Nike’s Analysis

From our days, it is impossible to find someone who has never heard or talked about this brand and its slogan. Nike profit is mostly from the sneaker sector, where it is one of the biggest competitors on the planet. Today people who buy Nike do so not just for sport. On the contrary, it has become the norm to buy Nike clothes and wear them going to school and elsewhere. Such is the success of Nike, a big number of companies try to imitate them. They use almost all the famous slogans on their products in the hope that people will confuse it for the real products and boast the sale or try to use the strategy to increase sales.

From a small business in Oregon, a city in the United States of America (USA), titled by the name of the Greek Goddess of victory, also may have contributed to this success. The start of the brand was in the 1970s in a special context, where people began to practice sports for leisure. Today, it sponsors the biggest athletes in the world and also covers global events. At the beginning of my assignment, I asked myself a lot of questions such as: what is behind their success? How can we explain this one? What strategies are they using to become one of the most influential companies in the world? Did they have some problems from the beginning of their glory?

In this project, it comes to analyse how Nike’s system and process are running and to find any faults which might be improved.

Firstly we are going to introduce Nike and its main stage from the start to today. Secondly we are going to expose the strategies of this company and what its assets are. And finally we will see why the strategies are not perfect and how Nike managers could improve the brand image.

First and foremost, we would like to start off with a brief introduction of Nike’s history.

Nike was founded in 1958 by a man called Phil Knight. Initially, Nike only started off making sneakers for track runners.

In 1962 Bill Bowerman, an athletic trainer for the University of Oregon, and Phil Knight, a student in accountancy and runner, got the idea to import inexpensive athletic shoes from Japan. The same year, their company Blue Ribbon Sport was selling shoes from the Japanese manufacturer Onitsuka Tiger.

They welcomed Jeff Johnson in 1965, the first full-time seller representing the brand. He was in charge of going to athletic stadiums to promote their shoes.

Few years later, Knight wanted to do more than sell shoes for others companies. So Johnson renamed the company: “Nike”. During this time, Bowerman was working on the design.

In 1968 Phil Knight, wanting to do always better, and his coach Bowerman talked about making better quality running shoes manufactured by Tiger. They then renamed their company to Nike after the Greek goddess of victory invoked by the legendary marathon runner. It was the exit of the shade of Nike.

At the beginning of the 1970s, there were a lot of movements in the company. First the apparition of the logo was created: “the Swoosh” by Carolyn Davidson, a student in graphic art. Secondly, after few months they broke with its Japanese manufacturer O. Tiger because of disputes over distribution rights. So they did not have any other choice except to create their own brand. In 1972, Nike was created by Knight and Bowerman. The following months, the famous “Waffle” shoe was on the market.

In 1975, Bowerman came up with an idea. Looking at his wife’s shoes, he thought of putting some rubber in the compound to make rubber waffles, cut them and put them together to the bottom of the shoes. He then lent them to some of his athletes and they were very satisfied. These shoes made Nike a leading sports company.

The shoes had a sole which was able to cushion the shocks and help the foot to bounce.

Obviously with this innovation, Nike became the number one manufacturer of sport shoes in the USA and took advantage to launch it as an Initial Public Offering.

In 1982, Nike launched the famous Air Force One basketball. This basketball became the sport-lighthouse of the brand with the signature of National Basketball Association (NBA) player Michael Jordan. Nike and Reebok were competing on the same level, until Michael Jordan came along. Nike came up with a pair of shoes called the ‘Air Jordan’, which were worn by Jordan in the NBA court. However, they were illegal because of its colors; red and black, which were not allowed. Michael paid a fee of a thousand dollars per game, but kept on wearing Air Jordan. Due to all this attention, Nike’s sales rose from $870 million to a more then $4 billion per year.

Around 1980, the logo received a new slogan; ” Just do it “.

Afterward numerous sportsmen got contracts with Nike as the official supplier of their sports garments. The brand also became the official supplier of event sports such as the cycle “Tour De France” at the end of 1990s, the balls of the UEFA Champions League in football…

In 2003, Nike Inc. acquired its rival converse Shoes for $305 million.

In 2005, Phil Knight (Chief Executive Officer and founder of Nike) prepared his succession. He indicated his successor: William Perez, before replacing him in January 2006 with Mark Parker.

As we can notice above, Nike brought a lot to the shoes sector but is always looking for new technology to bring to its customers.

We are going to look closer the company strategies implemented to push the consumer to buy a Nike product.

One of the key reasons for the success of Nike is because of its extensive advertising campaigns. The Nike brand is known in almost every household worldwide.

Nike’s brand management strategy is key to its global success because it is based on the sponsorship agreements with the world-class athletes, including individual performers and sport clubs.

All kinds of sportswear equipment are branded with Nike’s logo, which remind people of success and associates it with the achievements of star performers.

Nike has been the first company in the sports manufacturing sector to relocate and use outsourcing to reduce the cost of its manufactures.

The company used the vertical division of work, which means that managers and unskilled workers are separated. Thus, added to others mutations such as the transport revolution and the communication development, this lead to a more important liberalism of world trade. It enabled Nike to develop an outsourcing system. It consisted of centralising the command functions to the headquarters in Beaverton, the laboratories studies to St-Louis and the commercial responsibilities to Memphis.

In a simple way, we it is represented like this:

Today, all the textile companies are following Nike’s example, but this innovation lets them secure a monopoly though market domination.

The Nike system includes a developed branding system and an economic strategy, which promote the marketing rather than the production aspect. Indeed, Phil Knight said the branding could be completely substituted to production and that production is not important, but that it is just a tedious and marginal activity.

We arrive therefore secondly at Nike’s branding, which has turned towards celebrities. According to academic researchers, branding is “all about creating different and endowing products and services with the “power” of brand equity”.

The company has invested a lot of money in this domain and has tried to diversify in different sports, for example, Michel Jordan in basketball, Tiger Woods in golf and Ronaldo in football…

They will either shoot in an advertisement on the television or pose in a magazine with Nike products, telling the world how useful and cool their products are.

For years, Nike has known how to react to sport events, for example, when Knight wanted to associate Nike to the team of “ski de fond” Kenyane, which participated in 1998 Winter Games in Nagano. This is what economists call the “Opportunist mark”; the idea that a company uses the news to lead successful ad campaigns.

In order to maximize its market shares, Nike has placed great importance in developing their branding and marketing strategies on the net.

As we leap into the twenty-first century, it seems as though everyone is on the Internet and more companies are establishing an online presence to maintain their competitive edge. Along with high-speed Internet connection, the web has become an essential tool for any business to compete domestically and globally. Companies like Nike or Adidas have invested heavily in online brand building and image development.