NIKE 1 Nike has always remained on the preference list of athletes and athletic footwear was indeed the first category of products launched by the company more than 30 years ago. Today, you can see the craze for its products, not only among athletes, but also among golfers and other sportspeople. Apart from that, Nike shoes and other accessories have also become the favorite fashion products for teenagers. Thus, fashion, elegance and achievements are some of the associated attributes of Nike products. Early Days of Nike
Phil Knight, the starter of Nike revolution, began merchandising his athletic shoes designs, stores in a trunk inside a car. It is difficult to digest the fact that what is considered as an iconic brand today, witnessed a poor beginning like this. However, it was the hard work of Knight and needless to say, his efforts have paid him a lot. Story Behind Swoosh Symbol The present day picture of Nike products is incomplete without the mention of Swoosh symbol. This symbol has been adopted from Greek Goddess, Nike and hence, the name.
The Swoosh is believed to be the wing of this Goddess and it was chosen by Caroline Davidson. Caroline was an advertising student in the same University, where Knight was an accounts teacher. The symbol was incorporated on Nike shoes in 1972 and it is a part of the life of sports persons and fashion conscious generation. Nike – The Ship Floating Ahead Nike has existed for more than 35 years and is still willing to travel a long distance of popularity. With its products like baseball cleats, sports apparels, sports bags and other finest quality products are being accepted in all parts of the world.
Its evolution as a golf manufacturer is phenomenal and it has succeeded in offering Nike golf drivers, shoes, bags and other related stuff. Nike is the perfect example of a business, which has traveled a long way to become a successful brand. You can invest your trust and money in the manufacturer products to earn comfort and great quality, along with style and desirable returns on money. So in 1972 Nike was born, as I understand it, out of Phil Knight and Coach Bill Bowerman’s desire to make good athletic shoes.
Bowerman was a bit of a nut about running and running shoes, according to runners’ mythology, and his principle innovation was the lightweight running shoe with the now-famous waffle outsole. Yadda yadda yadda, they become the biggest sport brand in the world, thanks in no small part to Mr. Michael Jordan, his Airness and their ability to consistently market their innovations. Oddly enough, their growth hasn’t ever really been about the technical superiority of their product, besides perhaps in the basketball category. In almost every sport, Nike isn’t the choice of the “serious” athletes.
If you’re a serious basketballer or American footballer, it’s likely that you wear Swooshes. But serious runners typically choose something that is appropriate for their stride (New Balance, Saucony, Mizuno and Asics lead here, perhaps not in sales…). And most serious cyclists ride with Shimano, Sidi or Carnac. Serious backpackers and hikers stick with Asolo or some other specialty brand. Until recently (with the Joga effort and its ancestors) Nike played second fiddle for adidas in soccer. I’m not that familiar with baseball but I’ve seen a lot of logo diversity on the mound, suggesting that Nike’s hold here isn’t that strong.
Nike rose to great heights with Agassi and stole Sampras away from Sergio Tacchini, but other specialty brands were still considered superior by many serious Tennis players. And in Golf, Footjoy and others lead (at least in perception of quality and appropriateness) Nike despite their ownership of the Greatest Of All Time, Tiger. So Nike’s success, as far as I can tell, been founded on their ability to win over weekend warriors and to provide fashionable designs that can be worn outside of sporting activities.
As I recollect from my middle-school and early high-school days, most every kid wore some sort of Nike (or Nike-inspired Payless knockoff) athletic shoe, typically of either basketball or running varietal. Key factors that influence success of NIKE If a company is able to establish brand awareness, they will have a significant advantage in grabbing consumer’s attention and, therefore, market share. In today’s society where consumers have significantly less time to shop and compare, brand awareness is critical.
If an established brand name effectively conveys the messages of quality and dependability, consumers will automatically go to that brand relying on the image that has been created when they don’t have time to shop around. Manufacturing efficiency is something that companies are constantly striving for as well. Athletic shoe manufacturers must balance the costs of labor, raw materials, shipping, import tariffs, and technological advancements. In an effort to keeps costs down, the industry has been looking to overseas sourcing. This reduces the risk of losing revenue if one region which a manufacturer incurs problems.
Favorable legislation regarding foreign manufacturing has led to a huge increase in foreign sourcing. Overseas production and sourcing can lower material, and labor costs. The footwear companies must choose their distribution channels carefully because they want to make the product available, yet remain true to their image and goals. Retailers account for the largest percentage of sales, so manufacturers must be especially careful with their relationships with them. Technological advancement is becoming more and more of a player in the footwear industry.
