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Nikeprime
Nikeprime
Karim Habbas
B122608
Executive Summary
This report is the first of a two part series aimed at implementing a new product introduction
strategy for Nike, INC. The scope of this report encompasses analysis of Nike, INCs existing
product portfolio, documents market research to elicit customer needs and derives a Product
Design Specification as a result of a House of Quality.
Nike designs, develops and sells high-quality athletic performance gear and sports-inspired
lifestyle products, categorised as: Footwear, Athletic Apparel and Equipment / Accessories.
Respectively each business unit accounted for 62%, 32% and 6% of Nikes $26.1 billion
revenue for FY13/14, with 11%, 8% and 2% growth from the previous year. Winning battles
in key geographies such as Northern America, Western Europe and Greater China is
essential for Nike to establish further dominance amongst its growing rivals.
BCG and McKinsey Multifactor matrix results indicate the increasing excitement around
wearable technology is accelerating consumer demand for new product innovations. An
estimated 58 million wearable tech products will be sold in 2015, potentially increasing to as
high as 177 million units by 2018. Currently Nike holds 14% of a market that is forecasted to
grow by a CAGR of 52%. Leveraging Nikes position as a global leader in sporting goods
manufacture, passion for innovation and deep sporting connections, it can capitalise on the
market by introducing a distinctive wearable tech product.
Nike PRIME is an intelligent wearable training aid, which provides critical metrics, powerful
analytics and coaching recommendations to maximise performance on and off the track,
pitch, court or gym. Nike PRIME facilitates peak performance.
Weighing no more than 20g, Nike PRIME is comfortable to wear at all times during any
sporting activity. Processing speeds clocking in at 2.8 GHz and 1GB of RAM are essential to
ensuring that the device can handle large streams of real time data, compute results
analysis and simultaneously make useful training recommendations. Integration of a large,
crystal clear OLED touchscreen, force pressured, display with 480 pixels per inch resolution
as well as a wide variety of sensing units and high resolution of feedback are Unique Selling
Points of the product. Modularity and customisability of the product is also a key in appealing
to a diverse consumer base. PRIME will be the most personal product the company has ever
launched. The aforementioned target PDS points surpass or if not match competitor
products. Once achieved, Nike PRIME will become recognised as the best personal training
device on the market.
PEST and SWOT analysis as well as customer needs identification helped establish the
customer requirements of the product; while the 7Ps Marketing Mix details optimum
channels to market in order to connect the consumer and maximise Nike PRIME sales. High
profile endorsements create a wining mentality among consumers who are loyal to the
brand. At a RRP of 195, Nike PRIME will appeal to athletes looking to improve performance
in a particular sport/activity as well as consumers who are sporty or seeking a healthier
lifestyle. Casual sports or exercise consumers will be treated as part of a second tier market
strategy.
Investment in fundamental technological can pave the way for future generations of products
across Nikes portfolio. The battle for the wearable tech market is currently wide open, with
no clear market king present. Nike PRIME provides a unique opportunity for Nike to claim a
significant stake in one of the most significant, and profitable trends of this decade.
Table of Contents
Executive Summary..ii
1.0 Introduction ..................................................................................................................... 1
2.0 Nike, INC Product Portfolio Analysis ............................................................................... 2
2.1 Financial Performance & Growth Expectations ............................................................ 3
2.2 Channels to Market & Sporting Preferences ................................................................ 5
2.3 Footwear. ...................................................................................................... 7
2.4 Athletic Apparel ........................................................................................................... 8
2.5 Equipment & Accessories ............................................................................................ 9
2.6 Boston Consulting Group Matrix ................................................................................ 10
2.7 GE/McKinsey Multifactor Matrix ................................................................................. 11
2.8 Ansoff Matrix and Product Life Cycle Renewal .......................................................... 13
3.0 Market Needs Research................................................................................................ 14
3.1 Core Benefit Statement ............................................................................................. 14
3.2 PEST Analysis ........................................................................................................... 15
3.3 SWOT Analysis ......................................................................................................... 16
3.4 7Ps Marketing Mix .................................................................................................. 17
3.5 Customer Needs Identification ................................................................................... 18
3.6 Affinity, Tree & Kano Diagrams.................................................................................. 19
4.0 Quality Function Deployment ........................................................................................ 22
4.1 Needs-Metrics Scoring Matrix .................................................................................... 23
4.2 Pareto Analysis.......................................................................................................... 24
4.2 House of Quality ........................................................................................................ 25
5.0 Discussion of Recommendations .................................................................................. 26
6.0 Conclusion .................................................................................................................... 28
7.0 References.................................................................................................................... 29
8.0 Appendix ....................................................................................................................... 30
1.0 Introduction
This report aims to establish a new product offering for Nike Incorporated. Utilising historical
data, a variety of strategic analysis tools, and empirical research an analysis of Nike, INC.s
current product portfolio will be used to establish its competitive position in the market.
