Nike Free-Presentation to the Board
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Transcript of Nike Free-Presentation to the Board
NikeFree Run 2+
Dec 6, 2011 Board Presentation: Marketing Plan
NikeFree Run 2+ 2
Agenda:
i. Executive Summary………………..(p.3)
ii. Situation Analysis…………………..(p.8)
iii. Product Overview…………………..(p.11)
iv. Competition…………………………(p.19)
v. Market Analysis………………….....(p.23)
vi. Product Branding………………......(p.29)
vii. Financial Analysis……………….....(p.41)
viii. Marketing Strategy…………………(p.46)
ix. Q & A …………………...…………...(p.70)
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i.ExecutiveSummary
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Mission:
Principal business is the “design, development and worldwide marketing and selling of high quality footwear, apparel, equipment, and accessory products.”
Company goal is to “deliver value to our shareholders by building a profitable global portfolio of branded footwear, apparel, equipment and accessories businesses.”
Corporate strategy is to “achieve long-term revenue growth by creating innovative, "must have" products, building deep personal consumer connections with our brands, and delivering compelling retail presentation and experiences.”
2011 10-K filing
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Place:
North American Market36% of Revenues in 2011, 35% (2010)
363 Stores 20,000 Retail accounts
International Market64% of Revenues in 2011, 65% (2010)
393 Stores 20,000+ Retail accounts
2011 10-K filing
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Customers:
Products are marketed through 2 channels:
Direct to Customer (B-to-C) 700+ NIKE owned retail stores including NIKETOWNs & NIKE
Factory Outlets Internet sales at www.nike.com
Wholesale Distribution (B-to-B) Independent distributors & licensees in over 170 countries
worldwide Partnered Experiences with major athletic retailers (shops within
shops): • Dick’s Sporting Goods “Fieldhouse”• Foot Locker “House of Hoops”• Finish Line “NIKE Running Lab”
2011 10-K filing
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Product Revenue:(in millions of USD) FYE 2011 ∆ % FYE 2010 ∆ % FYE 2009
Overall Contribution
Footwear 11,493 11 % 10,332 0 % 10,307
Apparel 5,475 9 % 5,037 -4 % 5,245
Equipment 1,013 -2 % 1,035 -7 % 1,110
Other 2,881 10 % 2,610 4 % 2,514
Total Revenues 20,862 10 % 19,004 -1 % 19,176
(in millions of USD) FYE 2011 ∆ % FYE 2010 ∆ % FYE 2009
Footwear
North America 5,109 11 % 4,610 -2 % 4,694
Western Europe 2,327 0 % 2,320 -3 % 2,385
Central & Eastern Europe 600 8 % 558 -17 % 673
Greater China 1,164 22 % 953 1 % 940
Japan 396 -9 % 433 1 % 430
Emerging Markets 1,897 30 % 1,458 23 % 1,185
Overall Contribution 11,493 11 % 10,332 0 % 10,307
55 % 54 % 54 %2011 10-K filing
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ii.SituationAnalysis
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Benefits: Strengthens the muscles, tendons and
ligaments of the foot Endorses a natural running posture that
is less susceptible to injury
Claims: Shoes provide support, which doesn’t
allow the foot to strengthen and support it self
Shoes reduce proprioception, the body awareness of itself to its environment
Shoes add mass to the foot, slowing down the runner
Starting out: People are encourage to start by walking
barefoot, increasing their time gradually so that the sole has time to become conditioned.
Barefoot Running:
http://design.spotcoolstuff.com/barefoot-running-shoes/newton-vibram-five-fingers
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Minimalist Footwear:
Lightweight Footwear – shoes that weigh 9oz or less in men’s shoe size 9
Accounted for 28% of the running category during 2Q 2011
Minimalist Footwear – subset of lightweight, designed to emulate the barefoot running style while protecting your feet from the hazards of hitting bare ground
Accounted for 5% of running category for same period
According to market analysis firm SportOneSource, Lightweight products are on track to hit $1.8 Billion in sales in 2011.
