Nike Brand Portfolio Project - Case Study Example

?Nike Brief Brand History and Mission Nike, originally known as Blue Ribbon Sports (BRS), an American corporation majoring in sports and athletics gear started its operations in 1964. The University of Oregon track athlete Phil Knight and his coach Bill Bowerman founded the company, which currently involves in design, development, and marketing of athletics footwear, apparel, equipment, and accessories. However, the company has undergone through operational transformational changes since its inception. Although it currently operates as a designer and developer of sports apparel, the company’s first operations focused in distributing products of the Japanese shoemaker Onitsuka Tiger (Frisch 4). In 1964, the first year of its operation, the company sold about1300 pairs of shoes generating revenues of about $8000 dollars. The company acquired a full-time employee in 1965, with an annual turnover of close to $20000. With the increased sales volume and growth in stock, the company opened its first retail store in 3107 Pico Boulevard in Santa Monica, California in 1966. Because of the rapid growth in revenues and demand for the company’s products, the company in 1967 expanded its operations to the East Coast in Wellesley, Massachusetts. As the relationship between Blue Ribbon Sports and Onitsuka Tiger approached its final stages in the year 1971, Blue Ribbon Sports was preparing to launch its new footwear designed by Carolyn Davidson (Frisch 6). In June 1971, Blue Ribbon Sports, branded as Nike first used the Swoosh designed footwear, subsequently registering for a trademark and patents of the products. Over time, the company has grown tremendously due to the extensive use of television advertising for their products. Getting into a number of partnerships with different individuals such as John Brown and partners and Wilden+Kennedy, the later who has remained the official advertising agency for the company, Nike has successfully managed to transform its operations from a small company to a multi-billion dollar enterprise (Google finance Web). In the fiscal year 2012, Nike managed revenues in excess of US $24.1 billion. With the increase in product quality and focus on customer satisfaction, the once small distributor of athletics wear and apparel currently has a market value of approximately $10.7 billion (Nike Inc. web). This makes Nike the biggest company in the sports and athletics brands, ahead of companies such as adidas. Nike’s Mission The company’s mission statement drives its growth and success, making it a profitable and high performing organization in the sports business. This forms the ultimate goal of its operations, gearing its management and employees to work in an enthusiastic way. According to Nike inc. (web), the company’s mission is, “To bring inspiration and innovation to every athlete in the world.” Objectives and Strategies Although initially the company used TV as the dominant advertising strategy, in the recent past a number of strategies drives the advertising campaign of Nike. Among the most significant advertising methods forming the company’s current advertising strategy, include internet marketing, email management technologies and broadcast, methods that the company believes directly influences its target customers. The ability of the company to select reliable media to convey its messages and sell its products to the right people is the main reason for its success. Additionally, the company creatively uses these media forms to complement each other, creating a bigger impact in the market than any other sports company does. As the world started embracing advertising and corporations started using internet as an advertising tool, Nike too launched its website in the year 1997 in a bid to market its products. As the company took its products to the internet-advertising platform, it adopted an email management system called EchoMail that integrated its emails into one database center. In order to offer its loyal customers personalized services, the company decided to adopt an email system that would directly deal with the needs of their customers. Strategically, this would increase customer satisfaction and subsequently contribute to its growth and success. The one on one communication and interaction between its customers also contributed to the improvement of the company’s public image (Ore web). The new media strategy also helped the company acquire data, improve its customer feedback, and reduce its service costs, culminating to an increase in its revenues. Target Audience Identification Nike has different target audience identification from other companies. Unlike other firms in the sports industry, Nike has a wide and numerous audiences spread across different markets. The fact that the company creates its own audiences rather than exploit the existing audiences gives the company a competitive advantage over other companies. Using creativity and knowledge, the company understands the people’s response to images and lifestyles. Thus, the company uses this knowledge to create its own target audiences. Therefore, instead of manufacturing products for the existing markets, the company creates the image and later responds to the emerging market. The advantage of this is that while other companies compete for the existing audience (Ore web); Nike already has an upper hand as the image creates the desired audience. Additionally, Nike over the years has targeted the athletes and the aspiring athletes in order to market its products and services. Strategically, it places its advertisements on channels broadcasting athletics, creating awareness of their new products. It also targets the young children, especially the students, with the hopes of becoming athletes in future (Team web). Consumer decision-making Nike uses the lifestyles and image of its products to influence the decision making of its consumers. The fact that the company creates its own audience and markets other than relying on the existing markets influences the decision making process of the consumers. Nike