Nike, Inc. Marketing Plan

“Just Do It”
The Nike Company was created in 1972 and founded by Phil Knight and Bill Bowerman. Nike’s primary goal is to create products that help athletes to reach their full potential. Their secondary goal is to create competitive advantage that keeps them ahead of their competition. It is important to Nike to have a separate identity from their competition and to have a brand name reputation that speaks for itself. During the 32 years Nike has been around, they have successfully made a brand name the world loves and identifies with. Their logo “The Swoosh” is recognized all around world and embodies the names of several Celebrity Athletes. Nike’s mission statement is “To bring inspiration and innovation to every athlete in the world.” Nike lives and breathes this mission through all of their products. With Michael Jordan being the face of Nike this helps them to reach their mission. Children and teenagers all over the world look up to Michael Jordan. Many children in the world hope to be able to just wear a pair of Jordan gym shoes. Tiger Woods is also a new face of Nike helping to target the golf sector. Nike, Michael Jordan, Tiger Woods, and many other endorsees together create hope and inspiration for young children/athletes across the globe.

Nike is a global company and is known for employing more than 33,000 people globally. (Nikebiz.com, 2009) This alone shows that Nike embraces diversity within their workforce and supplies jobs for people all over the world. The Nike headquarter is located in Beaverton, Oregon and employees more than 7,000 people (Nikebiz.com, 2009). This is just a brief summary of Nike’s company’s history. Nike Organizational Development

Structure
Nike considers their structure a “Matrix Organization” (Nikebiz.com, 2010). This structure allows Nike to deal with the fast-moving market and keep their industry leading position. It can be costly, but has proven to be well worth the money for Nike. All work is collaborative; team members report to two areas; known as, geography and the global function area (Nikebiz.com, 2010). People

Suppliers/subcontractors that Nike does business with are considered “outsiders.” In the past, when Nike has received criticism for running sweatshops their first response was to deny that they ever knew this occurred. Their reason for this was because they hired outside suppliers who ran the factories outside of the U.S. Nike has now learned from bad publicity that the best way to handle this is to have “insiders” do audits of the factories globally. With new audits in place it is less likely suppliers will mistreat workers because they will fear losing their contract with Nike. Suppliers are also held to a higher standard now. Suppliers/subcontractors are responsible to report any other suppliers who act unethically. Nike learned that hiring outsiders can save money, but insiders have a better feel for respect for the organizations values and culture. Outside people can affect the way customers perceive the organization, and for this reason Nike is taking more precautions to ensure outsiders are in-line with their values.

Culture and Systems
Nike was built on a handshake and everything have today revolves around a mutual trust and respect of all parties involved with the Nike organization. The entire organization’s culture is based on trust, respect, honesty, and teamwork (Nikebiz.com, 2010). Innovation is a shared value within the organization that has helped them to sustain their success. Constant new products and enhancements of the old products is a value Nike has instilled in employees throughout the organization.

Nike has a reward system for suppliers/subcontractors. This reward system is called a “performance incentive.” The first reward system Nike had in place offered bonuses for quality, price, and delivery times. These rewards were causing unethical issues within the organization such as sweatshops ran by subcontractors. Suppliers were cutting corners and making employee work more hours to look out for their bonuses. The audits were not to combat this, as long as rewards were the main cause of the problem. Nike unknowingly developed an organizational culture with suppliers and this culture affected how suppliers made decisions. Nike new strategy was to create a grading scale, which is known as “performance incentive”, I mention earlier. The suppliers would be graded based on factories conditions and their rewards would be tied to the grade they receive. (Zadek, 2004) With this new strategy, it created corporate responsibility not only for Nike, but for its external suppliers as well.