"It's such an important new idea in footwear that in a couple of years, we probably won't be talking about lightweight anymore, because everything will be lightweight…But right now, everyone is playing the hot hand, so they'll be putting their marketing dollars behind it." - Matt Powell, analyst with SportOneSource`
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iii.Product
Overview
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Product Highlights:
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Product Highlights:
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Product Highlights:
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Product Highlights:
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Product Highlights:
Nike+ sensor: $19Nike+ iPod kit: $29Nike+ SportBand: $59
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NikeFree Run 2+
Since 2005, the line has undergone numerous revisions to improve performance, comfort and durability
Nike Free offers two levels of barefoot feel with 3.0 and 5.0 soles, allows users to enter the market and train at their own pace/comfort.
All models are lace-up style Extremely breathable
Provide cushioning without sacrificing barefoot feel Nike + and Nike ID available options
5.03.0
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Customerization:
Customerization with Nike ID
Free to chose
Cushioning: with 5.0 and 3.0 sole for reduced weight and enhanced flex.
Width: standard or wide.
Materials: matte, reflective synthetic, or water resistant treated.
Colors: choose the base mesh, accent webbing, lining, laces, mid sole rim, sole.
ID or Logo on tongue top.
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iv.Competition
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Adidas Climacool Sketchers Gorun Vivobarefoot Evo Saucony Kinvara Saucony Hattori
$90 $80 $120-160 $90 $79-89
NikeFree Run 2 + Vibram FiveFingers New Balance Minimus Merrell “glove” Reebok RealFlex
$90 Base$95 w/ Shield
$115 w/ Nike ID
$90-125 $99 $110 $90
Competition:
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Points of Parity:
Promote barefoot feel and movement Lightweight minimalist construction Breathable upper Flexible sole
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Vibram FiveFingers
New Balance Minimus
Merrell “glove” Reebok RealFlex
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Points of Differentiation:
NikeFree Run 2 + Vibram FiveFingers New Balance Minimus
Merrell “glove” Reebok RealFlex
Std Price $90 Std Price $90 $99 $110 Std Price $90
Sole choices 3.0, 5.0 Vibram Sole Vibram Sole Vibram Sole
Lace up styleStd
Lace up styleStd
Lace up styleStd
Lace up styleStd
Glove-like fit Glove-like fit Glove-like fit Glove-like fit
Supportive Cushioning with barefoot feel
Minimal “drop” Minimal “drop” Minimal “drop” Supportive Cushioning
Available at major retailers
Specialty Stores Available at major retailers
Specialty Stores Available at major retailers
Nike ID Customization
Nike +
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v.Market
Analysis
Customer Expectations:
The Nike brand of athletic shoes is the most popular among the younger sets, with popularity diminishing with age; over-65’s are least likely to purchase this brand. Nike…has built a reputation on pushing the limits of athleticism, and…they (consumers) will buy these shoes because of that very perception of athleticism that is bestowed upon them via purchase.
NikeFree Run 2+ 24Source: Mintel/Experian Simmons NCS/NHCS: Winter 2010 Adult Full Year - POP
Brand of Athletic shoes in last 12 months, Feb 2009-Mar 2010
Base: 13,740 adults who bought athletic shoes in last 12 months
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Positioning the Customer:
Sneakers Purchased in last 12 months$75K-$99.9K - 59%$100K+ - 63%
OtherHiking
AerobicTennis
BasketballCross-Training
Exercise/WalkingJogging/Running
Casual
0 0.05 0.1 0.15 0.2 0.25 0.3 0.35
14%
4%5%
6%9%
16%26%
30%34%
$100K+ households
Mintel/Experian Simmons NCS/NHCS: Winter 2010 Adult Full Year - POP
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Target Market:
Potential Market - All sneaker buyers who have a favorable opinion of the Nike brand
Available Market - All types of runners and casual/style sneaker wearers who already own, or would, own Nike shoes
http://www.prweb.com/releases/running_shoes/market_research/prweb3956384.htm
Weekend Warrior
20 - 25 miles per week
25 - 35 years old
male and female
This person is looking for quality and an affordable price.
Running for Attention
6 -10 miles per week
30 - 55 years old
male and female
This person wants to look like a runner regardless of ability.
True Runner
20 - 40 miles per week
25 - 45 years old
male and female
This person wants the latest in technology, regardless of price.
