Nike Case Study

Q1. Discuss the extent to which Nike is a market oriented company (culture & processes).

“Market Orientation is the organization culture that most effectively & efficiently creates the necessary behaviours for the creation of superior value for buyers & thus continuous superior performance for the business” (Aaker 1988; Kohli & Jaworski 1990)

Now looking at Nike in terms of market orientation reveals that it is up to a great extent a market oriented company. As it initially designed sneakers whose target audience was athletes. Apart from this Nike also sponsored athletes from diverse parts of the world. Nike lavishly spent wholesome amount for its publicity. It was an official U.S. Olympics sponsor in Beijing. It also participated in world cup for promotion.

Initially its supply-chain system was inefficient. And also there was no CFO at that time. But gradually after the arrival of Don Blair, the new CFO, in 1999, new management team brought order and discipline. It renovated its supply-chain system and thus made it more efficient. Nike also owned brands complementing it. Apart from this it combined sports with fashion and thus became popular in soccer.

Nike started making sports fashion a core business. Not only this, after seeing the bare foot runners of Kenya, it manufactured Nike free shoes which made runners feel bare foot. Later on being inspired by kids playing on street, Nike developed shoes especially for them. So the sleek shoes became a fashion accessory for those who never even played soccer. According to the case study, Nike built its empire by transforming technology and design of high performance sports gear into high fashion and thus attracting large number of customers.

The major issue that affected Nike was the ego problem between the founder of Nike, Phill Knight and the CEO, William D. Perez. Perez was not able to apply his approach as he was forced to follow what Knight thought was right. But overall, Nike up to a great extent has proved itself as a market oriented company.

Q2. Discuss Nike’s new product portfolio and strategic brand management strategies. Indicate any recommended changes.

Nike always spent lavishly to promote its products. For instance it sponsored individual players and not the game. During the Olympics, it sponsored players like Magic Johnson and used U.S. flags to hide Reebok jackets. Its product known as Mercurial Vapor made Nike the top European Soccer shoe company.

According to the case study, Nikes growth strategy was to add to its portfolio of brands. As a result of which Nike expanded its brand by managing other brands like Cole Haan dress shoes, Converse retro-style sneakers, Hurley International skate-board gear, Bauer in-line and hockey skates, thus ensuring that it was investing in opportunities that will generate the highest possible returns. So overall, it was now not just limited to making sneakers, but it became a sports cum fashion company.

Nike then focussed on its financial management, supply-chain system and inventory management resulting into quicker design and manufacturing times and fatter gross margins. Not only this, but its international sales exceeded U.S. sales. Nike believed in adopting new technology for developing the latest shoes. For instance, Nike launched Total 90 III, a sleek shoe inspired from cars. Later on influenced by the kids playing soccer on streets, it developed a shoe especially for them. Nike’s strategy was to convert business model into lifestyle as a result of which it was able to expand its potential customers.

*William D. Perez should have got a chance to prove himself. His approaches could have lead Nike to new heights.

*There should also be some limitations on the amount of money which is being spent just for the promotion of newly launched products.

*Nike should also think of opening outlet stores for increase in sales.

*Apart from thinking Nike as a brand, they should focus more on customer satisfaction because that is the key to success.

Reference List:

Nike’s case-study.

Narver, J.& Slater, S., 1990. The effect of market orientation on business profitability, Journal Of Marketing, 54(4),P.21.

http://www.nike.com/nikeos/p/nike/en_GB/? [accessed 6th Feb. 2010]