by professional and well known athletic team, college sports team as well as celebrity athletes.
  7. 7. P a g e | 6 This marketing strategy of Nike is particularly successful as of its capability to reach many athletes. Once the sports team manager lays down a particular kind of track shoes manufactured by Nike, the learners have no choice other than to purchase them as well as sports team can purchase the track shoes in a large number and deliver them to the members of the team. Another marketing strategy of Nike is the styling of product objective or purpose. Company does this through associating triumph with the apparel. For instance, when a superstar athlete sponsors a particular brand of sports shoes, the shoes will be related with victory. It has psychological effect to the viewers and this is reinforced with promotional which affirm this point. At last, Nike targets the users who could build up product intimacy, consumers who are after the quality and utility of the items than the cost. Through this, the costing is not pretentious too much in propose to accommodate a lot of consumers. PRICING STRATEGY: Nike focused on the users who embrace product understanding and closeness and thus heed less regarding the product. This allows the Company to set quite higher cost than its rivalry. This is a marketing strategy of Nike which calls for superior pricing points in order to push the supposed value of the product. Another significant thing that business must consider if you want to follow the success of the company is that, the truth that Company utilizes the vertical combination pricing technique in that they take participants ownerships at channel levels which differ and the Nike company also engage in diverse channel level functions in a propose to control prices as a result affect pricing function. DISTRIBUTION STRATEGY: The marketing strategy of Nike embraced by many organizations can either provide them a market frame or make them insulate the market frontrunner. The more reliable the distribution of the product is improves the sales and in consequence more profits. Product delivery at the required time to the users, not just effect usefulness but also results to high level of customer’s satisfaction as well as loyalty. Nike Company distributes its items base on the level or number. The high costs premium items are given to particular distributors while leaving products with low price to be traded at a discounted price at various retail stores including Wal-Mart.
  8. 8. P a g e | 7 COMMUNICATION AND PROMOTIONAL STRATEGY: Aside from trading quality products that have resulted to a high number of user loyalty, the promotional and communication utilized by the company are simply outstanding. Nike has hired many professional and well known celebrity sportsmen that have managed to make a considerable interest to their items. Most of the athletes contracted by Nike include soccer superstar Roberto Carlos, Ronaldo and Ronaldinho, basketball legends and superstars such as Lebron James, Jermaine O’ Neal and triathlete superstar Lance Armstrong as well as Tiger Woods a big name in the world of golf. This has developed a fairly high level of Nike items awareness. Aside from dealing or contracting of celebrity athletes to endorse their products, Nike also used a best deal of ad by means of mass media. The company uses a selective demand ad targets on the higher cost shoes utilized for typical sports. All the marketing strategy by Nike show a competitive marketing management which can allow the company to top turn out to be market leaders and make the market leader companies retain their competitive frame market by means of adherence to marketing principles, marketing plans and carefully planned marketing strategies. The marketing strategy of Nike is one of the techniques that many business follow to become successful in the world of business like Nike did. STORE LAYOUT STRATEGY: In Greek Mythology, the word “Nike” is associated to the goddess of success, representing ‘honored conquest’ on the battleground. When Bill Bowerman and Phile Knight founded Nike, they aspired to inspire this myth in every product. Primarily, Nike focused on top quality sports shoes but then branched out quickly to all kinds of sportswear. Their objective was not just to aid the world’s finest sportsmen find new degree of accomplishment, but to morph the normal person into a new place of Nike athleticism. The founder wanted each client to believe that through purchasing Nike products, they would obtain success, power and happiness. Nike stores are consistent with this dream. As a money making business, the branding strategy of Nike is to persuade its client into buying merchandise. The style of the Nike Stores uses standard in-store methods so as to improve the chance of customer’s purchases. While walking into the Nike store, the most enticing element is the
  9. 9. P a g e | 8 highly made and symmetrical layout. Every sport is provided its part that is arranged in color and product type. It is done to appear like there are small stores in one bigger store. Swimming for instance, had aqua or water walls the same to what you would see as a real swimming pool. This branding strategy of Nike makes it easier for people to find the product they needed. This branding strategy of Nike served three reasons: 1. Through having diverse parts for every sport, Nike produced extra markets for every client. It facilitated the belief of every customer which they want apparel for each sport they were participating in. It also made clients disregard that Nike sporting shirts act similar objective as the yoga shirts. The objective is to make markets in one. 2. To disembodies the prospective client from the store. Through developing a swimming portion really looks like a swimming pool, company facilitates spending through making space which appeals to the thoughts. This branding strategy of Nike is also related to the basis Nike wanted their floors, walls as well as ceilings to be unsuspecting and dark. They want the target to be on the décor and product that takes the client away the place or store and into a fantasy, mythological realm. 3. The third objectives of this branding strategy of Nike are to make a maze like environment. This is particularly feature of the bottom floor of this store. Through having various ways, the client maneuvered in rambling confusion. This strategy forces the client to see the entire product prior finding the way out. As a result, Nike utilizes of space, color as well as architectural techniques are made to gain profits. The Branding strategy of Nike are more complicated that its style tactics. Even both aim is to mystify the client into buying Nike product, marketing are a more obvious strategy to interpolate the client. The person may be incapable to understand the true meaning behind each shoe. The individual may be unable to know the meanings behind each however they are drawn because they provide “meaning” and “life” to or else lifeless or meaningless objects. Nike’s store layout is done by dividing the store by sport. In each section—basketball, soccer, running, etc.—customers are surrounded by Nike’s vision of a particular sport and all of the products it sells to make that vision a reality.