uses creativity to create appealing brands that individuals and customers cannot reject. Intentionally, it creates the urge among the customers to purchase the products, therefore influencing their decisions. Positioning and segmentation strategies and competition The company strategically placed its products at the heart of its consumers, winning their loyalty. When starting its operations, the founders realized that the existing firms in the sports business offered high quality products against a high price. The fact that these firms manufactured their products in high cost countries such as the United States and England contributed to the high costs of their products (Team web). On the other hand, Japanese manufacturers provided high quality products against low costs due to the production efficiency of the countries. Market segmentation Nike focuses on sports men and women by signing agreements between the company and the sports teams and college athletic for sponsorship and endorsement (Team web). This way, Nike reaches to a number of consumers and clients with the ability to purchase their products. The company lays a number of strategies in order to aim at these athletes and sponsorship companies. Thus, the company’s largest market segment is the athletes, sports teams, and college teams. Through endorsements and sponsorship programs, the company reaches to this target group of consumers. In order to increase the employee satisfaction, Nike focuses on individual athletes and sportsmen (Enderle 16). By giving them personalized attention, Nike ensures that it satisfies its customers, subsequently increasing their profitability. Competition Although sports industry has a number of competitors, Nike has cut itself a niche that gives it competitive advantage over other companies in the business. By developing its products in an innovative and creative manner, Nike over time has remained ahead of the other firms. The affordability of its products that are of high quality is one of the main reasons for the competitive advantage for the company (Enderle 28). The innovativeness of the company’s products, coupled with the creativity in its marketing strategy such as brand identity, celebrity endorsement and logo are factors that give the company a competitive advantage over the rest of the firms in the business. Communication strategy Nike values communication between staff members and its consumers. As a result, the company has created a communication system that enables good flow of information for effective decision-making process. Having a number of retailers and subsidiary stores, Nike keeps updating its communication system to ensure that it does not suffer from any communication breakdowns (Carty 138). In the late spring of 1999, Nike Retail, which is a subsidiary of Nike Town shops and employees of shops around the world, upgraded their hardware and software ion line with the international and industry requirements. Initially, the technology consisted of IBM 4690-series point of sale cash registers that operated on an OS/2 operating system. In the upgrading process, Nike Retail adopted PC-based systems that run on a more sophisticated Windows NT operating system. The company also plans to upgrade the past software that they used called Connect: Remote, a system developed by Sterling Commerce Inc. to a more advanced operating system in line with its current operations and growth. This allows monitoring of sales and inventory data in a real time basis (Carty 131). Further, because of the use of increased store databases in its sales reconciliation process, Nike’s operations are more efficient, especially in the use of electronic journaling and credit authorization in its sales strategy. The company understands the need for consumer awareness and the need for information. As such, the company uses emailing system to ensure smooth, direct, and effective communication between the company and the consumers. By adopting EchoMail, a system developed by Wieden+kennedy, it integrates emails from different media forms such as television, website and other sources into one database. This also allows customer to email featured athletes directly, increasing its public image, and enhancing its publicity. Moreover, the ability of the customers to speak with the company in a direct way allows for efficiency and effectiveness ion the communication process. Nike communication strategies allow for direct and instant feedback from the customers, increasing their level of satisfaction. Media strategy Over the years, Nike has sought to collaborate with reliable and efficient advertising agencies responsible for pushing its brand across the market. With the expansion in its operations to a global platform, Nike has diversified its media strategy to incorporate a number of media. Before the growth of the advertising industry, Nike extensively relied on television as the only advertising media. With time however, it has revolutionized its media strategy to incorporate a number of modern methods of advertising. The advantages that some of the marketing media have in delivering information to the audience makes them preferable by the company to others. Television Nike, since the mid-1980s, has extensively used the television as its most preferred advertising media. Among the reasons why the company prefers television, include the ability of the TV to convey the message or advertisements with sound, visuals, and actions. TV also gives Nike the opportunity to communicate with local, national, and international audiences, especially due to the globalization of the international business. BY using TV, Nike targets many segments of people like moms, young people, and children who are potential customers. However, it has its own disadvantages. Among these, include the high costs of running commercials on television. It is only possible to hire short commercials with concise messages, thus does not express much about the products. In order to capture the attention of the target audience, the commercials have to run a number of times. Cable television With the