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Nike Case Study

In: Business and Management

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Nike
Presentation of Facts Surrounding Case

Background on Football and the FIFA World Cup:
Football (Commonly known as Soccer in the U.S.) was and still is the most popular sport in regards to viewership worldwide. In 2006 it was estimated that the sport of football was played by more than 265 million people, and continuing to grow (These estimates were up from 2000, estimated 42 million). Profession leagues exist throughout the world and the most popular teams were in Western Europe. The history of modern day soccer dates back to 1863, although there was early evidence of soccer being played as a sport in China between the 2nd and 3rd centuries BC. In China, it was mentioned that people dribbled leather balls by kicking it into a small net. Recorded facts also support the fact that Romans and Greeks used to play ball for fun and leisure. (Jetzen, 2013).
Background of Nike: Co-founded by Phil Knight (former University of Oregon Track Athlete) and Bill Bowers, initially under the name Blue-Ribbon sports in 1962. After a business relationship ended with their overseas manufacturer, they changed the name in 1972 to what is now known as Nike. In 1975 Nike signed its “first” of many big name athletes in Steve Prefontaine. A local University of Oregon track athlete who at the time who held every known track record from the 2k to 10k meters. (Please note that ultimately, Steve Prefontaine was #1 in his sport as this has meaning throughout the case to Nike’s overall strategy). By 1979 Nike owned 50% of the “running shoe” market share (As this was there focus). After taking the leap and going public in 1980, Nike expanded into other sports outside of running. In 1985, Nike managed to sign some basketball player named Michael Jordan (Many say the “greatest” basketball player, ever in the NBA….and simply an “iconic” figure). By 1990 Nike was the leader in shoes and apparel and dominating running, basketball, tennis and cross training. In 1996, the division known as Nike golf signed a promising young golfer named Tiger Woods (Only to be a golf phenom and “iconic” figure and #1 at his sport for years to com). In 1999, Lance Armstrong’s made a miraculous comeback from cancer to win the first of seven straight Tour de France. Nike stood by him, when other sponsors he had left. All in all, one thing Nike prided itself on was innovation and being groundbreaking. Nike also was gaining the reputation for the big ticket endorsements of “leading” and “upcoming” athletes. By 2009 Nike was the #1 manufacturer of athletic clothing and shoes. According to Tony Bignell (Footwear Category Director), “Nothing ever stops; we just keep learning and innovating (referring to Nike’s R&D) (Johnson, 2011). This is a great stopping point for our group to focus on the Major Issues Nike Faces in Football this Nike Case: World Cup 2010 (Questions to Pose) 1. How to replace Adidas at the #1 position in preferred football athletic brand?

2. Adidas has been the leader for years, how does Nike close the market share gap?

3. Cannot Market (present commercials) Football products during World Cup, only Adidas can as official sponsor? (Not able to market their product with billions watching)

4. Strategy development leading up to world cup, each year same goal (gain more market share, but how to reach the consumer, who is Nike Targeting and how do they target?

5. Is the Nike strategy of seeping into pop culture and partnering with respective sports top athletes a strategy that can be used in football?