Identifying a suitable gap in the market will be followed by market research to specify the
fundamental customer needs of the new product offering.
Translating the qualitative, consumer language data, into technical specification outputs will
be achieved through the use of a House of Quality. The House of Quality will provide a
comprehensive collection of quantitative object targets. A successful product is ultimately
defined by its ability to meet the needs of the target customer.
Represented by one of the most recognisable logos in the world, Nike Incorporated is a
world leading athletic footwear, apparel and equipment company dedicated to inspiring every
athlete to reach their full potential. Named after the Goddess of Victory, in Greek Mythology,
Nike was founded in 1964 by Bill Bowerman and Phil Knight. Figure 1 below states the
philosophy and vision statement for the company (1).
Figure 2: Nike Revenues for FY12/13 & FY13/14 organised across portfolio categories, and
geographical locations
Figure 3: Nike EBIT for FY12/13 and FY13/14 with % increases, across geographic regions
Similar trends are mirrored in Nikes reported future growth, see Figure 4 below, based on
Nike footwear and apparel orders scheduled for delivery from January 2015 through to June
2015.
Western Europe is the largest growing market for Nike (33% increase on EBIT from previous
financial year and a 25% increase in future orders), with the North America region also
expected to grow by 11% on top of a 16% EBIT increase for FY12/13. Nike sees its
strongest return on its home geographic region. In the US Nike holds over 45% of the
athletic footwear market share (1). According to a report by Euromonitor direct rivals Adidas
hold a 13.3% share of the Western Europe sporting good market in 2012, while Nike market
share stood at 12.4%, see Figure 5 below (5).
A drive to overtake Adidas market share in Western Europe, the home territory of the
German based sports manufacturer, would greatly benefit Nike in order to establish itself the
top sportswear manufacture in the western world. By further capitalising on consumer
interests, utilising local knowledge and resources, Nike can continue to connect with its
customers to create demand which it can supply to. In all regions across the globe the
Footwear business unit provides the greatest revenue, and in total accounted for 62% of
Nikes revenue in FY13/14 (3). Perhaps, a new product venture, in a niche market, would
give Nike an additional edge in order to overcome Adidas in Western Europe specifically.
This notation will be explored later in the report.
4
Historically, Nike has been successful because it has taken the initiative and been first to
market by recognising and utilising key technological trends. At Nike, we are leaders. When
we fail, is when we follow. Tinker Hatfield, VP of Innovation. In 1991 Nike launched their
online store, 7 years later Adidas caught on (8). Similarly Nike leads with social media usage
as well as putting significant effort in closed loop sustainable initiative, and a big push for
corporate responsibility. Off the back of the heavy damages the brand suffered in the late
90s due to poor worker conditions in sweatshops in low economy countries forced a culture
change and emphasises on transparency in Nikes operations. This in many ways helped
elevate the brand on top of its continual ability to design, develop, and market its products in
innovative ways that connect directly with the target audience.
Popularity in various mainstream sports naturally differs with geographic location. Figure 8
below illustrates Nike products sold globally as categorised by their associated sport.
25% of Nikes products sold arent categorised to a particular sport, but instead classified as
Sportswear. Sportswear refers to product lines that arent specifically associated with a
particular sport. For example many of Nikes footwear collections such as the Air Max, Air
Force 1, and Mavrk are casual fashion items of clothing, yet still part of the sports brand.
Following this, 19% of sales across all product categories, footwear, apparel and equipment
are attributed to running. Next is basketball with 13% which is then followed closely by
football and mens training at 10% - with womans training lagging behind at 5%, yet still
ahead of niche categories like action sports and golf.
