Nike Case Study

In this Case Study Analyses, an objective SWOT Analyses will be done to help identify potential strengths, weaknesses, opportunities, and threats within the Nike Corporation.

It will look at the role of promotions as a consumer product company, offer possible promotional objectives, and consider other promotional methods the Nike Corporation may wish to implement in its quest to remain the market leader.

History, Development, and Growth

From their marketing strategies to their selling philosophies, Nike has developed one of the most recognizable and demanded name and logo tandems ever created.

A former University of Oregon track team member, Phil Knight, created Blue Ribbon Sports (a.k.a.BRS) in 1962 when he made a deal with a Japanese shoe company to import their shoe to the United States.

In Oregon, the legendary Bill Bowerman, who joined forces with him in 1964 to become the number one company selling athletic shoes, coached Knight. It was Knight’s idea to sell a low cost shoe with a very high quality.

Bowerman redesigned the Japanese shoe while Knight acted as the accountant and salesman, pushing their newly crafted sneakers at track meets and local shoe stores. Soon enough, BRS received a credit line and subcontracted it’s own shoe line. The Nike brand was born.

Nike, which is the Greek goddess of victory, was born in 1972, when BRS launched its first branded shoe at the U.S. Olympic track and field trials. Over the next decade, the company nearly doubled in size each year. In 1978, BRS officially changed its corporate name to that of the Nike brand.

The company signed on tennis great John McEnroe, marathon champions Alberto Salazar and Joan Benoit, and Olympic track star Carl Lewis. By the 1980’s, Nike was a household name.

Nike kept its focus on track athletes for the most part during these early years until the decline of the running boom of the late 70’s and 80’s when sales began to decline in the running shoe market and Nike dropped back to number two.

Pretty soon Nike began to notice a market that they previously avoided; that of the every day athlete. Co-founder Bill Bowerman once said, “If you have a body, you’re an athlete!” In 1985, Michael Jordan, then just a rookie, joined forces with Nike and began to market a new line of shoes and apparel with the name AIR JORDAN.

This was the beginning of the JORDAN brand and featured on each AIR JORDAN product was the Nike insignia, the swoosh. It just so happened that Jordan came to Nike at a time when the NBA was gaining marketability with the public, which gave Nike the perfect opportunity to capitalize on its marketing and promotion strategies.

Because of Michael Jordan, Nike was able to launch new lines of basketball shoes, the AIR FORCE and AIR FLIGHT, as well as a new line of apparel. Using technology to its advantage (by placing a cushion of air in its shoes) gave Nike the preferential advantage needed to maintain its market share.

Soon, Nike began marketing to “athletes of all ages”, bringing in new products aimed at every generation from infants to old age. Michael Jordan took Nike to a whole new level because of his popularity and image.

Nike executives continue to use top name athletes in their marketing efforts to promote each of their lines of shoes, apparel, and products. They have used highly recognizable names is sports as diverse as gold (Tiger Woods), football (Randy Moss), and boxing (Roy Jones, Jr.).

Nike continues to market itself to athletes of every age who wish to be active and still comfortable and can easily count on the Nike name promoting itself. They continue to produce innovative ideas as well, which have been productive and entertaining promotional tools.

Internal Environment (Strengths and Weaknesses)

Strengths

Ð'* Nike is a very competitive organization. Founder and CEO Phil Knight is often quoted as saying, “business is war without bullets”. Nike has a healthy dislike of its competitors. At the Atlanta Olympics, Reebok went through great expense to sponsor the games. Nike did not, however, Nike sponsored the top athletes and gained valuable coverage as a result.

Ð'* Nike has no factories. It does not tie up cash in buildings or labor. This makes it a very lean organization, resulting in higher profits.

Ð'* Nike is a leader in research and development, as evidenced by its evolving and innovative product range.

Ð'* Nike moves its production to where it can produce the highest quality product at the lowest possible cost.

Ð'* Nike is a global brand. It is the number one sports brand in the world. Its famous “swoosh” logo is instantly recognized everywhere.

Weaknesses

Ð'* Although the company has a large product mix, its revenues are still heavily dependent on its share of the footwear market. This may leave it vulnerable if, for any reason, the market share erodes.

Ð'* The retail sector is very price sensitive. Nike has it’s own retailer in Nike Town but most of its income is derived by selling to other retailers. Margins tend to get squeezed as these retailers try to pass some of the low price competition pressure onto Nike.

Nike has received a lot of negative press with its use of outsourcing to oversea labor (sweatshops)

External Environment (Opportunities and Threats)

Opportunities

Ð'* Product development offers Nike many opportunities. The brand is fiercely defended by its owners who truly believe that Nike is not a fashion brand, however, like it or not, consumers that wear Nike products do not always participate in sports. Some would argue, especially in youth culture, that Nike is a fashion brand. This fact creates its own opportunities.

Ð'* There is also the opportunity to develop products such as sport wear, sunglasses, jewelry, etc. Such high value items do tend to have high profits associated with them.

Ð'* The business could be further developed internationally, building upon its strong global brand recognition.