Nike

1) Business model of Nike

Customer Segments

Nike has a mass market business model, with no significant differentiation between customers.
The company targets its offerings at any consumer who is interested in athletic footwear and
apparel.

Value Proposition

Nike offers four primary value propositions: accessibility, innovation, customization, and
brand/status.

The company creates accessibility by offering a wide variety of options. It has acquired
numerous footwear and apparel firms since its founding, including Converse and Hurley
International. These actions have enabled it to expand its product lines, giving consumers more
to choose from.

The company places a strong emphasis on innovation. It maintains the Nike Explore Team Sport
Research Lab at its headquarters, a research facility focused on designing cutting-edge products.
It also operates the Nike Advanced Product Creation Center, focused on technology
incorporation.

The company enables customization through its service NikeID. It allows customers to
personalize various aspects of their shoes, including sport style, traction, and colors. Socks can
also be tailored.

The company has established a strong brand as a result of its success. It is the top seller of
athletic footwear and apparel globally. It has partnered with several of the world’s leading
athletes to promote its products, including Michael Jordan, Cristiano Ronaldo, and Tiger Woods.
Lastly, the company has won many honors, including recognition as the “World’s Most
Innovative Company“ by Fast Company (2013) and the “Most Admired Company in America“
for apparel three years in a row.

Cost Structure

Nike has a value-driven structure, aiming to provide a premium proposition through

frequent enhancements to its products. Its biggest cost driver is cost of sales, a variable
expense that primarily includes inventory and warehousing costs. Other major drivers
are in the areas of overhead, sales/marketing, and administration, all fixed costs.
Revenue Streams

Nike has one revenue stream: sales of its athletic footwear, apparel, equipment, and
accessories.

2) Nike reinforcement strategy

Fast Company did not name Nike its most innovative company in 2013 because it thought it had
the best-looking or feeling shoes. Rather, it crowned Nike because of the way the company has
shifted its approach in consumer engagement with its brand by reinforcing the identity of the
individual consumer. In a sense, that is the most ironic part of all -- a company that has built its
success by riding the endorsements of superstar athletes is now focusing its strategy on the
creative desires of the everyday consumer. If Nike is to find new growth, it seems to have
"iDentified" where to focus.

NIKEiD - An Experiment Turned Experience

What Nike found within its NIKEiD experiment was not just a new product offering, but also a
new way to think about a commoditized consumer experience. I think we all remember the days
of going to the shoe store, placing our foot in that metal sizing template and the salesperson
telling us our size was between x and y, so it would be best to try on both. Nike has turned that
experience upside down.

What started out as a web-only experience has now turned into a bricks-and-mortar phenomenon
where Nike has created over 100 "design studios." These studios not only create a unique
consumer experience, they bring intimacy to the design process and squarely place it in the hands
of those who care about it most -- the customer.

The design studio is often defined by a set of iMac workstations surrounded by versions of all
the customizable shoes and staffed with salespeople who are there to guide customers through
the design process, offer suggestions, and generally provide insights on the latest trends. The
layout is clean, provides an aura of sophistication and, most of all, separates Nike from its
competitors still content to measure feet and, at the very most, suggest a size.
The company has invested tremendously in the web iD experience as well and is the center of the
company's desire to ensure a seamless experience to interact with the Nike brand. The iD site
allows a customer to take any of the iD-compatible shoes and then, piece by piece, customize
every single aspect of the shoe from colors to width to cushion. It allows the customer to view
the shoe design from all angles as if he/she were holding it, save it to a personal locker as future
thoughts/designs come to mind, and share it with others via the traditional social media channels.

3) incidental brand exposure strategy of Nike

You are probably thinking… Incidental Brand Exposure (IBE)? What is it? Well the basic
concept of IBE is the short exposure to brand logos which the average person occurs
throughout their day. This might be the subtle Starbucks logo on a coffee cup someone is
holding as you passed them in the street or the Nike swoosh on someone’s t-shirt whilst
waiting at the bus stop.