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Unique Selling Proposition:
The NikeFree Run 2+
Is The Ultimate Running Trainer
Strengthens FeetThat Reduces Injury
Enhances Performance
For The “Competitive” Runner
Strengths:
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Pioneer in the Barefoot Market
Strong Brand Portfolio
Celebrity Athlete Endorsements
Research & Development
Wide Supplier Base
http://galenet.galegroup.com.ezproxy.lib.uconn.edu/servlet/BCRC?vrsn=unknown&locID=22516&srchtp=glbc&cc=1&c=1&mode=c&ste=60&tab=1&tbst=tsCM&ccmp=Nike+Inc.&mst=nike+&n=25&docNum=DC306325&bConts=8993
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vi.Product
Branding
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SWOT Analysis:
Strengths•Capacity of Innovation, Brand recognition
•Light weight & Durable
•Strong CRM, Celebrity spokespersons
•Marketing campaigns
Weakness•Adoption Time
•Not for watering activities
•Lack of Search Engine Techniques
Opportunities•Innovation
•Expansion into emerging markets
•Internet sales - Growing e-commerce’s positive
•Sports Events
Threats•Competitors
•Company’s business model
•The impact of foreign currency fluctuation
•Labor and political unrest
Five Force Analysis:
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Threat of
entry (Low/Medium)
Supplier Power (Low)
Threat Of Substitute (Low/Medium) Buyer
Power
(Low)
Rivalry (High)
Source: Group Estimate
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5 Product Levels:
Fun Running Experience –
Track your success
Flexibility in Options and Appearance
Quality, Durable Shoe Comparably Priced
Stronger Foot & Leg Muscles to reduce Injury
Barefoot Running
Experience
Value Proposition:
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Durable
Responsive Cushioning
Flexibility
Customizable
Nike+
Vibram FiveFingers
New Balance Minimus
ReebokRealFlex
Saucony Kinvara
AdidasClimacool
Vivobarefoot Evo
Merrell “glove” Saucony
Hattori
Nike Free Run 2+
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Distribution Channels:
http://www1.american.edu/carmel/ms1137a/industry.htmlClass Derived this data from 2.8% of Nike share
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Pricing Calculator:
Availability Of Substitutes
Characteristic Relative to
Competitors
Brand Positioning
Income/ Target Markets
Price/ Strength Of Demand For
Related Products
Market Environment
Competition
Source: The art of Pricing - Rafi Mohammed
Brand Messaging:
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Sincerity•Down – to earth•Honest•Wholesome•Cheerful
Excitement•Daring•Spirited•Imaginative•Up-to-date
Competence•Reliable•Intelligent•Successful
Sophistication Charming
Ruggedness•Outdoorsy•Tough
Jennifer Aaker – Dimensions of Brand Personalityhttp://www.youtube.com/watch?v=hbV6qsWEESw
Video - Our Brand
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Customer Based Branding:
High Quality Shoe
High Technical Performance Symbol of Status
Innovation Achievement
Activities
To bring inspiration and innovation to every athlete* in the world
*"If you have a body, you are an athlete." - Bill Bowerman
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Growth Rate:Nike Free Market Share
Revenue in Billions
Nike Revenue Growth
Source: Google Insight & Factivia Data
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Sustainability Framework:
Strategies Economies of scale NIKE Sports research Lab Better Financial Controls Customer Engagement – Design new products
Comparative Advantage
Valuable Rare Non-Imitable
Non-Substitutable
Assessment
Brand Recognition
Y Y N Y Sustainable
Cost Efficiency Y N/A N N Temporary
Inventory Management
Y N/A N Y Sustainable
Product Quality Y Y Y Y Sustainable
Effective – In Store operation
Y N N N Temporary
Contemporary Strategy Analysis - Grant R.M Values are Group Estimates
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Product Lifecycle:
Video – NIKE FREE
http://www.youtube.com/watch?v=jO2oBiZ6k2k&feature=related
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vi.FinancialAnalysis
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Nike Running Growth:
Running accounted for 24% of Footwear sales in Fiscal 2011 30 % Growth in 2011 “Running is one of our most important innovation engines. Lunar technology,
Dynamic Support, the Tempo Short and NIKE FREE all came out of the Running category.” – Charlie Denson, President
“Fueling the growth of our NIKE Brand footwear business was the increased demand in our performance products, including the NIKE Lunar and Free technologies which are used across multiple categories.” “The increase in unit sales was primarily driven by double-digit percentage
growth in Running, Men’s Training, Action Sports and Women’s Training products.”