From this analysis a new product introduction which could cover all the major sport, ranging
from running, basketball, football and both male and female fitness would clearly be
beneficial. A quarter of Nikes sales come under the Sportswear category and therefore the
potential to offer a generalist product with multiple, and specific sporting functions could
become Nikes flagship product. A product which resonated with the recent surge in
consumer interest for wearable technology, Nikes unique approach to innovation and
unrivalled brand power, a multi-faceted training device may be the exciting new product
introduction the company is looking for to maintain strides ahead of the competition.
2.3 Footwear
The global athletic footwear market is estimated to grow at a Compound Annual Growth
Rate (CAGR) of 1.8% to reach $84.4 billion in 2018. Comparatively, Nike's footwear sales
have historically grown at a far higher CAGR of approximately 20% over the 2012-2014
fiscal period (9). Figure 9 below demonstrates Nikes dominance in the global market share
of athletic footwear, as of 2011 (10).
The athletic footwear industry enjoys a high average gross margin of approximately 45%
because of the low input costs of raw materials and the premium pricing of finished products.
Nikes production outsourcing strategy allows the company to focus on design and provides
flexibility to optimise cost control and supply chain management. Currently Nike have 785
certified contract factories, with over 1 million contracted factory workers producing over
500,000 different product per year (1). Differences in gross margins arise from businesses
degree of focus on direct-to-consumer sales (including sales through company-owned stores
and online). Adidas has higher gross margins of approximately 49.5%, compared to Nikes
43.59%, as its direct-to-consumer sales contribute a higher proportion of total sales (23%, as
compared to Nikes 19%) (11).
The new product introduction should connect with user emotions, such that transactional
relationships are turned into beneficial experiences. Introducing customer influence at more
of these stages could potentially give consumers of the new product offering a unique
experience. Consequently, Nike should see an increase in profits as a result of direct
communication with its consumers. Nikes value chain is as follows:
Plan > Design > Make > Move > Sell > Use > Reuse
Nike ID to some extent achieves the inclusion of the customer, whereby they can customise
a trainer online and influence the design stage of the value chain. Expanding the mass
customisation comportment of Nikes business to other areas to enhance the product
portfolio will be discussed further on.
7
Acquiring market share from Adidas must be the priority, through a diverse on trend range of
activewear product offerings. Counterfeit products as well as increased competition from
local and niche players damage Nikes market share. For example, during 2014 activewear
sales in North America rose 29% for Under Armour, compared to 13% for Nike (16). Both
Nike and Under Armour have started to collaborate with supermodels as brand
ambassadors to emphasise the fashion element of the brands. Moreover, sponsoring social
media socialites with new product releases can provide an effective marketing strategy as
these individuals have direct access to specific youth target consumers. Attaining brand
loyalty from an early age can subsequently benefit Nike in the long term.
8
Technology giants such as Apple, Samsung and Google are keen to get involved in the
wearable tech market, with a stream of product launches all hoping to gain traction with a
demanding consumer base. Various niches can be carved from wearables but currently the
main avenue is aimed at fitness and wellbeing. The Fuelband, Nikes first iteration of a
wearable tech product has frankly been outmatched on sales, according to Canalys
analyst Daniel Matte. "Its competitors speed, international reach, broader channel
distribution, integration with other fitness communities, superior Websites and multi-platform
support have proven to be major advantages." Given Nikes innovation reputation, reach and
marketing power this is unacceptable. Nike, utilising its deep connection in the sporting
industry as well vast knowledge in specific sporting segments such as running, basketball
and football could align a wearable tech product into a specific training aid. With Apple CEO
Tim Cook on the Nike board of directors for over a decade (19), another partnership with
Apple would continue to assist in the overlapping of two considerably large consumer
markets. Expansion of the already established Nike Fuel system through introduction of a
new advanced wearable tech product introduction could help achieve Nike CEO, Mark
Parkers goal of achieving 100million fuel users (20).
9
The Multifactor matrix considers market growth rate to be one of the many contributing
factors to an attractive market. This is mapped against the competitive position of a
particular business unit. The result is a quantitative measure of industry attractiveness and
the business units relative performance in that industry (22). The size the circle represents
the size of the market the business unit is competing in, the black portion of the pie chart
represents an estimate of Nikes market share. The arrow represents the business unit
direction, where the length represents how quickly it is traveling in that direction.