increased viewer migration from broadcast to cable, Nike has seen this as an opportunity to reach out top more people. Since the rich and the higher income earners as well as athletes and celebrities use this service, the company hopes to capture them through using it as an advertising media. It also allows more weeks of advertising compared to the normal TV. However, it has lower rated programs, hence poor viewership. New Media The new media, which involves the use of the internet, is a new concept that helps companies to reach national or international target audiences with low cost, a reason why many organizations prefer using it. Additionally, it makes it easy to track results, enabling a company determine which online outlets work best for its ads. Since people have adequate access to internet, they are likely to find the information at any particular time. However, it faces a number of disadvantages such as the ease to ignore or skim over the advertisements, and the need to review the information frequently to make it attractive to the customers. Creative tactics and creative execution Just as the company believes in creativity in developing its products, it invests considerable efforts in its advertising strategy. with the understanding of the impact that creative advertising has on increasing company revenues, Nike, through its official advertising agent, Wieden+Kennedy churns out creative advertisements that not only capture the attention of the consumers but also increase the company’s product awareness. The company has won a number of awards for the creative messages and advertisements. In the year 1994 and 2003, Nike won the first position in The Cannes Advertising Festival as the advertiser of the year; Nike is the only company to have won the price twice, an indication of its high investment in its advertisements. Since the creation of the Emmay Award for the best commercials in 1992, Nike has twice received the award. One of the most creative advertisements aired by Nike was the “The Morning After” commercial, which was a satirical perception of what a runner could face in the morning of January 1, 2000 if every prediction on the Y2K problem became a reality. In 2002, the company also aired a creative piece called “Move”. In this advertisement, a number of famous athletes featured in a series of pursuits from each other, associating themselves with Nike as their brand (Google finance Web). Integrated Marketing Communications In an innovative way to reach out to more customers and athletes, the official advertising agency of the company, Wieden+Kennedy integrated the same email management technology with a number of advertising media such as TV, normal emails, the newspapers and its website, which developed its current marketing campaign. This allowed consumers of the company to directly and in an interactive way email featured athletes in the company’s advertisements. The fact that most of the customers can directly communicate with the company increases the customer’s level of satisfaction. Any queries or concerns by a customer go through the system directly without any intermediaries, subsequently increasing customer satisfaction. Advertising Budget History Historically, Nike has devoted significant amounts of money in its advertisement campaign, and has sign of slowing down if the current trends are anything to go by. Although its expenditure on print and TV slowed down by at least 40%, the company had a total of $2.4 billion in the year 2011. Targeting the youth and teenagers of 17 years who spend 20% more on shoes than their adult counterparts, the company increasingly invests in non-traditional media used by most of these youth. In the same year 2011, the company spent about $800 million in non-traditional media targeting this market. In the Super Bowl advertisement for instance, Nike spent $200 million that targeted all social media sites and communities. In the year 2001, Nike spent about $3 million in the advertisement, “Wings, Beer, Sports” campaign showing the company’s readiness to spend in the advertisements. In 2003, the company budgeted about $3 million, only to grow to about $8 million for the year 2003 in the advert “Twelve tasty appetizers, go crazy” campaign. In the last 10 years, the company’s budget has increased, with the reports indicating that this might grow further in future. Recommendations Although Nike has a successful history, the increased focus on the traditional media such as the TV could be disadvantageous to it as a brand. People know the company, but does not have experience of its products, especially in the emerging markets such as China and Africa. Direct marketing is one of the ways in which the company could use to reach to its potential customers. Additionally, increasing its network to different regions can potentially improve the organizational profitability. While the company has started using the new media such as the internet, the effectiveness of the use of social media such as Facebook and twitter could potentially improve the company’s profitability. Finally, the virtual shops are yet another important idea that the company needs to consider in its marketing strategy. Thus, it should consider getting its products on the online platform, and offer shipping services to the people in far countries. Works Cited Carty, Victoria. "Technology and Counter-Hegemonic Movements: The Case of Nike Corporation." Social Movement Studies 1.2 (2002): 129-146. Academic Search Premier. Web. 13 Dec. 2013. Enderle, Kim, Dan Hirsch, Lisa Micka, Brian Saving, Sheetal Shah and Tatiana Szerwinski. Strategic Analysis of Nike, Inc. DePaul University. desert. 2000. Web. 13 December 2013. Frisch, Aaron. The Story of Nike. Mankato, Minn: Creative Education, 2009. Print. Google finance. Nike Inc. 2013. Web. 13 December 2013. Nike Inc. 2013. Web. 13 December 2013. Ore, Beaverton. Nike, Inc. Reports Fiscal 2013 Fourth Quarter and Full Year Results, Businesswire, 2013. Web. 13 December 2013. Team, Trefis. Why Nike Will Outpace The Sports Apparel Market's Growth, Forbes, 2013. Web. 13 December 2013. Read More