Case Study on Nike, Inc.

By:
Paresh Sidhdhapura
Digesh Shah
Chandrajit Khaniya
Kartik Patel
Tejas Sachala
Jignesh Gamit
 Facts of Nike
• Nike, Inc. is a major publicly traded sportswear and
equipment supplier based in the United States.

• It is the world's leading supplier of athletic shoes and apparel

and a major manufacturer of sports equipment with revenue
in excess of $18.6 billion USD in its fiscal year 2008 (ending
May 31, 2008).

• The company was founded on January 25, 1964 as Blue Ribbon

Sports by Bill Bowerman and Philip Knight, and officially
became Nike, Inc. in 1978.
 Cont…d
• Nike markets its products under its own brand as well as Nike
Golf, Nike Pro, Nike+, Air Jordan, Nike Skateboarding and
subsidiaries including Cole Haan, Hurley International, Umbro
and Converse.

• In addition to manufacturing sportswear and equipment, the

company operates retail stores under the Niketown name.

• Nike sponsors many high profile athletes and sports teams

around the world, with the highly recognized trademarks of
"Just do it" and the Swoosh logo.
 The Tumultuous years
• In 1983,Inventory of 22 million pairs
of unsold shoes.
• In 1984, Earnings dropped by 29
percent.
• Falling shoe orders by 30 percent.
• High Competition from Reebok.
 Reasons for Tumult:
• Reebok International Limited, a subsidiary of
German sportswear giant Adidas, is a producer
of athletic footwear, apparel, and accessories.
• Reebok’s focus on Aerobic Shoes, which took
the sales from $1.5million to over $600
million.
• Reebok’s USP was to make their appearance as
fashion accessories.
Cont……………
• U.S. sales jumped upward by 450% between
1983 and 1985, Nike didn’t enter the market till
1985.
• Nike’s problem was that the company had never
outgrown its athletic youth or learned to keep
its winning streak in perspective.
• Hired managers who had more experience on
running tracks rather than sitting behind the
desk.
Cont………
• Failure to recognize aerobics boom.
Women -A major customer.
• Ignorance of market trends.
• Not satisfying customer needs.
• Endorsement contracts effective.
• Limited resources and unlimited
confidence.
• Persuasion of top athletes.
 Running to keep up
• In 1985, reducing the inventories by significantly
discounting.
• Lay off about 400 employees which is one-tenth of
his work force.
• Knight’s more emphasis on performance rather
than styling.
• Nike now also focus on a person who uses it for his
day-to-day activity and is more invoked to carry on
exercise viz. walking, jogging, cycling etc.
Cont………..
• In 1985, Nike unveiled its own version of the aerobics shoes,
a $40 leather shoe designed to be used also for bicycling.
• Nike sponsored Michael Jordan, the NBA star and promoted
Air Jordan Basketball shoe, for which Nike paid a sum of $
2.5 million for 5 years.
• In 1984, Nike’s basketball line showed a 49% increase in sales.
• Accounting for 39% of all Nike’s 1985, domestic footwear
sales.
• In 1984, Reebok fell far behind Nike, with domestic sales of
less than $300 million.
Cont…………..
• In a US athletic shoe market now
totally nearly $2.73 billion, Nike’s
sales figure of $620 millions was far
behind Reebok’s astounding $850
million.
Positioning strategies :
• Nike is positioned as a premium-brand, selling well-
designed and expensive products.

• Nike lures customers with a marketing strategy

centering around a brand image which is attained by
distinctive logo and the advertising slogan: "Just do it".

• Nike promotes its products by sponsorship agreements

with celebrity athletes, professional teams and college
athletic teams.
Cont…………….
• Nike tried to make walkers more aware of the EXW
by sponsoring a series of walking races in California.
• The EXW was expected to earn Nike big profits over
the long haul, but initial sales were nothing to get
excited about.
• The company now attempted to lure new customers by
focusing its design efforts to appeal to increasingly
narrow, but varied, market segments viz. “Wimbledon”
tennis shoe, “Classic” Golf shoe, etc.
Cont……………
• Lesson learned: We have to become
more of a marketing company & we
have to be there when the trends
start.
 Strengths and Weakness
Strengths Weakness
Sponsoring of sports Pressured to charge low

athletes and gain of prices.

valuable coverage. Due to diversified
Development of high products, values fall as
quality products at market shares fall.
reasonable price.
Re-location of products.

Brand Loyalty

High prestige i.e. Famous

 Opportunities and Threats
Opportunities Threats
Has established global Fake products.

brand recognition due to New brands of the same

sporting events.
Treated as a fashion brand
by youths and thus stays in
demand.
Due to high quality
quality with lower price
margin leaving a
competitive advantage.

products, it brings in more

profit.
 Revolution
• Reebok’s acquisition of Avira, buy out
of Rockport
• Access to Avira technology & own
proven flair for fashion.
• In 1987 Nike unveiled new two new
line of shoes, The cross training &
Air lines, that can be used for all
activities.
• The Air line – fifty models, price $45
to $110
 Air
• With Air, Nike sought to overcome a
variety of obstacles. It hoped that
the cushion system could attract
many people fearful about the
effects of strenuous exercise on
their joints.
• Its ads appeared in women’s
magazines, sports magazine, TV ads,
• Styling, Hightech, attention to color
combination & ornamentation.
 The cross training line
• The cross training line, which also
featured the air cushioning system.
• Appeal to people who were concerned
about fitness but weren’t too
involved in any one sports.
 Results
• During 1988 Nike began to gain rapidly on
Reebok. Nike bought the Cole Haan shoe
company, which made casual & dress shoes.
• Nike launched a new $20 million campaign
starring the highly visible young baseball
& football player BO Jackson & the tag
line “Just Do It”
• Company’s market share increase.
• Analyst s predicted that Nike would finish
the year with higher sales than Reebok.
JUST
DO
I
T
Thank you

• Questions?