Identification of the Key Issue
Besides the obvious limited marketing abilities, Nike must overcome other concerns that are associated with operating with in Africa. Nike must consider creative ways deal with Africa’s poor public infrastructure. To operate and market in underdeveloped regions means large amounts of capital are needed to address the added expenses that may include and are not limited to logistics, employee support, and budget management. Africa political and business markets have become synonymous with bribery and extortion. Both can have a devastating impact on a company’s bottom line. The challenge is how to reach the largest number of consumer considering the limited marketing capabilities due to the sponsorship agreement with Adidas. Nikes traditional marketing strategy has relied heavily on televised promotions of its products and endorsement partnerships with top tier athletes in their respective sports. With television and internet ads being restricted for Nike during the 2010 World Cup, there will be added cost of obtaining skilled professionals who are familiar with the national and local needs of the desired demographic. This will be costly and time consuming. Poor placement and untimely delays could harm brand strength and reputation in the region. The timing of product and endorsement releases will require extensive monitoring. Nike must also focus on how best to reach their target market of 17 year old males. The obstacle faced when trying to reach this demographic without using the internet or television will be difficult but not impossible. There will be issues with making strong relevant connections with their audience if the traditional positioning strategy cannot be implemented.
To overcome the 40 year association that Adidas has as the official FIFA sponsor, Nike must make sure that there content and images are not lost in translation. To grow their position within the target market Nike will have to implement a consistent approach to demographic in question. There placement and planning should be directed at maintaining and growing with their young consumer
Listing of Alternative Course of action:
Nike had to remain proactive and innovative to stay ahead of their competitors. The ability to continually build the Nike brand through celebrity marketing, all while changing the environment of marketing by redirecting to a different generation of consumer were the alternative course of action Nike.
Nike ability to remain proactive with new opportunities by means of investing a significant amount of money in big name athletes such as Michael Jordan, Tiger Woods, Lance Armstrong before each athlete reached their highest potential was an innovative approach to staying on top. Each athlete’s success in their individual field of sport, gave the illusion to the market that Nike brand products gives those whom use the ability to perform at the highest level. As the Nike sponsored athlete’s performance reaches its peak, Nike is able to stay above their competitors. New opportunities to create new products lead to other opportunities that changed the environment of marketing efforts.
Other opportunities where taken to shift Nike’s target market of 12-to-14 year old consumers. The value of both understanding and targeting to the right age groups, was very key in Nike’s marketing strategy to continue to build and gain market share of the football apparel market. After the World Cup 2006 Nike decided to focus their marketing efforts to the 17 year old consumer. The Nike Football team felt this older group were more independent in their ability to buy and develop a brand loyalty. Since every group does not feel the same way about the products, Nike focused on the exceptions of an older generation wanting to be better in sports; therefore, Nike acknowledged their enthusiasm on how Nike products can improve their performance. Effectively grabbing the attention of generational lifestyles is finding the ability to grab their attention and focus on the lifestyles and social values that influence their buying (Lake, 2013).
Evaluation of alternative courses of action:
Nike’s strategy to connect their brand to the world stage during the 2010 World Cup will take several approaches. To seek the attention of potential buyers to the Nike brand, the company’s CEO and business team evaluated several meaningful courses of action. The goal was to build a brand that was competitive in the markets above all brands that was a threat and transcend football as well as other sports into the Nike culture. Nike wanted sustainability in their products, they want to create in the minds of athletes that Nike’s innovation can improve their performance. Nike sought alternative ways to promote the Nike brand to a broader audience through various means of communication innovations. They wanted to continuously promote their brand through technology; the primary goal was to “create a dialogue with the world of football and other sports in way that is innovative, while also developing an emotional connection with the culture while remaining authentic.” To implement each phase of their alternative strategy, Nike used data collected from various sources of research. Communication and feedback from athletes was instrumental in the technology phase of developing a brand shoe that could potential over exceed the expectation in the minds of sports performers. Marketing through the means of advertising in several media outlets was key because buyers needed to connect to the brand and have a feeling for what they are buying. To maintain sustainability and stay true to the Nike brand, the team designed a product to connect to causes that impact the world in a way that would re-invent the product and show social responsibility. Nike maintained a competitive edge through on going market research and advance innovation in all sports communication channels (print & TV advertisement, social media, infomercials/commercials, collaboration with sport teams, etc) . Finally the team implement high profile celebrity athletes to market their brand by showcasing their performance while incorporating Nike product drivers to deliver the best, create the best, message the best, and staying ahead of the best company innovations in the industry. Nike’s course of action was to be the best while maintaining authenticity with their brand/product.
Recommendation of the best course of action:
Recommendation to Nike’s course of action is to implement cutting edge technology in every aspect of their company’s branding and products overall. Researching advance knowledge of communication channels. Putting out fact base research with real athlete is instrumental in winning over a broader spectrum of people who will support the brand and utilize Nike’s product. Branding is essential because the Nike swoosh logo is known all over the world, however, Nike is most notable by its athletes endorsement by wearing the Nike product and their testimony of its innovative design that help increase their level of performance. Nike should continue to prove that it is a sustainable and responsible company by supporting causes and programs around the world that is true to its brand, Nike’s support of AIDS research while introducing their cutting edge products during the 2010 World Cup is an example of how the company used its brand and revenues to support cause that resonate in all sports fans and people in general. Nike will need to continue to switch its target segmentation in a manner that is appealing to both age groups. Earlier on Nike’s primary focus was on very young sports football fans but soon realize that other sports attracted several people with various lifestyles and agendas as it relates to fitness and health. Researching and developing the fitness and sports world was ideal in introducing other sports apparel, which has increase Nike’s revenue sales and has made them one of the leading sports brand around the globe.

References
Lake, Laura, (2013) Power of Generation Marketing. Retrieved September 30, 2013 from http://marketing.about.com/od/demographics/a/generationmktg.htm
Ofek, Elie and Ryan Johnson (August 2012) Nike Football: World Cup 2010 South Africa

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