Nike : building a global brand

Phil Knight, recognized a neglected segment of serious athletes that had specialized needs that were not being addressed by the major player (1962).

Knight started Blue Ribbon sports (Nike later) by getting first shoes (Tiger shoes) from Japan and sold them direct to athletes by himself(1963).

knight asked his coach Bowerman to become a partner and partnership was developed .each one with $500 (1964).

Bowerman developed Marathon, Cortez and Boston as a running shoes and sales reached $300000 (1969).
knight decided to change name of Blue Ribbon to another name , the new name was Nike the winged Greek goddess of victory . Nike management team select Nike new logo from 12 ideas and it was a fat chick mark which is Nike famous swoosh(1971). Oregon running star Steve Prefontaine became the first athlete to be paid to wear Nike shoes(1973). Nike revenues had reached $4.8 million (1974).

Nike became the number one athletic shoe Company in U.S.A surpassing Adidas with almost 50 percent market share (1980).

The popularity of running was beginning to give away to fitness and aerobics , this market was dominated by Reebok through style and fashion shoes. Market share leading moved to Reebok 30% Compared with 18% to Nike. Nike decided to keep their focus on performance but give more attention to basketball.

Nike developed Air Max with new technology which selling $75 million in its first year.
Nike succeed in getting rising star Michael Jordan and introduce Air Jordan line of basketball shoes which sold $100 million in the first year.

Nike brooding its brand through line of sports uniforms and apparel so Nike brand meaning changed to performance in sport.
After overcoming Adidas inside U.S.A , Nike decided to compete with Adidas inside Europe. Nike decide to penetrate soccer crazed world through sponsor Brazil team in world cup 1994.

After establishment in Europe , Nike looking for global growth in Asia.

Nike's image suffer from companys labor practices in Asia and the ubiquity of its corporate logo the swoosh. 2006 Nike was the number one athletic footwear and apparel company in the world.

Question no. 1:

To what extent did Nike succeed (fail) to predict (recognize) trends in consumer tastes ? Explain and evaluate the consequences of such success (failure) .
1- succeed in the beginning when Knight (Nike owner) recognized a neglected segment of serious athletes that had specialized needs (high quality running shoes) . 2- succeed when recognize that consumers chose products and brands in the mass market based upon by the preference and behavior of a small percentage of top athletes. 3- failed when the popularity of running was beginning to give away to fitness and aerobics which dominated by women .

4- succeed when Nike devote more attention to basketball inside U.S.A that had continued its recent rise in popularity (new generations) . 5- succeed when insist on performance position so they get anew wave of success when consumer desire for performance related products in the late [Link] Nike get dominance in the market from Reebok . 6- succeed when Nike sponsoring brazil national team in world cup 1994 in U.S.A in which American start to be interested in soccer. 7- failed when fashions changed again and many consumers viewed trainers or running shoes as out of style ,useful only for exercise.

Question no. 2:

Demonstrate how a sound strategy can fail because of improper execution.

1- When Nike change its distribution strategy and successfully regained control of 90% of Nikes European distribution.

2- Nike have an anti establishment and rebellious spirit which is different , innovative and effective but in many times made problems more than its benefit especially in European market who saw it was very aggressive for example: A -When Nike work in Europe with U.S.A message and soul Play Hard . Die Old was too aggressive and was not well received
B -Before Olympic games Atlanta 1996 Nike airing some controversial series with caption if you cant stand the heat, get out of Atlanta. C - European soccer championships ad. Nike vs. Evil .

3- when Nike take decision to penetrate soccer world it was a right strategy but its extravagant spending made some consumers refused it.

4- when Nike focus on its brand logo (swoosh) but overabundance of swooshes every where (shoes ,jerseys ,hats ,billboards ,soccer balls) made some writers to say (the swooshification of the world) . All of this made consumers think of swoosh as a Nike aggressive philosophy symbol and one of two modern societal ills.

Question no. 3:

Evaluate Nike distribution strategy.