Strategy
Nike overall strategy is to create a team atmosphere in the workplace to foster innovation and overall success for the organization. According to a group from DePaul University, Nike uses all sport terms when talking in the workplace. For example workers are called “players,” supervisors are called “coaches,” and meetings are called “huddle” (Group One, 2000). All of these terms seems so little, but have huge meanings. These terms makes employees feel like they work for more than just a company, but they are a part of team. When anyone is a part of team you tend to give everything your best effort and you care about the outcome. Success can‘t happen without the motivation and acceptance of everyone. Nike strategy so far has worked and the strategy goes hand-and-hand with the company culture. Other Strategic Plans

Nike, and any other organization, plan is always set by the mission, vision, and value statements. These statements outline who they are, what they do, where they plan to go, and what they value. See the following statements that the Nike organization was built on: Mission Statement

Our mission at Nike is to be a company that surpasses all others in the athletic industry. We will maintain our position by providing quality footwear, apparel and equipment to institutions and individual consumers of all ages and lifestyles. We pledge to make our products easy available worldwide through the use of retail outlets, mail order and our company web site. Nike’s management believes that our success lies in the hands of our teammates, customers, shareholders and the communities in which we operate. We vow to keep this in mind with the execution of every decision within our company. Value Statement

Nike will focus its commitment to all stakeholders by continuing to make strides towards being a company that sets the precedents in social responsibility. Nike is continuously making efforts to ensure that all employees and members of its surrounding communities are treated in a manner that is in line with our mission. Nike has made many alliances with human rights organizations in an attempt to ensure labor rights for employees of the industry overseas. We are committed to treating our employees with the utmost respect, which is reflected in our compensation and human resource policies. We are also committed to making sound decisions in regards to our environment, resources, and the fight against pollution.

Vision Statement
At Nike, our vision is to remain the leader in our industry. We will continue to produce the quality products that we have provided in the past. Most importantly, we will continue to meet the ever-changing needs of our customers, through product innovation.

Market/Submarket Analysis
Attractiveness of the Market
The footwear industry sales usually remain stable from year-to-year. No matter what the economic situation shoes are always needed and people will pay money for quality footwear. According to Research Report, “On average, every man, woman, and child in the United States purchases more than four pairs of shoes each year, a level of consumption that establishes the U.S. as the world’s largest importer of footwear” (Research Report, 2002). The market is attached to professional athletes and celebrities and profitability is likely. Sales are approximately $2 billion in the footwear industry and there are about 100 manufacturers (First Research, 2010). Product segments are for women, men, and children. Recently, most manufacturing has been outsourcing to save on production and increase profits. The market is based on fashion and people love fashion. There is always money to be made when fashion is involved. Entry and Exit Barriers

The market is very mature. All of the companies within the organization are well established and hold a substantial market share. This makes it hard for new competitors to enter the market. The standards for footwear and apparel have already been set high. Customers are use to a certain level of quality at a certain price and new competitors will find it hard to compete with these standards at first. Smaller companies such as K-Swiss and Saucony have had a hard time surviving with Nike, Adidas, and Reebok taking over the market (Group One, 2000).

Nike, Adidas, and Reebok are so well established that they take over the shelves in the retail stores (distribution channels). New comers will find it hard to find traditional distribution channels because the industry leaders are utilizing them all. Exit barriers are minimal because there are so many other options within the industry to change to. The only barriers with exiting would be financial barriers such as debt, lawsuits by stakeholders (possibly), and assets. Other Entry Barriers

Figure 1: Entry Barriers for Footwear Market

Profitability Prospects and Growth Projections
Profitability and growth depends on the marketing skills of the organization. Nike has done a great job with using marking to increase sales and market share. According to First Research, footwear is becoming a big industry for counterfeiting. In 2009 they seized about $100 million in counterfeit footwear (First Research, 2010). People are setting up on-line websites to bypass the government inspection of packages by sizes. Profitability in this market is being damaged severely by this issue. Gross margins in this the footwear market is usually between 35-50 percent (First Research, 2010), but there are many environmental factors that can affect these percentages. As mentioned above counterfeiting, recessions, etc. Industry Trends

The footwear market is actually evolving into several trends and they are as follows: * Something for everyone- The footwear industry markets to women, men, and children * The big get bigger- Adidas merging with Reebok and Nike merging with Converse * Moving away from the middle- No longer just athletic shoes, but casual shoes such as Cole Haans * Toward a better shopping lifestyle- Industry leaders such as Nike and Adidas are set-up in areas or strips malls where Victoria Secret, Star Bucks, Gucci, Cartier, Best Buy, etc., are housed. It is particularly set-up this way on Michigan Avenue in Chicago.