  10. 10. P a g e | 9 Nike have different strategies in how they communicate with customers online. For example, Nike Golf is a fully integrated part of Like the in-store experience, Nike Golf is a one-stop destination for all things golf. Nike has created a narrative around its golf products the same way it did in its store layout. Nike isn’t selling you a pair of golf spikes—it’s selling you Nike Golf. Nike’s strategy of developing a distinctive identity for each sport is smart and effective. While Nike is always the overarching brand, every sport is presented on its own, with its own story. Nike provides customers with a simpler, more cohesive experience that shines through loud and clear. Nike in itself is a private label and the retail outlet at Thane, i.e. the factory outlet of Nike houses only Nike products and no other private labels or brands. MERCHANDISE MIX: To have a broader perspective of the merchandise mix, let’s take a look at all the various products that Nike has produced till date. Few of their products are –  Shoes  Socks  Rackets  T-Shirts  Tracks  Caps
  11. 11. P a g e | 10 All in all, Nike is known to invite one and all to experience their innovative and inspiring products. CORPORATE SOCIAL RESPONSIBILITY: NIKE has always been keen on its image in corporate and social community. NIKE has been involved in number of eco-friendly and social drives to show its concerns towards the well- being of the social and individual personality. As a result NIKE has been awarded various prestigious awards, like;  Top 10 of Newsweek's 2010 Green Rankings  Maplecroft recognized as a leader in climate change  Tops Climate Counts List in Corporate Commitment to Climate  Recognized as One of the World's Most Ethical Companies by The Ethisphere Institute  Named as One of the 100 Best Corporate Citizens for 2010 Corporate  Responsibility Magazine (the new name of CRO Magazine).  Named as One of 100 Most Sustainable Corporations in the World by Innovest  Strategic Value Advisors and Corporate Knights Inc.  Recognized for its Leadership in Climate Change Solutions by World Wildlife Fund  Recognized three times by FORTUNE magazine on its "100 Best Companies To Work For" list for employee benefits like paid sabbaticals, on-site childcare
  12. 12. P a g e | 11 NIKE, Inc. Diluted EPS Performance Fiscal Years 2007 - 2011 Five-year CAGR 11% * * 5-Year Compound Annual Grown Rate (CAGR) based on Fiscal Year 2006 diluted EPS of $2.64 ** EPS amounts are not directly comparable as they include non-recurring expenses and benefits such as imparment and restructuring charges, tax settlements and other items. To see comparable annual EPS amounts please refer to our prior press releases and SEC filings. 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 2007 2008 2009 2010 2011 EPS
  13. 13. P a g e | 12 NIKE, Inc. Return on Invested Capital Fiscal Years 2007-2011 NIKE, Inc. Revenue Performance Fiscal Years 2007-2011 Five-year CAGR 7% * * 5-Year Compound Annual Growth Rate (CAGR) based on Fiscal Year 2006 Revenue of $14,955 million. 0 5 10 15 20 25 30 2007 2008 2009 2010 2011 Percent 0 5000 10000 15000 20000 25000 Revenue Chart Title 2007 2008 2009 2010 2011
  14. 14. P a g e | 13 PLAN FOR GROWTH: Nike is a growth company. But we want to deliver growth in the right way. We seek growth that is:  Sustainable  Profitable  Capital efficient  Brand enhancing Like many other businesses, Nike faced some significant headwinds in FY10 and FY11. Around the world, unemployment was high, especially among youth; and governments wrestled with high debt levels. Rising costs for energy and labor sparked inflationary pressures. In turn, higher costs for materials, labor and freight were evident in our margins. While the headwinds we faced were shared across our industry, the competitive advantages we have are unique to the Nike portfolio. In spite of ongoing macroeconomic challenges, we are well positioned to leverage our strengths – including scale, operational capabilities and pricing power – to help mitigate the risks beyond our control and capitalize on opportunities to grow the company.
  15. 15. P a g e | 14 CONCLUSION: NIKE are innovators by nature. They are fixated, obsessed by innovation. NIKE represents a passionate and an insatiable appetite to go deeper with an athlete within sports and to take those insights and translate those creatively into innovative concepts and products and stories. They have incredibly wide peripheral vision, the ability to see and be inspired by things that happen in sports, but also in film and music and digital technology — everything in youth culture around the world. They are incredibly curious and incredibly focused as well. NIKE continually challenge themselves to be better. There’s a lot of pride at NIKE. They believe in what they do. They are basically a youthful and a premium brand. Their intentions, influence and results are all really very positive. But that doesn’t mean that they are always satisfied. They keep striving and taking risks and firmly believe in their tagline –