Nike Company

Introduction

Nike is a multinational corporation whose headquarter is located in Beaverton, Oregon.  It is among the top suppliers of apparel, sports equipment and athletic shoes in the world. It manufactures, designs, develops and markets apparel, footwear, accessories, equipment and provides services worldwide. It has more than seventy thousand employees worldwide, with revenue of more than US$24 billion by 2012. Today, the Nike brand is worth $26 billion, becoming one of the most recognizable brands in the world.

History

The original name of Nike was Blue Ribbon Sports (BRS). It was founded in January 1964 by Phil Knight and Bill Bowerman. Phil Knight was a track athlete from Portland whose coach was Bill Bowerman. Bill Bowerman tried improving his students’ shoes unsuccessfully. During that time, Phil Knight did an MBA assignment at Stanford University and suggested the manufacturing of shoes in Japan. These shoes would be used by retailers to compete with German brands which were well established.

His suggestion was not well received by those he had proposed to, hence, he decided to import shoes from Japan and sell them to the people in his local area. When he tried selling the shoes to his coach Bowerman, he asked him to partner with him in business. The first brand ambassador of Nike was Steve Prefontaine, an athlete who set seven American records in athletics. The BRS sold 1,300 pairs of shoes that valued around $8,000 within its first year after being established. In 1965, the sales increased to $20,000. BRS opened its first retail shop at Santa Monica in California and made it easy for its employees to sell from the shop instead of carrying stock with their back. The business grew rapidly and expanded its distribution services to Wellesley, Massachusetts on the East Coast in 1967.

The business launched their own shoes – the lighter weight sports shoes with waffle-type nubs in 1971. The shoes were designed by Carolyn Davidson and were named the Swoosh. On May 30th 1971, the name was changed from Blue Ribbon Sports to Nike, Inc. The Swoosh logo was created by a Portland State University student, and symbolized the wing of Nike; Greek goddess of victory. It was through this symbol that the name Nike came from. Since then, the logo has undergone small changes. Initially, the logo was incorporated with the Nike name. It had a red and white color palette until it recently changed to a solid black swoosh.

The company hired John Brown and Partnered in 1976 to establish an advertising agency in Seattle. In 1977, a brand advertisement called “There is no finish line” was created by the agency. This development led to the increase on the Nike’s market share for athlete shoes market in the US to 50%. Through this, Nike gained popularity that year.

Dan Wieden, the co-founder of the advertising agency, came up with the “Just Do It” slogan again in 1988. He was inspired by Gary Gilmore words before he was executed, “Let’s do it”. The slogan became one of the top advertisement slogans of 20th century after recognition by Advertising Age. On July 1988, Walt Stack featured on the Nike’s first advertisement.

Nike expanded onto many regions of the world during the 1980’s. It then moved to Beaverton, Oregon to establish its headquarters in 1990.

Nike acquired its first company Cole Haan, an upscale footwear company in 1988. In 1994, it purchased Bauer Hockey and Hurley International from Bob Hurley, the founder. It also acquired Converse, producer of sneakers in 2003 by paying $309 million. In 2004, it acquired Starter and acquired Umbro in 2008, a company popular in the manufacturing of national football team’s kit in England. As of 2013, the company owns only Converse Inc. and Hurley International. It sold other subsidiary companies to concentrate on its line of business.

The first product of Nike was track running shoes. In 1987, Nike released its first line of shoes called Air Max. Then it later introduced Air Huarache in 1992. Then it came up with Nike NYX, Nike 6.0 and Nike SB shoes which were designed for skateboarding. Later, Air Zoom Yorker – cricket shoes which are 30% lighter than the other cricket shoes in the market were introduced. The Air Jordan XX3 for basketball was designed in 2008. The newest shoes produced by Nike contain Flywire and Lunarlite Foam which makes them lighter in weight.

Apart from the manufacturing of shoes, Nike also produces other items like shell suits, sweatpants, crop tops, track suits and baseball caps. All these are directed towards street wear.

Along with manufacturing and distribution, Nike has experienced criticisms from other organizations as well. An activist group documented that factories contracted with Nike Violate overtime and minimum wage laws. In 1990 and 2001, it faced criticism for child labor in Pakistan and Cambodia. In 2014, a china factory Yuen Yuen Industrial Holding shoe factory (producing for Nike) employees went on strike due to underpayment.