Emerging Submarkets
* Sportswear
* Golf Equipment
* Hockey Equipment
* Soccer Equipment
* Casual wear
* Casual shoes
* Swim wear
Key Success Factors
* Strong marketing campaigns
* Icons/ celebrity images
* Quality
* Price
* Innovation
* Research and Development
* Brand Building/ Loyalty
* Globalization
* Internet based business

Internal Analysis: S.W.O.T.
Figure 2: Nike S.W.O.T. Analysis

Figure 2 information was found on

http://www.mba-tutorials.com/marketing/240-nike-swot-analysis.html and http://www.marketingteacher.com/SWOT/nike_swot.htm External and Customer Analysis

Major Segments, Customer Motivations, and Unmet Needs

Nike major market segment is athletes, but they are also known for targeting individuals that are interested in dressing casual. The two market segments look to Nike products for different reasons and values. The market segment that uses the product for athletic activities is looking for high quality, satisfaction, and a comfortable product. The market segment seeking the Nike product for casual wear is looking for a common, but comfortable shoe. An example or two of Nike’s casual selections would be Air Force Ones or Cole Haan. Nike market segment started off as just athletes, but has evolved over the years to everyday shoes for all purposes. Nike no longer creates shoes and clothes for sport, but for every aspect of life outside of that. One of Nike statements is “If you have a body, you are an athlete “is true statement when it comes to their market segment and who they target (Nikebiz.com, 2010). Nike market segment is endless and over the years they have evolved in marketing to almost everyone.

Nike customers’ unmet need is quality. When customers turn to Nike for products it is because they know the product is comfortable, well put together, tested by real people prior to being release for sale, and brand recognition. The Nike brand is known for quality and many celebrity athletes endorse this fact. Michael Jordan and Tiger Woods are two key motivators that make customers buy the Nike brand. Although, Nike market segment is wide the celebrity endorsement motivates more youth to buy the Nike brand from ages 13-25. Most urban area children adore Jordan’s and can’t wait to own a pair. For young child in urban areas the unmet need would be prestige and wanting to fit in with their peers. The current unmet need for some Nike customers would be affordable prices. There are those young children who parents can’t afford Nike high priced shoes. This forces those customers to seek products from competitors such as Reebok or Adidas. Competitor Analysis

Competition
Nike top competitors are Adidas, New Balance, and Puma according to Nike’s profile (Hoover’s, 2010). 1) Adidas Group: This umbrellas three major companies Adidas (the profit driver of the company), Reebok (discount image), and TaylorMade Adidas Golf (leading golf brand). The newest growth strategy in place is to try to remove the image of “discount” from the Reebok name. The new Reebok image is going to high performance and a way to push this positioning is to through a price strategy. Reebok will increase quality on products and add a premium price (Adidas Group, 2010). The strategy will hopefully increase sales for Adidas group and compete with Nike prestigious name, which doesn’t include anything of discounted pricing. 2) Puma: They seem to be the underdog in the competition, but they are slowly edging their way to a healthy market share. While Nike uses professional athletes to lure in customers, Puma chooses the approach of having celebrities (actors, actresses, etc.) wear their products.

They promote the everyday apparel/shoes for everyone to wear, rather than the on the court sportswear. They feel that customers enjoy “classic” styles and this is what makes their products sales (Stevenson, 2003). 3) New Balance: Continuous technological innovations allow New Balance to remain tough competition and keep a healthy market share. In many cases they received first-mover advantage for many innovations such as handmade running spikes, running sole with a rippled rubber sole(multiple widths), and a shoe to feature a high performance suspension system known as the N-ergy SC System (Data Monitor, 2007). Their products are also sold in 120 countries (Data Monitor, 2007). This is taking globalization to another level. The New Balance name in the United States is underestimated, but is loved in other countries. Table 1: Sales, Profits, and Shares in the United States

Company| Sales| Profits| Share|
Nike| $19,176,100,000| 18.1% (Nikebiz)| 36%|
New Balance| 1,500,000,000| N/A| 10.7%|
Puma| 90,626,400| 19.8%| 1.1%|
AdidasReebok| 15,438,623,200| 10.4% (Adidas-Group)| 9.2%12.2%|

Environmental Analysis
Threat, Opportunities, and Trends
Nike started off as being known as just a company that provides shoes for sports. More customers in the urban area are recognizing Nike for a casual shoe selection and wearing Air Force One. Nike biggest threat is that they need to market more for the casual wear with the professional athletes and celebrities to gain more market share. High school children are deciding to dress more casual today and this could be a great profit opportunity for Nike. In some countries Nike is still just known for their sports shoes and it is time to expand pass that recognition into casual footwear as well. They do offer Cole Haan and more people are prone to buy these with today’s fashion trends.