1 Athletic Apparel Nikes range of athletic apparel options are stuck in the middle ground
between medium market attraction and medium competitive position. With 9.9% market
share, being cannibalised by numerous competitors, and lack of performance differentiation
in the market; the best strategy would be to invest in technology specific application of
apparel, instead of diluting the marketing with non-essential appealer items. The fashion line
of Nike has a smaller role to play in the shadow of a performance focused kit.
2 Equipment & Accessories A crowded market with competitors from within and outside
of the sports industry. Nike has remained weak in its competitive position due to a lack of
product diversification. The market is experiencing an increase in attractive ness to an
average level. An appropriate course of action would be to harvest remains of the market
then divest capital expenditure and re-invest that into the wearable tech market, whereby
Nike would be re-inventing its equipment range by going down an innovative technological
approach. This however, poses risks, due to lack of core competence in areas of electronics.
Resource re-assessment would be required and the potential of outsourcing and
collaborating with specialists companies would have to be considered.
3 Footwear Collaboration with artists helps generate continual product lifecycle renewals,
by generating hype over new product skews with minor alternations. This will assist in
mitigating the effects of slowly reducing market attraction value. Holding over 33% of the
market and in a strong competitive position Nike can influence the market heavily by setting
trends and being first to market with innovation in footwear technology, such as the Nike
Flyknit woven trainer. Sponsorship deals with high profile athletes and sporting events such
as the Olympics and World Cup have helped Nike in the past see an increase in sales in
footwear (23). This relationship should further be leveraged in other product lines to
stimulate interest and growth in the new product offering.
4 Wearable Tech With the groundwork for a top tier wearable tech product already
established at Nike, and the increasing traction and popularity of the wearable tech market.
The best place for a new product offering would be in wearable tech. however, sufficient
conviction in the product offering has to ensure that the product isnt just a fashion item, but
can sustain a mature product lifecycle. Nike is in a position of strength to capitalise.
5 Nike ID Bolstering and encouraging customers to use the premium customisation
services can increases sales of specific SKUs of product lines. Leveraging customisability
and personalisation elsewhere in the business can attract customers and help grow the
market size and increase brand presence to maximise returns from trends e.g. combining
the Nike ID program with wearable tech options. However, in terms of sustaining the
capacity to deliver and meet increasing market demand Nike must continue to leverage its
already established customisation program and continually outdo rival comports such as
Adidas, who have until recently been lagging behind.
12
Nike PRIME is an intelligent wearable training aid, which provides critical metrics,
powerful analytics and coaching recommendations to maximise performance on and
off the track, pitch, court or gym. Nike PRIME facilitates peak performance.
Developed in parallel with top athletes from across the globe, across a variety of sporting
disciplines, PRIME assists in the physical and mental battle athletes must endure whilst
training and competing. PRIME is an evolutionary step, eclipsing the efforts of the Nikes
previous sports equipment product offerings. The simple to use device coupled with powerful
analysis tools will deliver immediate performance improvements.
Data is gathered through real time sensing capabilities, full analysis available through online
and app platforms, coaching and development AI programmed into the device. The Nike
PRIME platform offers an option for consultation with professionally qualified and certified
coaches, nutritionists, physiotherapists and doctors.
PRIME will leverage the established Nike+ training platform and will be marketed across all
sporting segments in order to maximise sales revenue. Currently there are over 30 million
Nike+ members (25). By developing the product as non-sport specific, PRIME will become
the flagship product in terms of Nikes technological product offering and will lead the charge
in an attempt to capture a larger share in the sports equipment and accessories market as
well as the fitness/health wearable tech market. Bolt on services for sport specific
applications offer product life cycle longevity by continually increasing Nikes direct contact
time with the customer. Ultimately PRIME is an integrated product/service personal training
solution.
14
Subsequently, the Affinity diagram was organised into a Tree diagram; whereby questions of
customer importance were posed to the focus group. Each individual response is recorded in
the Tree diagram analysis and an average score is given. From this, a priority rank of is
denoted in the far right column. The customer importance can be found in Figure 23 below.
The full Tree diagram and customer needs priority analysis is shown in Figure 24.
