Case-Study

NIKE
CHANGING THE SNEAKERS
GAME GROUP - 6
23P077 ASHUTOSH
23P078 ASTHA MISHRA
23P083 D LALIT KUMAR
23P090 HITESH THAKUR
23P098 PRATUSH RA J
23P101 PRIYANSH KHANDELWAL
KEY CONCEPTS TO KEEP IN MIND
The Theory of Economic Development states that firms often engage in 3 types of innovative activities:
Invention: Act of creating or
developing a new product or process
Innovation: Process used to create a
commercial product from an invention
Imitation: Adoption of a similar
innovation by different firms
The word “Innovation” has appeared 33,000
times in U.S. firms’ quarterly and annual reports.
Among these 3, innovation is the most
critical for the following reasons:
• Commercialization: While companies
may be able to create ideas that lead
to inventions, commercializing these
inventions is often difficult.
• Patents: A strategic asset and a very
important source of competitive
advantage, the ability to regularly
produce them is crucial for a firm’s
sustained success, especially when a
firm aims to commercialize an
invention or compete in a knowledge-
intensive industry (eg: Pharma)
INTERNAL INNOVATION
• Internal Innovation refers to the process by which an organization develops new ideas, products, services, or processes from within, rather
than relying on external sources.
• This innovation can be driven by the company's resources, capabilities, and employees, and aims to improve performance, enhance
efficiency, and maintain a competitive edge in the market.
• Internal innovation can be incremental improvements to existing offerings or the development of entirely new and groundbreaking products
and services.

THE INTERNAL INNOVATION MODEL

Whirpool uses structured ideation sessions with employees

to identify new ideas for innovation

At LinkedIn, employees are encouraged to come up with

ideas for innovations, develop a team to work on it, and to
make a pitch for the innovation to an executive team.

At Ericsson, employees are encouraged to participate in

“ideaboxes”. Promising ideas are developed further by
“Ideas-to-Innovation” managers to determine their value
and feasibility. The best ideas receive funding from an
internal venture funding group.
INCREMENTAL AND NOVEL INNOVATION
Incremental Innovation Novel Innovation
Novel innovation, also known as radical or breakthrough innovation, involves
Incremental innovation involves making small, gradual improvements or
developing completely new and unique products, services, or processes that
updates to existing products, services, processes, or methods.
significantly change the market landscape.

• Most of the innovations are incremental • Also called breakthrough innovations

• Build on existing knowledge bases and provide small
improvements in current products
• Cheaper, easier, and faster to produce and involve less risk
• Used in established markets where customers understand and
accept a product’s characteristics
• Provides significant technological changes and create new
knowledge
• Revolutionary and non-linear in nature
• Rare since difficulty and risk involved in the development

Apple: A prime example of how incremental Toyota’s Kaizen approach for continuous
innovation can lead to disruption improvement

Gartner’s Hype Cycle, 2023

INTERNAL CORPORATE VENTURING: AUTONOMOUS
AND INDUCED STRATEGIC BEHAVIOUR

Autonomous Strategic Behaviour Induced Strategic Behaviour

• Bottom-up process • Top-down process

• Product Champions pursue new ideas in which they
develop and coordinate the actions required to innovate
and bring in the market
• It result in change to the firm’s current strategy and
structure arrangement
• The firm’s current strategy and structure facilitate
the development and implementation of product or
process innovations
• Driven by the organization's current corporate
strategy
APPROACHES TO PRODUCE INNOVATION
INNOVATION THROUGH INNOVATION THROUGH
COOPERATIVE STRATEGIES ACQUISITIONS

• Alliance with other firms can contribute to • Acquire companies to gain access to their
innovations innovations and their innovative capabilities
• Provide information on new business • Enrich and increase the internal innovation
opportunities and innovations to exploit abilities
• Combining complementary assets has the • Purpose - to rapidly extend one or more
potential to more frequently result in product lines and increase the firm’s revenue
“breakthrough” innovations
• Factors influencing decision to innovate by
cooperate - Rapidly changing technologies,
globalization and need to innovate at world-
class levels, etc.
• Such alliance can even be with competitors
 NIKE: COMPANY BACKGROUND
Founded (1964) Renamed (1971) Geographies Brands Categories

American multinational NIKE, INC. HQ Beaverton, Oregon Converse - Casual footwear Footwear
firm after the Greek goddess and Apparel
of Victory earlier ( Blue 190 countries across 6 Hurley - Surfing Community Apparel
Founders: Ribbon Sports) continents Jordan - Jumpman
PHIL KNIGHT trademark, Basketball Equipment
BILL BOWERMAN $34 B Revenue (FY 2017) Community

Market shares NIKE, INC. brands in the U.S. in 2017 Current Model Problems & Opportunities

Sales - Retailers and D2C Physical retailers are struggling

NIKE 36%
Channels - Both Offline & Competitors (Adidas (11%) and Under Armour (3%))
Online increasing market share

JORDAN 16% Faster growth rate in D2C as compared to third-party

wholesale business

CONVERSE 4%
CONTINOUS DIGITAL
INNOVATION
 NIKE’S FOCUS ON “GOING DIRECT”

NIKE DIRECT
CONSUMER DIRECT OFFENSE
• Nike's service model is simple: Make consumers feel loved by Nike through their DIGITAL PLATFORM.