With computer-aided design (CAD), companies have been able to successfully shorten their design to distribution cycle to only a few months. Also, new technology has facilitated new quick-response programs that link retailers with manufacturers to allow the retailer to have the correct inventory when it is needed called electronic data interchange (EDI). Immediately after a sale is made, electronic point of sale scanners read the information related to the sale such as price, product, size,… 2 question The Threat of Competition to Nike The athletic shoe industry is slowly becoming a global oligopoly.
There are many barriers to entry preventing new entrants from capturing significant market share. Nike can enjoy economies of scale that create cost advantages over any new rival. Today’s athletic shoes are highly technical. An extremely large capital investment is required for new firms to open athletic shoe factories and conduct research and design to create a popular athletic shoe. Nike has incorporated forward vertical integration into their corporate level strategy. Nike opened discount factory outlet stores in rural areas and retail stores in urban shopping Mecca’s.
Monolithic athletic manufacturing companies utilise economies of scale by spending millions on product endorsements and advertisements by spreading the high cost over their entire yearly sales. The aggressive marketing campaigns turn their products into household names making it arduous for new firms to compete. Athletic shoe manufacturers greatly attempt to differentiate their products from all shoe manufacturers. For example, Nike aggressively markets their shoes with a visible air chamber in the sole. The capital requirements can be a high entry barrier to a new firm to the industry.
However, an existing dress shoe manufacturer may enter the athletic shoe industry simply by re-tooling their manufacturing plant. Access to athletic shoe distribution channels is a moderate barrier to entry. This all depends on the status of the entering firm. If they are a start-up firm, it is extremely difficult to get shelf space at major shoe retailers. If the firm is currently in the dress shoe industry, and is entering the athletic shoe industry, they may use their existing connections to easily access athletic shoe distribution channels.
Switching costs are very low for the athletic shoe industry. Shoes are relatively inexpensive personal goods that are frequently replaced. Cost disadvantages independent of scale are moderate. Many athletic shoe customers are brand loyal and are reluctant to try a new athletic shoe. Additionally, previous aggressive marketing campaigns have increased not only brand and individual product name recognition. Government policy is a low entry barrier, as all manufacturers in every industry are subject to factory safety laws. Threat of Retaliation
The threat of retaliation is high in the athletic shoe industry. For example, if a small new competitor attempts to gain market share by dumping their products, the much larger computer firms are more capable of absorbing losses associated with driving the new competitor out of business. The threat of new entrants to the profit potential of athletic shoe manufacturers is minimized through high entry barriers, but incumbent manufacturers must stay aware of other shoe manufactures attempting to enter the athletic shoe industry. Rivalry amongst Existing Firms
In the athletic shoe industry, corporations are mutually dependent. A competitive move by one firm directly effects competitors, forcing retaliation or counterfeits. For example, Reebok’s expansion of the women’s walking shoe, inspired other firms to follow. The number of competitors is stable, partially due to high entry barriers. This adds to the rivalry among existing firms. Manufacturers watch each other carefully and make appropriate countermoves to match a competitors move. The rate of industry growth is stable, but the quest for global market share is eminent.
Nike and Reebok are not as dominant globally, compared to the U. S. This increases global rivalry. Product characteristics are related to market share. Name recognition alone sells athletic shoes. The larger the market shares the greater advertising capabilities and hence increased name recognition. Athletic shoe manufacturers relentlessly try to minimize fixed costs. Many shoe manufacturers reduce their costs by assembling athletic shoes abroad where labor is less expensive and tax laws are minimal. This increases rivalry, when manufacturing savings pass to the consumer.
Capacity has minimal impact on rivalry, because most firms have means to manufacture the demanded amount of athletic shoes. This ability to meet demand reduces market because most firms overproduce and drive down the selling price. Low exit barriers and diversity among competitors has minimal impact on profit potential. If the athletic shoe industry becomes too unprofitable, firms could switch to other shoe markets. Additionally, diversity among firms is small because every firm follows one another. The rivalry among existing firms is high where weak firms are easily acquired by fierce competitors.
This may have a high impact on profit potential. Bargaining Power of Suppliers Athletic shoes are manufactured primarily from raw materials including rubber, leather and nylon. These materials could be classified as commodities, where the manufacturing process adds to their value. For this reason, the suppliers have limited bargaining power and little impact on profit potential. Threat of Substitute Products and Services Athletic shoes are designed to improve comfort and personal safety during periods of increased movement. Substitutes for athletic shoes are using other forms of shoes, or going barefoot.