Customer Importance Ratings
5 Feature is critical. I would not consider a product without this feature
4 Features is highly desirable, but I would consider a product without it.
3 Feature would be nice to have, but Is not necessary
2 Feature is not important, but would not mind to have
1 Feature is undesirable
Focus Group
Reposnse
4
5
5
5
3
2
5
4
5
4
4
3
Priority
Rank
3rd
10th
4th
5th
5
5
3
5
4
5
5
3
4
5
5
5
5
5
4
5
5
4
5
3
5
5
4
4
4
5.00
5.00
3.80
4.60
4.00
1st
1st
6th
3th
5th
5
5
3
3
5
3
3
5
2
2
3
3
4
5
4
3
4
5
2
2
4
4
2
2
3
3
5
5
3
4
5
4
4
5
3
3
4
2
4
4
5
3
5
5
3
2
4
2
2
4
2
4
5
5
3
3
5
2
2
4
4
3
3
2
5
4.80
4.80
3.00
3.80
5.00
2.80
2.60
4.40
3.00
2.40
3.20
2.40
4.00
2nd
2nd
10th
6th
1st
11th
12th
4th
10th
13th
9th
13th
5th
5
4
3
3
4
5
3
5
3
3
2
3
4
4
5
3
2
4
4
5
4
5
4
4
3
3
4
2
5
3
4
3
4
4
3
5.00
3.40
3.20
3.00
3.60
4.40
3.20
1st
8th
9th
10th
7th
4th
9th
4
5
5
5
4
4
4
5
3
3
5
3
4
4
4
4.00
4.60
3.80
5th
3th
6th
3
4
2
3
3
3
4
4
3
4
3.00
3.60
10th
7th
4.00
5th
20
4
2
3
5
Average
Score
4.60
3.00
4.40
4.00
From this data customer priority data was ranked a classified in accordance with Kano
analysis. Kano provides an extra dimension to the data analysis by mapping customer needs
to their importance in terms of a user satisfaction. Customer needs classified as primary, are
critical to the product, but may rank differently according to the Kano model. For example,
the need safe to use is considered as a critical basic need. No matter how well you make
the product safe the customer expects this level of satisfaction as standard. The need high
processing power is another example of a high ranking need, whereas the Kano rating
indicates it is a performance need. The level of achievement is proportional to customer
satisfaction i.e. the faster the product can perform computational calculations; the more
satisfied the user will be. Delighters such as wireless charging, may be ranked lower in
terms of importance but can significant increase the delight of the user experience if
achieved but wont lead to satisfaction if not implemented. Kano was The Kano ranking for
each need was provided in joint agreement of the focus group. The Kano rank and
corresponding diagram is illustrated below in Figure 25.
Kano Metrics
Basic Attributes Allows product to get into the market, if not fulfilled customer will not be interested
Performance Attributes Allows product to sustain and remain competitive the higher the level of fulfilment the higher the customers satisfaction
Delighter Attributes Allows a product to excel and be world class if needs not met no dissatisfaction - but fulfilling leads to more than proportional satisfaction
No.
Customer Needs
5
Lightweight
6
Safe
14
Sweat/waterproof
23 Training development AI
10
Real time sensing
11
Automatic feedback
1 Unclutterd User Interface
8
Ergonomic size
31
Breathable materials
3
Large screen
17 High processing power
28 Fast operating system
4
Online platform
9
Appropriate shape
22
Pressure toushscreen
30 Customisable / modular
35
Sports tech look/feel
7
Soft
13
Long battery life
32
Tough & durable
27
Device connectivity
34
Follows brand style
24
Realtime cloud sync
20
Media centre
25
Push notifications
29
Location features
2
Simple setup
12
Wireless charging
18
Low maintenance
26
Automatic updates
33
Unique
15 Biometric data security
16
Harddrive capacity
19
Easy to replace parts
21
Home docking stand
Rank
1
1
1
1
2
2
3
3
3
4
4
4
5
5
5
5
5
6
6
6
7
7
8
9
9
9
10
10
10
10
10
11
12
13
13
KANO Rank
Basic
Basic
Basic
Performance
Performance
Performance
Basic
Basic
Performance
Delighter
Performance
Performance
Delighter
Basic
Delighter
Performance
Delighter
Basic
Performance
Performance
Delighter
Basic
Performance
Delighter
Delighter
Performance
Basic
Delighter
Performance
Performance
Basic
Performance
Performance
Delighter
Delighter
Based on assumptions and analysis derived from the portfolio analysis, backed by the
confirmation of both primary and secondary market research, Quality Function Deployment
must be utilised in order to ultimately ensure the product developed meets the identified
needs of the customer. The QFD provides an opportunity to translate language data into
quantifiable quantitative data.