On environmental performance, Nike is ranked among the top three companies which are climate friendly. In 2008, it was praised for producing shoes made from leather and synthetic leather from waste materials of factory floors. Its reuse-a-shoe program which started in 1993 involves the use of material from old shoes to process and recycle them. Also, the produced material is used to make running tracks, playgrounds and basketball courts (Masaviru, 2016)

Marketing

Product image

Nike has successfully managed to market its products in several ways, from making a good product image, advertising, internet and email marketing, creating programs, campaigns and sponsorships. Its unique marketing strategies have aided the development of the company to one of the top multinational companies specializing in sportswear across the world. The company spends about 10% of its annual revenue to advertise and promote the company

First, its logo is unique and distinct. The company invested in creating a logo with a purpose, which is to show its correlation with victory. This logo is widely recognized and has placed high value on Nike’s brand (worth $26). Its product slogan “Just Do It” created by Wieden has captured the world with its inspiring words. It has actually been used in commercials for a long period of time.

Bowerman’s passion also promoted Nike products. The regular improvements made on Nike’s products shows that the Company produces products to suit the users’ needs.

Nike has also used the design and color of its logo to market itself. The logo was initially displayed in different colors to stand out from its competitors. The white color palette on its logo represents charm, purity and nobility, while the red color symbolized exemplify passion, joy and energy. In 1994, it featured the name Nike written in bold on the logo and later rebranded it to a simple black color Swoosh. The frequent rebranding gives a new perspective of Nike to customers.

The company also produces a variety of products to suit the needs of the user. It produces sportswear for all types of sports, from football, basketball, golf, skateboarding, cycling, volleyball, wrestling, and athletics among others. Apart from that, it also majors on street wear to suit the fashion needs of the youth as well as the provision of apparel, equipment and accessories such as golf club. The availability of such a wide range of products has led to its popularity and increased market share.

Pricing                                                                                                                    

Another marketing strategy used by Nike is its pricing strategy. It has focused on producing sports products for consumers who understand the product and need it regardless of the price. The company has invested on producing quality products that serve the consumers need to their satisfaction. The company hence sets higher costs of its premium products than its competitors. It is quite obvious that people relate high prices with high quality of products and services. The high price of Nike products is linked to high quality products.

For instance, in 2014, the company raised the prices of sneakers when the rest of the market was giving discounts to its customers. It used a consumer value approach which is based on how much a consumer is willing to pay for a particular product. Through this, the company grew and attracted more customers. This kind of pricing strategy increases customer’s perception about the product. Through this strategy, Nike added $168 million to the company. The effect of this strategy was backed by the fact that Nike is known to provide high quality sportswear products.

Nike also sells its products at discounted prices to some customers. For instance, the products at Walmart superstore are sold at lower prices. They contain slightly inferior features than the premium products. This makes it easy for customers of different financial levels to find and buy Nike products.

Nike’s promotion marketing strategy

Promotion involves the use of different communication strategies to reach out to the target market and maintain brand image. Nike uses advertising, personal selling, direct marketing, sales promotions and public relations as their promotional activities. The largest contributor to Nike’s wide market coverage is advertising. It uses sports teams and professional athletes to advertise its brand. Through the use of celebrities, customers get the motivation to buy Nike products with the aim to mimic their favorite celebrities. Nike pays celebrity athletes to use their products and promote them. Its first professional athlete to use and promote Nike products was Romanian tennis player. Nike has sponsored Indian cricket team with its official kits since 2005. It has sponsored footballers such as Ronaldo, Neymar, Wayne Rooney and Landon Donovan among others.  It also uses internet marketing, email, and broadcasts to create multimedia campaigns.

In 2013, Nike offered to sponsor Rory Mcllroy, a top golfer in a deal worth $250 million to use Nike’s golf clubs among other offers. It has manufactured Manchester United’s kit from the start of 2015 for a deal worth £750 million for ten years. The company is also organizing a team of coaches, statisticians, designers and scientists in order to have one or more runners break the world record in 2017.

Nike’s personal selling comes in the training of personnel to persuade customers to buy and assist them in knowing about the products. Through this, customers feel empowered to make the right decision in purchasing Nike products.