A large population of athletic shoe consumers wears athletic shoes strictly because they are comfortable. Comfortable dress shoes or sandals are equally interchangeable with minimal switching costs. If the athletic shoe is used for sports, then there are relatively few substitutes. Given these reasons, the threat of substitute products is moderate and the impact to profit potential is moderate to high. Relative Power of Other Stakeholders The U. S. government has low power over the athletic shoe industry. Many shoe manufacturers have plants outside the United States, where U. S. laws are not applicable.
To minimize the relative power of other stakeholders corporations strategically locate their plants throughout the world. Forces driven by market demand are the only forces that may significantly affect profit potential. Therefore, the relative power of other stakeholder’s ability to impact profit potential is moderate to low. Overall Assessment The threat of new entrants to the profit potential of athletic shoe manufacturers is minimized through high entry barriers, but incumbent manufacturers must stay aware of other shoe manufactures attempting to enter the athletic shoe industry.
The rivalry among existing firms is high where tender firms are easily acquired by fierce competitors. This may have a high impact on profit potential. The overall impact from buyer’s bargaining power to profit potential is moderate. Suppliers have limited bargaining power and little impact on profit potential. The threat of substitute products is moderate and the impact to profit potential is moderate to high. The relative power of other stakeholder’s ability to impact profit potential is moderate to low.
The overall profitability on the industry is moderate to low level and could increase with future consolidation. This is because of high rivalry; many substitute products and a little buyer bargaining power. Labor Practices: Activist groups and student organizations have made Nike a symbol of labor exploitation. These groups blame Nike for poor conditions in its third world factories, under-paying workers, employing children, and ignoring the basic rights of its workers. Nike is often in conflict with labor unions; most recently, Nike bucked heads with a factory workers? nion in Mexico. Accordingly, the public associates Nike with sweatshop labor and accuses it of sidestepping human rights in order to secure the greatest profit. Advertising: Nike spent over $1 billion on advertising, sports marketing, and promotional spending in 1999, and, although popular, some of its advertising strategies were considered controversial, according to an article titled ? Channel Conflict.? Feminist groups accusing Nike of degrading women have attacked Nike commercials that stress winning above everything else and show women submissively.
Although the majority of Nike? s commercials are cutting edge and creative, those very commercials can be weaknesses in Nike? s reputation. Consumer Cost: Nike has been accused of outrageously marking-up prices on many of its products to cover the costs of advertising and sponsoring. The public feels that Nike overcharges its consumers and should lower prices. 3 question Nike is a worldwide powerhouse in the athletic shoe and apparel industry. Nike’s short, but yet effective mission statement is characteristic of such success.
Nike paints a picture of their company for the world to see their, “inspiration and innovation”, as well as their “commitment to serve everyone in the world”. Through a continuous effort by Nike to remain at the apex of technology and innovation, they are the market leader by a significant margin. As a result of Nike’s pursuit of selling a broad spectrum of products, they possess a formidable competitive advantage. Nike exhibits significant strength in market share, brand image and recognition, as well as research and development.
Through the use of intuition and analysis I have concluded that opportunities exist for Nike to increase market share. Specifically, I recommend horizontal integration, global expansion, European concentration, and segmented marketing to target various generational demographical opportunities. The focus will lie using various methods of segmentation to develop the targeted markets and increase market share. Nike, Inc. is a marketer of sports apparel and athletic shoes. The American manufacturer, through its marketing strategy which rests on a favourable brand image, has evolved into a large multinational enterprise.
In keeping with the brand image is its association with the distinctive logo and its advertising slogan, “Just do it. ” In order to maintain and sustain this image, the company makes huge investments in advertising and brand promotion. Its promotional activities include agreements for product sponsorship with professional athletic teams, celebrity athletes, and numerous college athletic teams. Nike is involved in the production of goods for a wide variety of sports, competing with every sports fashion brand in existence.
Because of the absence of any single brand that rivals the products of Nike, the company has no direct competitors, with the exception of German company Adidas. This has helped popularize the brand worldwide in all areas of sport and sports fashion. Recommendation While Nike is the industry leader in athletic foot ware on both a national and a global basis, the company? s performance has been less than spectacular over the past two years (Hoover? s, Inc. 1). Three areas of particular concern to the company in relation to the refinement of its marketing strategy to improve the company? performance are (a) the dispute between Nike and Foot Locker (a leading athletic shoe retailer), (b) Nike? s strategies for dealing with outlets (the company? s own Nike Town stores and retail Web outlet, as well as discount outlet retailers), and (c) the company? s overall retail strategy (product and target market issues concerning an athletic emphasis versus a fashion emphasis, as well as similar issues affecting the retail marketing of its products). The three areas of concerns described above require the development of strategic responses by the company.
