The marketing strategy of Nike
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A sound marketing strategy and planning are vital for any company to compete effectively in the market. In order to compete in today’s markets, a company needs to break out of commodity status and serve customers’ needs better than competitors (Ferrell and Hartline 2011). The most successful companies use a great marketing strategy to take advantage of their strengths and capitalize on available opportunities.
Nike has become one of the most successful companies globally mainly because of its aggressive marketing which has made the swoosh trademark relevant to every athlete and sports fan globally. The report takes an in-depth analysis of Nike’s marketing activities, tactics, and strategies by identifying diverse components of its marketing strategy. Through this analysis, the author has discovered several trends likely to affect Nike’s success. Declining basketball sneaker sales, changing preferences of younger buyers, growing tariffs, and the company’s declining US sales. Nevertheless, the report has also discovered a number of opportunities including penetrating the Southeast Asia market and China.
According to the findings, while the footwear business unit is in decline, Nike should endeavor to invest in its apparel business, which has proved to be a star. Nike should use revenue from its footwear to invest in this strategic business unit because of its fast growth, high market share, and future growth potential. The company should also continue to invest in its equipment and other segments as well as enhance its digital, business because of its growth potential to become the next business star.
Nevertheless, Nike's positioning has become one of its major success factors because it has been able to reach out to all its targets globally. This has helped it to capture a high market share and revenue globally, giving it a competitive edge in the growing competitive market.
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Nike's marketing strategy Case Study
Key Learning Outcomes
By the end of the case, students should be able to:
- Understand and discuss the key components of Nike's marketing strategy
- Understand the concept of marketing strategy, what it is, how it works, and its importance in the success of an organization
- Apply strategic business theories and concepts to a real company
1.0 INTRODUCTION
Established in 1964 by Phillip Knight and Bill Bowerman, Nike went on to become the most successful sports apparel company globally. This has been mainly due to its remarkable advertising and great positioning among its targeted customers. However, the company is currently facing declining demand for sneakers as well as growing competition in the market.
The main aim of this report is to analyze Nike’s marketing activities, tactics, and strategies by identifying diverse components of its marketing strategy. This will be done using the four elements of the marketing mix (Product, price, promotion, and place). The author will identify the company’s product target, product positioning, product lifecycle, and the kind of demand the company is facing.
The author will use SWOT Matrix to reflect the company’s weaknesses, strengths, opportunities, and threats which will help us formulate the company’s growth strategies. BCG matrix will be used to identify the most relevant SBUs that the company should invest in to continue growing. The author will then discuss the report findings and recommend strategies going forward.
History of Nike
Initially operating as a distributor of Onitsuka Tiger a Japanese shoemaker, Nike was founded in 1964 as Blue-Ribbon Sports. With its headquarters in Beaverton Oregon, the company was founded by Phillip Knight, a middle-distance runner at the University of Oregon, and Bill Bowerman a track-and-field coach with just $1,200 in the bank (Bain and Banjo 2015). Originally, Knight wanted to call the company Dimension 6 but later named it Nike after the Greek goddess of victory. Jeff Johnson, the company’s first employee came up with the name (O’Really 2014). Nike’s first shoe innovation was in 1971 made inside a waffle iron, an innovative idea that would shape the company's future expansion and success. The company’s first store was opened in 1966 in Santa Monica California, followed by the one on the east coast of Massachusetts the following year. (Flynn 2015).
The company’s iconic swoosh was created by Caroline Davidson in 1971 for $35. She was later given stock which is now worth over $640,000. In the 1972 US track and field Olympics, Nike heavily promoted its products, generating close to $2 million dollars in its first year of distribution. (Bain and Banjo 2015; Flynn 2015).
In the years that followed, Nike’s sales grew very fast, enabling the company to endorse its first star athletes, Ilie Nastase and Jimmy Connors, a Tennis player. By 1978, Nike’s revenue had reached $28 million, boosted by remarkable marketing and growing popularity. By then the company was already involved in international markets including Asia (Flynn 2015).
In 1980, the same year Nike went public, it usurped Adidas (its biggest competitor then) in the US market share. By then, Nike’s revenue had surpassed $269 million (Bain and Banjo 2015; Flynn 2015). In 1984, Nike made one of the most strategic marketing decisions of all time when it endorsed an upcoming Micheal Jordan, who later became the biggest basketball player in history, boosting the company’s success through the years. In 1991, Nike became the first global company with over $3 billion in revenue, making it one of the biggest global companies (Bain and Banjo 2015).
In 1987, Nike was overtaken by Reebok in the US market, forcing the company to launch its training division featuring cross-training shoes from athletes like Deion Sanders and Bo Jackson. Jackson’s ‘Bo Knows’ campaign became a big success while cross trainers and Air Max became successful, playing a remarkable part in the success of Nike (Bain and Banjo 2015).
In 1996, Nike was published in Life Magazine with accusations of child labour which the company later vowed to rule out. Thus making its first free sole shoes designed to imitate running barefooted. In 2003 when Jordan retired, he was replaced by LeBron James who has also contributed greatly to Nike’s success (Bain and Banjo 2015). In 2015, Nike was picked by Brand Strategy Consulting as the world’s most valuable brand (Bin and Banjo 2015). Nike’s famous slogan ‘Just Do It’ was inspired by Gary Gilmore, a serial killer who said ‘let's do it’ before his execution in 1977 a fact that was revealed in a 2009 advertising documentary (O’Reilly 2014).
Between 1990 and 2000, Nike started extending its product portfolio to include apparel, golf, and many other sports-related items. Around the same time, the company also acquired many companies in order to expand, though it later sold off most in the late 2000s in order to cut costs. However, Converse and Hurley have remained the companies major subsidiaries. To reach its success, Nike has gone through several ups and downs and suffered many blows to its reputation including the sweat shop claims and troubled athletes among others. Nike’s success through the years has been mainly because of its innovative culture, a culture that started with Bill Bowerman at the University of Oregon when he was always trying to innovate comfortable, safe and cheap shoes to improve his student’s performance.
As of 2018, the company employed 73,100 employees with a brand value of at least $32 billion and trademarks in over 170 countries globally. The company has continued to endorse famous stars and forge major partnerships with companies like Apple. Currently, Nike has partnered with UEFA to support women’s football, Apollo Global Management to enhance its supply chain, and differentiated retailers like FootLocker, Dicks Sporting Goods, and Amazon.
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