21
22
Form
Function
Software
Hardware
Comfortable to wear
Online platform
Lightweight
Safe to use
Hydrophobic Rating
Processing Speed
Software
9
1
3
3
Soft
Ergonomic size
Appropriate shape
10
Automatic feedback
11
Wireless charging
12
9
9
13
14
15
Hardrive capacity
16
17
Low maintenance
18
19
9
6
3
3
3
1
9
9
24
25
Automatic updates
26
Device connectivity
27
28
Location features
29
Customisable / Modular
30
Breathable materials
31
32
Unique style
33
34
35
Measurement (Units)
9
9
3
9
9
1
1
9
9
9
3
9
1
3
9
1
1
2x 2x13
.1
mm x
mm x Kg
mm
9
1
Push notifications
23
Training development AI
22
3
9
Pressure touchscreen
21
20
Media centre
Home docking stand
3
1
Features
Sweat/waterproof
Training AI predictive
calulation time
Operating system design
architecture
No. of compatible apps and
devices
Large screen
Bluetooth connectivity
Wireless bandwidth
Simple setup
Hardware
Total Mass
Customer Importance
Material
Battery Capacity
Easy to control
Customer Attributes
Form
Product Dimensions
Engineering
Characteristics
Need No.
Affinity Group
Direction of Improvement
Technical Group
9
3
Subj.
logP
Ra
m
Yr.
GB
GHz
3
GB
Hz
ppi
Subj.
<1
>5
0.1
1.0
1.0
>5
0.1
0.8
0.8
25.5
10
3.2-0.
1.0
2.0
8.0
80
500
540
422
42x42x
13 2
20.0
10
15
32 01
1.0
2.8
16.0
120
500
692
480 <0.5
313
236
140
211
147
130
222
182
234
342
155
288
231
174
175
112
279
276
387
91
98
71
160
103
126
6%
5%
3%
4%
3%
3%
5%
4%
5%
7%
3%
6%
5%
4%
4%
2%
6%
6%
8%
2%
2%
1%
3%
2%
3%
Technical Difficulty
23
The intelligent programmed chip, in communication with the array activity sensors, feed
channels of data and analyses back and forth to the display and all data is logged in the
large capacity hard-drive. The processing unit effectively manages all interdependent
components of PRIME and selectively provides key functionality as and when required. This
can occur at the users request, if he or she wants to see a specific metric, or autonomously
in the background. All data is securely stored on the device with the latest encryption and not
accessible by Nike. Once connected online, all data becomes available to the user only
through the online Fuel Network. Further holistic analysis of all metrics will be presented
here clearly. Various levels of detail will be accessible depending on the users preference.
A fundamental trade-off between battery capacity to power the technical performance of the
product versus the size and weight of the product is ultimately decided by current technology
available. Use of miniaturised large capacitance, slow discharge lithium-ion batteries can
achieve the desired capabilities but a higher cost.
26
This increase in cost would therefore have to be passed on to the consumers, and as a
consequence could result in a lower number of units sold. Further investigation must be
conducted if this is the case through the development phase, if the impact of the cost is too
high and the consumer is not willing to pay for the vastly extended battery capacity of
500mAh, then a lower cost smaller capacity of battery will be used and Nike Prime would
consequently require more frequent charging. Ideally, users shown enjoy daily use of Nike
PRIME with battery life lasting a full week, before 30 minutes to 1 hour charge time. A Sync
& Charge feature could mitigate the negative effects of more frequently charging by turning
it into an opportunity to connect with the Nike online community network for performance
reflection and setting of new goals.
