case study on nike, inc
TRANSCRIPT
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Case Study on Nike, Inc.
Case Study on Nike, Inc.
By:Paresh SidhdhapuraDigesh ShahChandrajit KhaniyaKartik PatelTejas SachalaJignesh Gamit
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Facts of Nike• Nike, Inc. is a major publicly traded sportswear and
equipment supplier based in the United States.
• It is the world's leading supplier of athletic shoes and apparel and a major manufacturer of sports equipment with revenue in excess of $18.6 billion USD in its fiscal year 2008 (ending May 31, 2008).
• The company was founded on January 25, 1964 as Blue Ribbon Sports by Bill Bowerman and Philip Knight, and officially became Nike, Inc. in 1978.
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Cont…d• Nike markets its products under its own brand as well as
Nike Golf, Nike Pro, Nike+, Air Jordan, Nike Skateboarding and subsidiaries including Cole Haan, Hurley International, Umbro and Converse.
• In addition to manufacturing sportswear and equipment, the company operates retail stores under the Niketown name.
• Nike sponsors many high profile athletes and sports teams around the world, with the highly recognized trademarks of "Just do it" and the Swoosh logo.
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The Tumultuous years• In 1983,Inventory of 22 million
pairs of unsold shoes.• In 1984, Earnings dropped by 29
percent.• Falling shoe orders by 30 percent.• High Competition from Reebok.
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Reasons for Tumult:• Reebok International Limited, a
subsidiary of German sportswear giant Adidas, is a producer of athletic footwear, apparel, and accessories.
• Reebok’s focus on Aerobic Shoes, which took the sales from $1.5million to over $600 million.
• Reebok’s USP was to make their appearance as fashion accessories.
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Cont……………• U.S. sales jumped upward by 450% between
1983 and 1985, Nike didn’t enter the market till 1985.
• Nike’s problem was that the company had never outgrown its athletic youth or learned to keep its winning streak in perspective.
• Hired managers who had more experience on running tracks rather than sitting behind the desk.
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Cont………• Failure to recognize aerobics
boom. Women -A major customer.• Ignorance of market trends.• Not satisfying customer needs.• Endorsement contracts effective. • Limited resources and unlimited
confidence.• Persuasion of top athletes.
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Running to keep up• In 1985, reducing the inventories by significantly
discounting.• Lay off about 400 employees which is one-tenth
of his work force.• Knight’s more emphasis on performance rather
than styling.• Nike now also focus on a person who uses it for
his day-to-day activity and is more invoked to carry on exercise viz. walking, jogging, cycling etc.
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Cont………..• In 1985, Nike unveiled its own version of the aerobics
shoes, a $40 leather shoe designed to be used also for bicycling.
• Nike sponsored Michael Jordan, the NBA star and promoted Air Jordan Basketball shoe, for which Nike paid a sum of $ 2.5 million for 5 years.
• In 1984, Nike’s basketball line showed a 49% increase in sales.
• Accounting for 39% of all Nike’s 1985, domestic footwear sales.
• In 1984, Reebok fell far behind Nike, with domestic sales of less than $300 million.
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Cont…………..• In a US athletic shoe market now
totally nearly $2.73 billion, Nike’s sales figure of $620 millions was far behind Reebok’s astounding $850 million.
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Positioning strategies :• Nike is positioned as a premium-brand, selling
well-designed and expensive products.
• Nike lures customers with a marketing strategy centering around a brand image which is attained by distinctive logo and the advertising slogan: "Just do it".
• Nike promotes its products by sponsorship agreements with celebrity athletes, professional teams and college athletic teams.
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Cont…………….• Nike tried to make walkers more aware of the EXW
by sponsoring a series of walking races in California.• The EXW was expected to earn Nike big profits over
the long haul, but initial sales were nothing to get excited about.
• The company now attempted to lure new customers by focusing its design efforts to appeal to increasingly narrow, but varied, market segments viz. “Wimbledon” tennis shoe, “Classic” Golf shoe, etc.
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Cont……………• Lesson learned: We have to
become more of a marketing company & we have to be there when the trends start.
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StrengthsSponsoring of sports athletes and gain of valuable coverage.Development of high quality products at reasonable price.Re-location of products.Brand LoyaltyHigh prestige i.e. Famous
WeaknessPressured to charge low prices.Due to diversified products, values fall as market shares fall.
Strengths and Weakness
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Opportunities Has established global brand recognition due to sporting events.Treated as a fashion brand by youths and thus stays in demand.Due to high quality products, it brings in more profit.
ThreatsFake products.New brands of the same quality with lower price margin leaving a competitive advantage.
Opportunities and Threats
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Revolution• Reebok’s acquisition of Avira, buy
out of Rockport• Access to Avira technology & own
proven flair for fashion.• In 1987 Nike unveiled new two
new line of shoes, The cross training & Air lines, that can be used for all activities.
• The Air line – fifty models, price $45 to $110
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Air• With Air, Nike sought to overcome
a variety of obstacles. It hoped that the cushion system could attract many people fearful about the effects of strenuous exercise on their joints.
• Its ads appeared in women’s magazines, sports magazine, TV ads,
• Styling, Hightech, attention to color combination & ornamentation.
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The cross training line• The cross training line, which also
featured the air cushioning system.
• Appeal to people who were concerned about fitness but weren’t too involved in any one sports.
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Results• During 1988 Nike began to gain rapidly
on Reebok. Nike bought the Cole Haan shoe company, which made casual & dress shoes.
• Nike launched a new $20 million campaign starring the highly visible young baseball & football player BO Jackson & the tag line “Just Do It”
• Company’s market share increase.• Analyst s predicted that Nike would finish
the year with higher sales than Reebok.
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JUST
ITDO
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• Questions?
Thank you