Thus, each of the three areas defines an objective for Nike? s marketing strategy plan. This current research developed two suggested marketing strategy options in relation to each of the three objectives for the company to consider for inclusion in its marketing strategy plan. Capture 2 1 i think passion is for the key of Walt Disney Walt Disney was a man of dreams. He dreamed big dreams. And he made his dreams come true. Walt Disney would agree, and is himself ample proof, that dreams can come true. His example reveals that making dreams come true takes more than just wishing.
In Walt’s case, the “star” was Mickey Mouse, and combined with a lot of vision, planning, and hard work, Walt made dream after dream come true. Most people think of Walt Disney as an animator, the “inventor” of Mickey Mouse. He is more accurately thought of as an entertainer, not in the sense that he wanted to be the center of attention, but that he wanted to create something that would excite an audience and make them laugh. Walt had talent, and developed a keen commercial sense of what would appeal to the public.
This combination enabled him to parlay $40 and a few drawing tools into a film studio producing popular cartoons, feature length animated features, and live action movies. Disneyland, Walt Disney World, and ultimately the other Disney theme parks around the world all came about because Walt Disney insisted that he could build an amusement park that was so much bigger and better than other amusement parks that it shouldn’t even be called an amusement park. How did this dream come about? As a child in Kansas City, Walt watched through the fence at Fairmont Park, wanting to participate, but not having enough money to enter.
A parent in the 1930’s, Walt would take his children to amusement parks. But he was not amused, convinced he could do much better. By 1937, at the premiere of Snow White, Walt told Wilfred Jackson that someday he would “make a park for kids, a place scaled down to kid size. ” In 1940 he revealed a plan to showcase Disney characters in their fantasy surroundings at a park across the street from the Disney studio in Burbank. The vision of an amusement park grew in Walt’s mind as he traveled through the US and Europe and visited attractions of all kinds.
He visited county fairs, state fairs, circuses, carnivals, and parks. He was distressed at operations where things were run down and ride operators were hostile. And he loved the spotless Tivoli Gardens in Copenhagen, with bright, upbeat music, excellent food and drink, and warm, friendly employees. Walt was convinced that an amusement park would be successful in the United States if it offered a “good show” that families could enjoy together, was clean, and had friendly employees. In 1948 he shared his concept with trusted friends, a modest amusement park ith a central village including a town hall, a small park, railroad station movie theater, and small stores. Outlying areas would include a carnival area and a western village. Soon he added spaceship and submarine rides, a steamboat, and exhibit halls. Four years later, in 1952, he decided on “Disneyland” for the name and formed a company to develop the park, Disneyland, Inc. Walt’s brother Roy, the studio’s financial head, was against investing in Disneyland. Bankers and amusement industry experts forecast doom. That’s why Walt stepped outside the studio organization to develop the idea.
Eventually Roy agreed to help, and the Disney studio became part of the operation. In 1953 Walt brilliantly strategized combining television production with development of the park. The Disneyland television program on ABC had a dual benefit. It promoted the new park through a weekly program, and it became part of a deal where the network invested half a million dollars plus substantial loan guarantees in return for a 35% ownership in Disneyland Park. That same year he enlisted Stanford Research Institute to examine the economic prospects of Disneyland (it was deemed profitable) and to find the ideal location (Anaheim).
They broke ground in July, 1954, and one year later, on July 17, 1955, Disneyland opened. Within 7 weeks, a million visitors had visited Disneyland, making it one of the biggest tourist attractions in the US. Attendance was 50 per cent ahead of predictions and guests were spending 30 per cent more than expected. Walt combined his talent and his sense of what the public would want with lots of hard work. Today we might call him a “workaholic. ” His work was driven, not by guilt or insecurity, but by a dream. As he told an interviewer in 1955: “Everybody can make their dreams come true.
It takes a dream… faith in it… and hard work. But that’s not quite true because it’s so much fun you hardly realize it’s work. ” At a dinner party at Herb Ryman’s house in 1960, someone commented that Walt could be elected president if he wanted it. His response? “Why would I want to be President of the United States? I’m the King of Disneyland! ” In 1960, after 37 years in Hollywood, with a mixture of huge successes and frustrating setbacks, Disney had created something that was successful beyond Walt’s own dreams.