Modularity and customisability in the design is also an influencing factor. In line with Nike ID
and Nikes in-season activewear sports apparel, making Nike PRIME customisable whilst
still being able to manufacture the product on a mass scale will also help Nike gain traction
in the market. This is another opportunity where Nike can connect with the user to deliver a
truly unique experience. Inevitably, Nike PRIME will be the most personal product Nike has
ever launched. The advanced predictive analytics software and array of smart sensors
facilitate self-performance improvement. Nike PRIME is a universal product, catering for
elite, training and lifestyle athletes whereby, according to Nikes mission statement, an
athlete is defined by someone who has a body.
As estimated by the technical difficulty and forecasted costs, this development will come at a
price. Traditionally, Nike have limited in-house hardware expertise and therefore a
partnership will industry experts through engineering and design consultancies would likely
have to be established to develop the product to its full potential. Alternatively, recruiting
specialists and forming a new sub-division of the Equipment & Accessories business unit
could help to stabilise product innovation in the long term.
If the outlined PDS targets are achieved by the R&D department, it is reasonable to assume
that Nike PRIME will far surpass anything currently on the market, and potentially leap over
current competitor new product development projects. Thus the framework for a sustained
competitive advantage can be put in place from release date. No other competitor has a
relationship with a specific pool of sports customers like Nike. Tapping into the loyal fan base
before they switch out to a competitor wearable fitness product is key in gaining momentum
of market share. Consequently, through targets marketing campaigns and international
endorsement and the expected popularity among early adopter a greater number of
consumers will be attracted to Nike PRIME.
The criticality of achieving the aforementioned PDS points is therefore paramount in the
success of the product. If PRIME achieves these PDS objectives, it has the potential to
become recognised as the best personal training tool on the market.
The presented strategy is risk positive. Referring back to the Ansoff Matrix, see Figure 14
the roadmap for Nike PRIME shows a product development and diversification route.
However, Nike has had positive experiences with previous generation wearable products,
such as the Nike + Sensor (A pedometer style sensor which is inserted into the soles of
specific Nike + shoes, introduced in 2007) and the more recently, the Fuelband introduced in
2012. Having established a growing online community and with new practical applications of
advanced technology, Nike PRIME caters for a surging market demand.
27
6.0 Conclusion
To summarise, Nikes Footwear and Athletic Apparel business units are major competitors in
their repetitive global markets with 33.6% and 9.9% market share respectively. The
Equipment and Accessories business unit has failed to control significant market share due
to the vast numbered of skews the market offers. Internally, Footwear accounted for 62%,
Athletic Apparel for 32% and Equipment / Accessories at 6% of Nikes reported $26.1 billion
revenue in FY13/14. This equates to $17.2 billion, $8.9 billion and $1.7 billion respectively
for each business unit with each unit experiencing growth in sales revenue from the previous
financial year in sales of 11%, 8% and 2%.
Winning battles in key geographies such as Western Europe and Greater China is essential
for Nike to establish further dominance amongst its growing rivals. Currently, Western
Europe is projected to offer the most growth, with a 25% increase in order take for 2015
already reported, with North America increasing by 11% and Greater China increasing by
6%. Japan is the only global region reporting shrinkage of product interest.
Running, basketball and football are the strongest individual sporting sectors globally for
Nike with male and female fitness combing to account for 15 % of product sales and general
Sportswear attributing to a quarter of Nikes global sales in 2014.
Results from both the Boston Consulting Group Matrix and GE/McKinsey Multifactor Matrix
indicate that pursuing wearable technology in a complete sporting application could have
significant benefits for Nike. With the wearable tech market expanding at an estimated
CAGR of 52% between 2013-2018, and Nikes ideally suited position as a world recognised
sporting goods manufacturer will provide an avenue for substantial growth over the
foreseeable future. The concept of Nike PRIME was consequently established, with a core
benefit statement as follows:
Nike PRIME is an intelligent wearable training aid, which provides critical metrics, powerful
analytics and coaching recommendations to maximise performance on and off the track,
pitch, court or gym. Nike PRIME facilitates peak performance.
PEST and SWOT analysis helped to identify influencing factors to the success of the
product. With the 7Ps Marketing Mix used to establish the best way to connect the target
market in order to maximise Nike PRIME sales. At a Recommended Retail Price of 195,
Nike PRIME will appeal to athletes looking to improve performance in a particular
sport/activity as well as consumers who are sporty or seeking a healthier lifestyle. Casual
sports or exercise consumers will be treated as part of a second tier market strategy.