Inside USA: succeed Nike distribute its product through retailers and Nike kept its relation good with them and trying to give them offers to motivate them to sell Nike shoes (10%discount,exclusive models) but in the same time Nike control marketing and advertising . Inside Europe: failed When Nike starting penetration Europe its market share was affected by distribution strategy , Nike was unable to control the growth of its brand because Nike distributer who controlled marketing and advertising rights was not necessarily highly motivated about selling Nike , overcoming this problem affected Nike position in customer mind. After change distribution strategy by regaining control of 90% of Nikes European distribution they have bad relation with European retailers .

inside China : succeed

Based on presence of Nike store every where 1200 store and 10 new shops a week

Question no. 4: Explain and evaluate the formulation and evolution of the Nike brand positioning. 1-Nike start and formulate its positioning as high quality running shoes designed especially for athletes by athletes. 2- Nike keep its position as high quality running shoes by developing Marathon , Cortez and Boston which cover the same segment runners. 3- Nike change its positioning by introducing general public with (Waffle Trainer) to be innovative and high performance athletic shoes .

If you have a body, you are an athlete

4- Nike modify its position as a innovative and high performance shoes for athletes and people who involved in sports .
5- Nike then change its position from performance shoes to innovation and performance in sports because Nike is started to produce apparel beside shoes for athletes . Also go to new markets like football and base ball . 6- Nike keep this position by penetrate new sports and new products like balls ,bags, contact lenses for athletes. to be world leading company in athletic footwear and apparel.

Question no. 5:

Evaluate Nike brand extension strategy.

I think brand extension was very effective due to: 1- Nike start with its core product tiger shoes for runners. Then introduce new models for the same segment . 2- After filling running shoes segment Nike start its extension through penetrate new segment which is basketball shoes with new products specific for it which is right step that moving from mature market to promising market withy keeping previous market. 3- After this expansion Nike expand in many markets like tennis and baseball based on its famous in the previous two markets. 4- Its the time for Nike to expand through biggest market worldwide (soccer) especially out side U.S.A and they work hard to get market share in this market .

5- all previous extension was inside footwear but this time Nike made a brand extension through apparels based on consumer perception and attitude on Nike shoes and it was very successful extension.(brand generalization) . 6- Nike then made extensions through sport equipment (balls, bags) which also right step like. 7- through this extensions Nike acquiesce many companies some of them not matching with its image or segment like Haan and other was right decision like Converse and Bauer (sport companies).

STRENGTHS:
Strong brand recognition high market share worldwide. Growing international presence Superior research and development department Strong financial returns

WEAKNESSES:
Lack of good positioning to the active females. Nikes failure to foresee problems in relation to labor and factory conditions at production locations has resulted in bad publicity and declining sales as society and consumers call for more "socially responsible" companies.

Strong sense of culture in the working Heavy dependency on footwear sales. environment

Great celebrity spokespersons

Sales divided in many markets worldwide which decrease risk.

High price related to competitors.

Insufficient line of affordable shoes

SWOT ANALYSIS
OPPORTUNITIES:
Customer use of companys products change from athletic purpose to be a fashion item.

THREATS:
market saturation. The problem is that the athletic shoe market is already full of different brands and companies. Competitors which copy company's business model (high value branded product manufactured at a low cost) Adidas the strong competitor who follow Nike every where Economic disaster coming to the world. economy, which may spark a cutback in consumer spending. Consumers are becoming savvier and may be scanning the market for new and different footwear and apparel products. the new generation will not be exclusively loyal to Nike

New Generations children (born between 1979 and 1994) will reach 60 million.
Growing e-commerces positive effect since one of companys competitive advantages is Internet sales Women demand for athletic footwear and clothing is increasing significantly Athletic shoes and apparel have become a trend worldwide. This is due to both the increasing numbers of people exercising and the trend towards casual apparel.

Strength

Weakness
Establish a better presence in the affordable shoe market. Increase focus in female fashion market. Increase market share in products other than shoes.

o
T

keep strong brand equity with new generations. Increase focus in e-commerce and mass customization. New innovation from R&D Push casual trend worldwide

Keep expanding into current and future foreign markets . Keep focus on performance and quality to counterattack copy products.

Focus on improving working conditions and human rights at international manufacturer. Increase number of Nike outlet stores offering discounted merchandise Increase CSR worldwide especially Europe.