With Disneyland and its continuing stream of visitors, Walt had finally achieved financial stability. 2 As he readies for the fight of his life, embattled Walt Disney Co. chief Michael D. Eisner carries a long list of vulnerabilities into battle: A long list of friends who became enemies, struggling theme parks, weak television ratings and a hostile takeover offer that would enrich shareholders. But industry experts and analysts warn it would be foolish to underestimate a corporate warrior as tough and as successful as Disney’s chairman and chief executive officer has been over the years.
And it shouldn’t be overlooked that after several years of weak corporate profits, the 61-year-old Eisner just turned in a spectacular quarter and the studio once again topped the industry in domestic box office in 2003. “Although there are certainly a lot of people who are giving him a hard time at the moment, they certainly should not take him lightly,” observed Jack Plunkett, president of Plunkett Research LTD , a market research firm based in Houston. “Certainly the thing he has going for him is he’s a noted fighter, an aggressive guy with a record of getting what he wants and the way he wants it. ‘ Since Comcast Corp. made its stunning $54 billion hostile takeover bid for the empire he has ruled for nearly two decades, Eisner has publicly appeared upbeat. At last week’s investor conference atWalt Disney World in Orlando, Fla. , he maintained a business-as-usual attitude, referring the offer to his corporate board for analysis and discussion. “Acquisitions? We’re buying Comcast,” Eisner lightly joked when asked by an analyst at the conference about possible Disney acquisitions in the future.
But with a campaign to vote him off Disney’s board of directors when shareholders meet next month being ratcheted up, Eisner is embarking on what many believe will be the fight of his storied corporate career. He faces this with some mounting woes: –Comcast’s $54 billion all-stock offer has put the Disney company’s performance under heavy scrutiny – especially its weaknesses like ABC –Roy E. Disney, nephew of company founder Walt Disney, is leading the campaign to oust Eisner. His efforts were boosted when fund adviser Institutional Shareholder Services recommended last week that shareholders leave Eisner off the board. -The company’s failure last month to reach an agreement to extend its lucrative pact with Pixar Animation Studios is being blamed by some on Eisner’s management style and bitter relationship with Pixar head Steve Jobs. –The Disney-owned ABC broadcast network remains ratings-challenged, trailing CBS, NBC and Fox. The network has lacked a true breakout hit for several years other than some of its reality programming such as “The Bachelor. ” –Theme park attendance, while rebounding somewhat, has dragged down the company’s bottom line since the Sept. 1, 2001, terrorist attacks against the United States. Roy Disney said this week that he believes that troubles with animation, theme parks, and ABC are among the weak spots that made Disney “an attractive target” for a takeover bid such as the one brought about by Comcast. “The Comcast bid did highlight how the performance has slipped in a number of Disney operations,” said media analyst David Joyce of Miami-based Guzman and Co. “But while some things they did wrong, some things they have no control over such as terrorism and economic recessions. ‘ Eisner’s corporate maneuvering abilities are well known and Disney has already hired a law firm, Wachtell, Lipton, Rosen & Katz, which is known for formulating strategies to defend against takeovers. It doesn’t hurt that Disney’s first-quarter earnings, released Wednesday, topped Wall Street’s consensus by 10 cents a share. The company’s stock price is riding a two-year high with Disney’s stock up 16 percent since the Comcast offer. Any bids, including one from Comcast, will surely have to be higher than the one on the table. `The biggest problem lies in the stock value of the company,” Plunkett said. “The market has not been kind to Disney. Value of stock has been flat for over two years. ” Fueling the company’s performance has been its industry-dominating movie division that ruled the box office in 2003 and has grossed more than $1 billion in ticket sales in eight of the past 10 years. In addition to the Pixar-produced “Finding Nemo,” Disney’s studio released the blockbuster “Pirates of the Caribbean : The Curse of the Black Pearl” and the hits “Bringing Down the House,” “Freaky Friday” and “Brother Bear. ‘ The box office hits have translated into major profits in home video, an area in which Disney has also been dominant, especially with the industry’s DVD boom of recent years. In all, first-quarter studio revenues were up by 57 percent, to $3 billion, during the quarter, helping propel overall company revenue to $8. 55 billion, compared with $7. 7 billion a year ago. 3 • High sunk cost • Excessive Research & Development • Constant Up gradation • High Investment • High Risk Factor • Limited range of target audience group • Poor Management • Cultural Imperialism • Media Network Competition