The use of direct marketing by Nike Company helps in promoting new products to the target market. Through the use of sales people, the company heavily advertises in organizations and to individuals in the target market. Direct marketing helps the company to create a long term relationship as well as convince potential customers to buy the products.

On sales promotions, Nike uses special offers and coupons which it gives to potential customers. Through this, new customers get the chance to know about the features and benefits of using Nike products. In addition, it uses public relations to sponsor charity events or to communicate to the public on matters relating to social issues. This leads to brand promotion and motivation on the use of Nike products to potential customers.

Place marketing strategy

Nike sells its products to about 20,000 retail stores in the US and to about 200 countries in the world. Hence, its products are sold in many sports stores across the world. Its production facilities are based in Asia, while the other operational units and customer service facilities are available in many countries worldwide. With the use of licensees, subsidiaries and independent distributors, Nike is able to sell its products to the international markets.

The Company uses retailers such as Walmart as the most significant distributors of their equipment, shoes and apparel. The products can also be purchased from Nike’s online store and Niketown retail outlets. These retailers also use the same marketing strategies that Nike uses to sell the company’s products. For instance, Walmart provides a wide variety of Nike products to its customers. It uses the same promotional strategies, which include advertising, sales promotion, public relations and personal selling to promote its products. It also has many other subsidiary stores to distribute and sell Nike products (Burgelman, 2016)

Conclusion

The company operates in Western Europe, Central and Eastern Europe, Japan, Greater China, North America and other emerging markets. Its portfolio brands are Nike, Converse and Hurley. The products of the company are manufactured by independent contractors. In 2016, Nike offered its brand in nine categories of products. They are; Action sports, men’s training including American football and baseball, women training, sportswear, running, basketball, the Jordan Brand and Golf. Nike also markets products designed for kids and other recreational and athletic uses like tennis, volleyball, wrestling, cricket, outdoor activities and walking.

Each sportswear produced by Nike Company is produced for a specific purpose. For example, there are shoes specifically made for football use, so they cannot be used for running. Apart from sportswear, the company sells a variety of products which include socks, eyewear, digital devices, bats, gloves, sport balls, bags, golf clubs, protective equipment and other equipment essential for sports.

Apart from that, Nike also sells plastic products such as Nike IHM, Inc. Nike IHM, Inc. manufacturers Air-Sole cushioning at its facilities in Oregon, St. Charles and Beaverton through subsidiaries to other manufacturers.

Hurley brand designs and distributes accessories, apparel for youth lifestyle and action sports using the Hurley trademark. The Jordan Brand uses Jumpman trademark to design and distribute Basketball sportswear and accessories. Under, All-star, Star Chevron, One star, Chuck Taylor and Jack Purcell trademarks, the Converse brand usually designs, licenses and distributes apparel, accessories and casual sneakers directly to consumers.

The company has used unique marketing strategies that have made it stand out in the sportswear market. It goes beyond its competitors to satisfy the needs of the final user through proper designs that suit each person’s need as per their line of sport. Solving users’ problems is the reason behind the success of Nike Company.

The company plans to increase its profits and the growth of the company. According to the CEO Mark Parker, expanding its business across Western Europe and North America will help in the company’s growth. Also, extending power among the youth and increasing leadership in the emerging markets while improving the growth of women’s business by introducing products like the female sneakers will lead to more growth. This will include serving customers in their place of residence. The female business is expected to grow from $5.7 billion to $11 billion. The company is aiming at annual revenue of $50 billion by 2020. Through improved technology, faster communication and selling of more personalized products, the company aims at improving its revenue.

The company also aims at expanding Jordan Brand by doubling its sales. The training of young athletes has made Jordan a multi-category and global brand which leads towards growth. The Nike Company aims to aid growth of Jordan brand by treating it separate from Nike Basketball. The expected growth in 2020 is $4.5 billion.

Nike’s collaboration with Dreamworks and NOVA Company will help it in improving its product designs and provide 3-D visualizations and ultrarapid prototyping together with the creation of faster digital printing applications (Reis, Lima, & Cister, 2016).

In addition, the company is working on reducing the wastage of materials that should be used to make products. The future of the company seems prosperous, especially with the implementation of current goals.