2011 10-K filing, Earnings Release FY2012 Q1
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Footwear Market: US
Mintel
Forecast for U.S. Footwear Sales 2011-2015
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Budget & Expectations:figures in USD $MM (include currency translation effects) 2008 2009 2010 2011 CAGR 2012
Total Revenues 18,627 19,176 19,014 20,862 4% 21,665
Footwear Revenues: 9,733 10,307 10,332 11,493 6% 12,148
% of Total Revenue 52% 54% 54% 55% 56%
Western Europe 2,411 2,385 2,320 2,327 -1%
Central & Eastern Europe 702 673 558 600 -5%
Greater China 738 940 953 1,164 16%
Japan 374 430 433 396 2%
Emerging Markets 1,031 1,185 1,458 1,897 23%
North America 4,477 4,694 4,610 5,109 4% 5,339
% of Total Footwear 46% 46% 45% 44% 44%
Demand Creation Expense* 2,308 2,352 2,356 2,448 2% 2,496
% of Total Revenue 12% 12% 12% 12% 12%
Total Footwear Marketing Budget** 1,206 1,264 1,280 1,349 4% 1,400
North American Footwear Marketing Budget** 555 576 571 600 615
*Consists of advertising and promotion expenses, including costs of endorsement contracts
**Theoretical, calculated by growth & "% of Sales"10K Filing
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Budget & Expectations:
figures in USD $MM (include currency translation effects) 2010 2011 2012
Total Revenues 19,014 20,862 21,665
Footwear Revenues: 10,332 11,493 12,148
Running Revenue 2,100 30% 2,730 30% 3,549
% of Total Footwear Revenue 20% 24% 29%
North American Footwear Marketing Budget** 571 600 615
Running Shoe 80 84 123
% of Total Demand Creation Expense * 14% 14% 20%
*Consists of advertising and promotion expenses, including costs of endorsement contracts
**Theoretical, calculated by growth & "% of Sales"
10K Filinghttp://invest.nike.com/phoenix.zhtml?ID=1422879&c=100529&highlight=&p=irol-newsArticle
Category Offense 2011* 2012
Action Sports 14% > 20%Basketball 14% 6.7%Football 14% 6.7%Running 14% > 20%Sportswear 14% 6.7%Training (M) 14% > 20%Training (W) 14% > 20%
100% 100%
*Assumed as flat percent
2 Major Running Lines:
Free 50% $61.5
Lunar 50% $61.5
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vii.MarketingStrategy
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Strategy Execution: Past
Nike Free launched at the height of the barefoot running trend
Strong advertisement presence
Strong media presence New York Times Oprah listed the Frees on the “One of Her Favorite Things”
episode in 2005 Commercial campaigns: http://youtu.be/8u-yA6fe_Ts
47
http://www.nytimes.com/2005/06/23/fashion/thursdaystyles/23Barefoot.html?pagewanted=2 http://nl.newsbank.com/nl-search/we/Archives?p_product=MWSB&p_theme=mwsb&p_action=search&p_maxdocs=200&p_topdoc=1&p_text_direct-0=10A923A40C2FB109&p_field_direct-0=document_id&p_perpage=10&p_sort=YMD_date:D&s_trackval=GooglePM http://www.nytimes.com/2005/06/23/fashion/thursdaystyles/23Barefoot.html http://www.wired.com/science/discoveries/news/2005/08/68474?currentPage=all http://completerunning.com/running-blog-mark/index.php/archives/2005/11/23/oprah-winfrey-nike-free/
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Campaign: Power To Your Feet
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http://www.coloribus.com/adsarchive/prints/nike-free-training-shoes-58-muscles-7337355/http://www.coloribus.com/adsarchive/prints/nike-free-training-shoes-strength-7337455/
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Marketing Plan Objective
• Reintroduce the Nike Free as the leader in the barefoot running industry
Goal:
• Print• Digital• Live events
Create New Ad Campaign
• Duration Mix• Network vs. Local• Day Part
Keep TV Execution
• Website• Banner• Broadband• Paid Search
Keep Digital Execution
• Facebook• Twitter
Increase Social Media Usage
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Campaign: Just Free It
Designed by: Lisa Alberts
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Campaign: Just Free It
Spinoff on Nike’s “Just Do It”
Opportunity to get people buzzing about barefoot running
Display in malls, movie theatres, gyms, on billboards
Ad emphasizes the similarities of Nike Free to running barefoot
Use in conjunction with editorial opportunities (Runner’s World, Health Magazine)
Continue researching and opening new running stores
Emphasis on customization
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Campaign: Just Free It
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Strategy Execution: Future
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Total Advertisement In...