• Across this massive digital and physical footprint, NIKE Direct will consistently deliver the best expression of the NCX, the Nike Consumer
Experience, as the truest expression of the NIKE Brand.

• NCX focuses on 3 key areas: Product, service and environment.

• Targeting 12 key cities in 10 countries, reducing product styles by 25% while offering deeper selections in top franchises.

• Over the last 2 years, membership grew nearly 30% per year. Currently, over 100 million members.

• NikePlus membership program aims for 3X growth over the next 5 years.

• Targeting the reach of Nike’s apps to almost 700 million new consumers.
 NIKE’S FOCUS ON “GOING DIRECT”

5 world-class digital experiences. That's the Nike APP, SNKRS app, NIKE Run Club, NIKE Training Club, and of course, Nike.com
 HISTORY OF SNEAKER CULTURE
Early 19th century
• First sneakers: Soft shoes with rubber
soles
1980s -90s: Rise of Sneakerheads
• Sneaker collecting trend
• Introduction of "casual Fridays"
• Adidas and Run-DMC: "My Adidas" song
and partnership in 1986
• Nike and Michael Jordan: Launched Air
Jordan in 1984
1915-1922: Converse
• Converse established in 1915
• ‘Converse All Star’ in 1917
• Rebranded as "Chuck Taylor All Star" in
1922
• Collaboration with Chuck Taylor: First
athlete-footwear partnership
2000s: Fashion Collaborations
• Adidas with Yohji Yamamoto and Jeremy
Scott
• Nike with Supreme, resulting in "Supreme X
Nike Dunk Low Pro SB"
• High-end designers entered market
• Kanye West's "Yeezy I" in 2009 and "Yeezy
II" in 2012 with Nike
• Limited-edition releases drove frenzy
1970s: Design Innovation
• Emergence of brands like Nike, Adidas,
and Puma
• Focus on athletic performance and
street fashion
• Sneakers became a status symbol in
urban communities
2015: Continued Growth
• Increased interest from female
consumers
• In 2015, sneakers outsold heels in
Europe for the first time
 SNEKAERS MARKET IN 2018
The Global athletic footwear market
• Global market value close to $50 billion annually. • The U.S. accounted for just under 20% of the total market.
• Nearly a billion pairs of shoes sold. • Main competitors: Nike and Adidas, along with Puma, Under
• Market constituted one-seventh of total footwear market. Armour, Vans, Gucci, and Balenciaga.
• Sales increased by over 10% from 2016 to 2017

New Developments

Collaborations Resale Trend Internet and Social media

• High-profile partnerships, e.g., Nike and
Virgil resulted in "The Ten" collection.
• Adidas collaborated with Yohji
Yamamoto and Jeremy Scott.
• Nike partnered with fashion brand
Supreme.
• Resale market growth with platforms
like Grailed and StockX.
• High prices in resale, e.g., Nike "Air
Yeezy II" sold for $90,000 on eBay.
• Led to use of automated bots to secure
limited editions.
• Brands and athletes used these
platforms for product promotion.
• Increasing online purchases directly
from brands or online retailers.
• Social media created significant buzz
and anticipation

Relevance of Physical Stores

• Physical stores like Kith, Dover Street Market, and Supreme • Long lines and camping out for limited-edition releases on
remained relevant. "drop dates."
• Boutiques in major cities (New York, Los Angeles, Miami) • Physical stores provided a tangible shopping experience
attracted sneaker enthusiasts. that online platforms could not replicate.
 NIKE’S PROCESSES
The right product at the right time and at the right price

Consumer Insights Product Creation Team Product Strategy

Market Data Merchandising Team

Design Team Product Story

Business Targets

Nike’s Sneaker Launch Strategy

Explore Invest Scale

• Push the boundaries of innovation,
aesthetics, and fit with unique, high-
energy products
• Limited availability, high price points,
focused on creativity and experimental
designs
• Example: Virgil Abloh's Off-White
Collection
• Fuel bigger ideas and drive broader
product lines with special editions of
existing performance sneakers.
• Moderate quantities to satisfy a higher
percentage of demand, often tied to
signature athletes or special events.
• Example: LeBron 16 Performance Shoes
include special editions
• Driving large-scale demand creation
campaigns and providing high-
performance sneakers.
• Global presence, and produced in
significant quantities to meet
widespread demand.
• Example: React Cushioning Technology
Sneakers
 S23NYC
• Acquisition Background:

Digital studio S23NYC was the result of an acquisition of Virgin Mega (founded by Faris)
• Inspiration and Concept:

Faris found inspiration in the energy of people waiting in line at his festivals
The platform aimed to connect emotionally with brands through gamification

Introduced 'Megaline' to make waiting more engaging using game principles

• Role and Initial Mandate:

Post-acquisition, S23NYC became Nike’s digital studio based in New York

The first mandate was to operate the SNKRS app and introduce new features

Vision
• To become “the Ultimate Sneaker Source” • “Bringing back the thrill of the chase”
• SNKRS was about turning shopping into a sport
• “To bring energy back to the consumer”
 SNKRS SEASON 1

• The SNKRS app launched its most eye-catching elements in January 2017.
• The features were aimed at enhancing user engagement and bringing unique experiences to sneaker enthusiasts

SNKRS Gesture Unlock SNKRS stash

• First feature debuted in January 2017 with the release of the “Blue
Foamposite One”
• Interactive Experience: Users could unlock the shoe by recreating a
color pattern using a Sharpie marker, turning black parts of the shoe to
blue
• Engagement: Encouraged user interaction and added an element of
surprise
• Impact: The first person unlocked 8 mins after the post went live. 100K
people wanted to buy the shoe (20x their expectation)
• Launched in May 2017
• Scavenger Hunt: SNKRS’ version of Pokémon Go
• Location-based Purchases: Users could purchase shoes by locating
hidden stashes in various locations around New York City
• Impact: Generated excitement and engagement as users participated
in the digital scavenger hunt and successfully drove foot traffic to
specific locations
• Increased user participation and anticipation for future releases
SNKRS SEASON 1
 SNKRS SEASON 1
SNKRS Cam
• Debuted in June 2017 (Collaborated with David Chang)
• Augmented Reality:
⚬ Launch a sneaker by digitally burying it in a menu
⚬ Users could point their phone’s camera at a normal menu and
see the shoe on their screen as if floating in the air
• Impact: Sold out in 1 hour. Target audience were foodies (Not the
usual audience)
SNKRS shock drop
• Introduced in early 2018.
• Surprise Alerts: Notified users of surprise drops for coveted products,
available for immediate purchase or pick-up.
• High-Profile Example: Successfully executed during the 2018 Super Bowl
with the release of Justin Timberlake's customized Air Jordan 3s
• Impact: Sold out immediately. Notified 100k+ people on the next drop
resulting in 100% sell through
 SNKRS SEASON 2
Season Two of the SNKRS app is an exciting step forward for Nike in making sneaker shopping more fun and engaging. After a successful initial launch, Season Two is all
about adding new features and onboarding even more users. The main goal is to make the app better and get more people involved in the sneaker community

New features and goals

Stash Squads: This new feature lets users in one location help users in another location get access to
special sneakers. It’s a way to make the app more inclusive, so even sneaker fans who don’t live in
big cities like New York can join in on the fun

Team Collaboration: The app now has features that let users in different cities work together to
unlock sneakers. For example, if users in one city unlock a sneaker, users in a partnered city can
also get access to it. This creates a sense of community and shared excitement among sneaker fans
in different places

Applying Existing and New Features: Nike has been using the current features of the app in creative
ways for different campaigns. Two major campaigns in Season Two are the NBA-centered Art of
Champions and Kendrick Lamar's concert tour, both of which have used the app to create
excitement and engagement among users.
 SNKRS S2 | ART OF CHAMPIONS
This campaign was a digital launch for Nike Basketball, telling stories of Nike’s long history with basketball through a series of digital and physical events. It focused on the
excitement of the NBA playoff series, creating engaging content that resonated with fans

Art of champions campaign

Objective: Celebrate the most iconic championship moments in basketball history.

Launch Date: Coincided with the NBA playoffs in 2018.

Key Message: Highlighted the intersection of sports and culture, emphasizing the
artistic and heroic elements of basketball.

Collection: Featured 16 shoes, each representing a legendary playoff performance

or championship moment.

Storytelling: Bringing stories of Nike's long history with basketball to life through
digital and physical moments

Marketing Strategies
Multimedia Approach: Utilized social media, digital Collaborations: Partnered with artists and Limited Edition Releases: Created exclusivity
platforms, and in-store displays to engage fans and influencers to create content and buzz around the and demand by releasing limited quantities of
promote the collection. campaign. each shoe
 SNKRS S2 | KENDRICK LAMAR’S TOUR
Nike partnered with hip-hop artist Kendrick Lamar and his label TDE to release special edition sneakers during his concert tour. These sneakers had unique unlock features
that made them highly sought after, and they sold out quickly at tour events, demonstrating the app’s power to drive excitement and sales

Kendrick Lamar’s Tour Campaign

Objective: Collaborate with rapper Kendrick Lamar to promote Nike Cortez
during his "DAMN." tour.