Although you may not consciously look to identify these things, subconsciously your brain is
recognising these logos and as a result, has been proven to later affect purchasing and
lifestyle decisions related to the selection of products as well as the way an individual acts
and feels. 

In a study conducted by Rosellina Ferraro, James Bettman and Tanya Chartrand, they
gathered 126 undergraduate students who all viewed a series of 20 photos. These photos
contained a single person performing an everyday activity. In a number of photos, a bottle of
Dasani water was placed next to the focal person, whilst the remaining photos were fillers
that did not dislay the Dasani brand. The duration of exposure was controled through the
amount of photos displaying the Dasani bottle i.e. 0, 4, or 12 times. The results show that in
the 0 exposure control condition that 17.1% of participants selected Dasani water rather than
the other three bottle options presented to them, as compared to 21.6% in the 4 exposure and
40% in the 12 exposure. These results showed that there was a positive correlation in regard
to their choice of water and their unaware exposure to the Dasani brand. 

This study shows how IBE can have a large affect on consumer behaviour based on
frequency and positioning, Nike’s marketing strategy is accepted to be an important
 component of the company’s success. Nike is positioned as a premium-brand, selling
well-designed and very expensive products. As same time Nike tries to lure
customers with a marketing strategy centering on a brand image which is attained
by distinctive logo and the advertising logo: “Just do it”. 

4) Nike observational learning strategy

Consumer behavior is largely learned behavior. Most attitudes, values, tastes, behaviors,
preferences, symbolic meanings and feelings are acquired through learning. People buy things
and then make decisions for future purchases based on if they liked the product, quality, service,
and price. Nike has always focused on customer experience and whichever channel customers
are buying from including the online and offline channels. The focus is on providing customers
with the best experience. Apart from other things, brands are relying on higher personalization to
offer their customers the best. For this purpose, brands like Nike use data and analytics to design
exclusive experiences for their customers and engage them on all channels. Nike’s growth in
sales along its direct sales channel is also a result of the consistent focus of the company on
customer experience. Nike Direct has experienced enormous growth over the previous few years
and it is also why the company is not relying on other e-commerce channels but developing its
own and deepening its relationship with its customers. Nike has always been a customer-centric
company. The Nike App brings the best of Nike to its customers, personalized for each one of
them. Apart from providing early access to new products, the app also lets customers shop for
exclusive collections and get invitations to member-only events and experiences. However,
things do not stop just there because when it comes to customer satisfaction Nike cannot stop at
anything. For example, Nike is using Machine learning, AI, and recommendation algorithms to
serve its customers better. Using the Nike Fit app, customers can just snap a picture of their feet
and find the right fit. Since a large number of customers are shopping or checking out new
products online, Nike is focusing more on digitalization. In 2018, it acquired Zodiac, a data and
analytics company, to speed up digitalization. It has also helped Nike grow the level of
personalization it offers its customers. In fact, Nike’s customer-centricity has continued to grow
with time. It is one of the central pillars of its business strategy
 Network Associatios of Nike

The core of building the brand equity for Nike brand equity is brand association. Core
associations for Nike include: innovative technology, high quality/stylish products, joy and
celebration of sports, maximum performance, self-empowerment and inspiring, locally and
regionally involved, and globally responsible. What has to be mentioned is that Nike is
associating its brand with famous athletic celebrities that have similar personality as the brand;
they are achievers, winners, determinant, and accomplishment oriented, nontraditional. Nike is
capitalizing on the idolized view of American for their athletic heroes, especially the youth the
main target of NIKE. The most famous example for brand association ever was the collaboration
between Nike and Jordan, the association that personified Nike as a superior, achiever, successful
and amazing top performing brand.

Winner
Innovative High quality
technology

Inspiring

Maximum
performance

Self-
empowerment
Air Jordan

Determination