Customer base is getting older and with so many alternative products to Nike newer generations may choose another brand. This is a big threat. It is not always promised that the older loyal customer can influence the up and coming generation to be loyal to the Nike brand. There is now Sketchers, Rockport, Pastries, etc. that youth are buying that are actually cheaper than Nike. This could mean that Nike must begin to market to an older customer base and also come with new innovations to draw in the new generations.

New Balance is taking first-mover advantage on a lot of technological footwear advances and this is a threat to Nike. New Balance may not be as respected in the U.S. as Nike, but in other countries this could hurt Nike’s bottom line. Nike R&D(Research and Development) is strong, but they still lacked the research to forecast the technologies New Balance has mastered to gain market share.

Bad publicity is an environmental factor that was somewhat out of Nike’s control. They hire subcontractors to do the manufacturing and they can’t always be within the factories to see everything all the time. This has already posed a threat for Nike. Even with the audits put in place, bad publicity still hurts the company for years down the line. There are customers Nike will never be able to gain back and some they will never be able to win due to this issue. Subcontractors and their work environments can be a big threat to any organization. Strategic Uncertainties/Scenario

Michael Jordan is an athlete that Nike depends on drastically to make revenue for the company. Jordan is human and it is possible that he can receive some bad publicity that can hurt the bottom line of Nike. Customers may tend to stop buying the Jordan gym shoes, which could hurt Nike more than anyone could imagine. For years now Jordan has been the face of Nike. Jordan shoes sale for $150 per pair and children skip school to go buy these shoes when they are released. If Michael Jordan becomes involved in any kind of scandal this could ruin Nike’s strategy of top athlete sponsors to increase revenues.

Strategy Development
Table 2: Strategy
Target Segment/Age| Value Propositions| Asset/Competencies for Leverage| Athletic Shoes13-24| Appealing DesignProduct Attribute BenefitEmotional/Self-Expressive Benefits| Strong marketing campaignsGreat slogansBrand Loyalty & RecognitionHigh quality produced at low pricesProfessional Athletes| Casual Shoes25-45Marketing to the Aging Customer Base| QualityBrand FamiliarityEmotional/Self-Expressive Benefits| Strong marketing campaignsBrand Loyalty & RecognitionHigh quality produced at low pricesCustomer Service/Relationship|

Functional Strategies
* Quality Program
* Brand-Building Strategy
* Customer Relationship Program
Nike has already established its brand and people respect them for their quality products. It is cheaper and smarter to stick with the attributes they are best in. It is always important to continue to build the brand because there will always be room for further improvement. Improve quality daily to ensure that Nike continuous to have superior quality products that customers can’t resist. Customer relationship building is the only new factor that needs to be developed to ensure that customers receive great service and quality products from retailers. Investment Level

There will need to be a growth strategy implemented for the athletic shoe market because less people are buying athletic shoes. Shoes are actually declining. More innovations need to be put in place to pull in more customers and keep current customers loyal. The casual shoe market is already growing and only requires the same growth to maintain strategy for success at this time. Air Force Ones are considered casual and many men buy this shoe in many colors. It may be awareness. More of the Cole Haan shoe line needs to be marketed using celebrities, especially on the red carpet or award shows.

Conclusions
The footwear industry has its ups and downs, but overall shoes are a necessity. People will buy shoes no matter what the current economic crisis is and quality is most important. Nike has captured a huge chunk of the market and has maintained that share for years. Nike’s success can be contributed to great slogans, strong marketing campaigns, brand-building, and quality. Nike is always finding new innovative ways to capture new customers and one important way they do this is by product extension. Nike provides sports equipment, clothes, shoes, and most importantly inspiration to youth around the world that they can be whatever they dream to be. Their special slogans provided insight and motivation to the lives of people all around the world.

References

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Data Monitor. (2007). New Balance Athletic Shoe: Company Profile. Retrieved May 30, 2010, from http://mgm409.wikispaces.com/file/view/17393.pdf
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Research Report. (2002). Footwear Industry in The U.S. Retrieved May 31, 2010, from http://www.infomat.com/research/infre0000246.html
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