Identifying and analysing customer needs was completed through methodological process.
Interviews, focus groups, brainstorming sessions and analysis of existing products helped to
identify customer needs. Tree and Affinity diagram helped categorise the customer needs as
a perquisite to a House of Quality. Furthermore Kano analysis was performed to understand
the level of satisfaction gained from each requirement.
Finally a House of Quality was produced in order to obtain a Product Design Speciation for
Nike PRIME. Needs-metrics scoring, Pareto analysis of the technical requirements as well
as detailed technical competitor benchmarking were included in the analysis. In achieving
these PDS targets Nike PRIME can be the definitive wearable tech sports development
training solution.
28
7.0 References
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http://www.nikeresponsibility.com/report/content/chapter/business-overview.
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3. . NIKE, INC. REPORTS FISCAL 2014 FOURTH QUARTER AND FULL YEAR RESULTS. Portland, Orergon : Nike
Incorporated, 2014.
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April 2015.] http://www.fashionbeans.com/2015/5-mens-fashion-trends-to-keep-for-2015/.
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16. Kell, J. Athletic apparel: Outperforming the competition in 2014. Fortune. [Online] Fortune, 25 December 2014. [Cited: 3
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2015.] http://blogs.cisco.com/cle/improving-lives-through-wearable-technology.
18. Pachel, P. Nike FuelBand Was the First Fitness Tracker to Fall, But It Won't Be the Last. Mashable. [Online] Mashable, 22
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26. Campos, A. A Few Reasons Why Nike Is A Good Long-Term Investment . Seeking Alpha. [Online] 28 January 2015. [Cited:
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27. Ulrich, K, Eppinger, S. Product Design and Development. Boston : McGraw-Hill, 1995. p.39.
29
8.0 Appendix
Breathable materials
Customisable / Modular
Location features
Device connectivity
Automatic updates
Push notifications
Training development AI
Pressure touchscreen
Media centre
Low maintenance
Hardrive capacity
Sweat/waterproof
Wireless charging
Automatic feedback
32
31
30
29
28
27
26
25
24
23
22
21
20
19
18
17
16
15
14
13
12
11
10
5
3
4
4
5
5
4
5
4
5
5
3
4
5
3
3
4
3
2
3
2
4
5
3
3
3
4
4
3
4
5
4
3
3
1
9
9
9
9
1
3
1
9
9
3
logP
3.2-0.1
3.2-0.4
Ra
m
182
Yr.
Subj.
10
222
4%
9
3
1
9
9
3
3
1
9
9
1
3
1.0
GB
2.8
2.0
GHz
155
16.0
8.0
GB
1.0
342
3%
234
7%
5%
2
2
2
3
3
2
Features
Software
1
9
3
9
9
9
1
1
3
3
3
3
9
1
1
9
1
2%
103
0.8
10
3%
126
0.8
1.0
9
3
Hardware
9
9
9
1
3
9
0.1
0.1
Subj.
>5
160
71
3%
ppi
<1
>5
98
1%
422
91
2%
480 <0.5
387
2%
276
8%
1
Y
6%
5
4
3
3
540
279
Hz
500
692
112
6%
80
500
175
2%
120
174
4%
231
4%
288
5%
6%
9
1
Training AI predictive
calulation time
Opera ing system design
architecture
No. of compatible apps and
devices
Bluetoo h connectivity
9
9
Wireless bandwidth
Battery Capacity
Material
9
9
1
9
9
9
9
9
9
9
3
3
15
130
5%
147
3%
25.5
10
211
3%
42x42x13
.1
20.0
140
4%
42x42x
13.2
236
3%
313
5%
3
2
6%
2
1
2
2
3
1
3
3
1
1
3
1
mm x
mm x Kg
mm
Processing Speed
3
9
Hydrophobic Rating
Total Mass
Form
1
2
3
4
5
6
7
8
Product Dimensions
Technical Group
Direction of Improvement
Engineering
Characteristics
Customer Attributes
Unique style
34
Customer Importance
Measurement (Units)
Appropriate shape
Need No.
30
Affinity Group
Easy to control
Comfortable to wear
Hardware
Software
Function
Form