Launch Date: Align with Kendrick Lamar's tour schedule in 2017-2018.

Key Message: Fuse music, culture, and sneaker heritage, emphasizing the
influence of Kendrick Lamar and the iconic Nike Cortez.

By June 1, 2018, Nike ran stashes at three cities the tour visited- Los Angeles,
Houston, and New York City.

Marketing Strategies
Signature Shoe: Introduction of the Kendrick Lamar x
Nike Cortez, featuring unique designs inspired by
Kendrick Lamar's music and personal style.
Design Elements: Shoes included distinctive Limited Releases: Created hype and exclusivity
features such as "DAMN." branding, Chinese by releasing limited edition versions of the
characters symbolizing "balance" and "unity," and Kendrick Lamar Cortez during the tour.
references to Lamar's lyrics and artistry
 LOOKING AHEAD
As Nike looks to the future, the focus is on using the success of the SNKRS app to drive broader digital transformation and growth. The vision is to expand the
app’s reach, keep innovating, and introduce new users to the exciting world of sneaker culture.

Goals and Strategies

Extending Access: One of the main goals is to expand
the app’s reach, both within the U.S. and globally. This
means making the unique sneaker culture accessible to Introducing New Consumers: Nike aims to attract new
more people around the world, ensuring that more users users and introduce them to the vibrant world of
can enjoy the SNKRS experience. sneakers and sneaker culture. By using data and
insights, Nike plans to create personalized experiences
for each user, making the app more engaging and
relevant to individual preferences.

Innovations and Adaptations: To keep users excited and engaged, the

SNKRS app will continuously update its features. This focus on innovation
ensures that the app remains at the cutting edge of digital retail, providing
an ever-improving user experience.
 NIKE’S INNOVATION PLAYBOOK
Invention: Nike's development of new Innovation: The process of turning Imitation: Other companies in the athletic footwear
sneaker models and technologies such as inventions like the Flyknit into industry adopting similar technologies and designs,
the Air Jordans, Air Max & Flyknit commercially successful products. Nike's leading to product standardization and increased
represent the creation of new products ability to market and sell these new competition.
that meet technical criteria for success. technologies showcases successful E.g. - Adidas Boost Technology (Imitation of Nike Air
innovation. and React Technologies)

INCREMENTAL INNOVATION ALLIANCES AND PARTNERSHIPS RADICAL INNOVATION ACQUISITIONS

• Nike's continuous
improvements in existing
products, such as design,
enhancing cushioning
technology or material quality
• This builds on existing
knowledge and provides small
but significant improvements
• Nike collaborates with
designers, celebrities and
brands (Virgil Abloh,
Kendrick Lamar) to bring
innovative products to market
• These partnerships help
combine complementary
assets and result in
breakthrough innovations
• The introduction of
groundbreaking products like
the Nike Air series, which
provided significant
technological changes and
created new knowledge
• This novel use of AR
technology in SNKRS cam
attracts foodies (new users)
• The acquisition of S23NYC,
a digital studio, enabled
Nike to integrate innovative
digital experiences into its
SNKRS app
• This enhances consumer
engagement and drives
digital transformation
 NIKE’S INNOVATION PLAYBOOK

INCREMENTAL INNOVATION RADICAL INNOVATION

• S23NYC became a catalyst for Nike’s digital transformation • Nike's strategy to better serve consumers personally but at scale
through its direct-to-consumer approach

• Nike's focus on digital innovation, transformed how consumers

interact with the brand and purchase products. • By leveraging digital platforms like the NikePlus membership
program to provide tailored experiences and products

• Features like gesture unlocks, scavenger hunts (stash), augmented

reality (SNKRS Cam), and shock drops enhance user engagement and • Bridging the gap between physical retail and digital experiences (In-
create unique shopping experiences store features that recognize NikePlus members)
 SUGGESTIONS
• Broaden the focus beyond key sports like basketball to include other popular sports, and diversify product
offerings to reduce dependency on any single product line.
• Introduce and promote an affordable range of sneakers in developing countries like India to capture a broader
customer base and increase market penetration.
• Widen the availability of the SNKRS app to include almost all developed countries, enhancing global engagement
and sales.
• Partner with globally famous celebrities to enhance the fashion appeal of Nike sneakers, leveraging their
influence to attract a wider audience.
• Emphasize sustainability by using eco-friendly materials in product development, and invest in technological
advancements to stay ahead in innovation and appeal to environmentally conscious consumers.
THANK YOU !