$61.5 MM
PAT: Professional athletic teamsCA: Celebrity athletes CAT: College athletic teams.
SPENDING BY TACTIC
Trade
OOH
Digital
Sponsorship
TV
0 5 10 15 20 25 30 35 40
Network Cable
PAT
Banner
CA CAT
Broad PS Web Others
30%
35%
20%
8%
1%
5%
Others
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Television:
Nielsen
Evolution of TV
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Television:
Still Dominant form of media
P 18-49 May 2011
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Digital Transformation:
Nielsen
Device Transformation
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Digital Transformation:
Nielsen
What are people doing when they are watching TV?
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Television:
Mix of 60% :15’s copies and 40% :30’s copies Utilize :15s copies to optimize ROI. :30s copies can be used to drive volume and increase share.
Mix of 65% Network and 35% in Local Network can be optimized for new launches, driving more
volume. Network can be used to sustain media presence while keeping
cost down. Local drives higher share growth while Network offers a more
efficient opportunity to maximize ROI.
Day Part Prime Time and Late Night are the most effective times during
the day
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Digital: Broadband
Yahoo, Vevo, ABC, AOL, CBS, Hulu, NBC, CNN, MSN.
NIKE Free Running Shoe
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Digital: Banner
Google, Amazon, CBS interactive, Yahoo, Facebook, Pandora, Weather.com, Discovery.
Yahoo, Bing, WebCrawler, Dogpile.
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Digital: Paid Search
Google, Yahoo, Bing, WebCrawler, Dogpile.
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Digital: Website
It allows viewers to buy Nike sports product online, custom design Nike products, place orders online, as well as access corporate information.
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Social Media:
Goal: Build social authority
Supplements traditional marketing practices
Current Management of Social Media for Nike is Poor:
Facebook Page lacking No dedicated NikeFree page
Poorly managed Twitter account Outdated twitter feeds on the NikeFree website
http://en.wikipedia.org/wiki/Social_media
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http://en.wikipedia.org/wiki/Facebook
http://www.telegraph.co.uk/technology/facebook/8283072/Facebooks-Mark-Zuckerberg-attacked-by-hackers.html
2004
•June: Facebook was launched
2010
•April:41.6% of US population had an account
2011
•June: Reached 1 trillion page views, making it the most visited site in the world
• June: 750 million users
•July: Over 800 million active users
Facebook:
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Create “official” NikeFree page Dozens of unofficial NikeFree pages No single place to view this growing product
Facebook:
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Benefits:Consumers spend more than 6 hours on social
networking sitesSmartphoneAnalyticsSEO Direct InteractionEmbedding
Facebook:
https://www.facebook.com/note.php?note_id=219338781435544
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Twitter:
http://www.pcmag.com/article2/0,2817,2383408,00.asphttp://socialmediatoday.com/dom-bradbury/280032/twitter-businesshttp://twittnotes.com/
Information exchange
People go on to learn things and share what they know
Less busy Facebook
Older demographic (could translate to more disposable income)
Allows for real time interaction
Ideal for smartphone usage Put message directly in the pocket of the
consumer
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Strategic Retail
Nike strategically opens up and develops specific types of stores depending on the location
10 Nike Running store locations Run clubs that leave from the store Back your Block
$500 million for new stores between now and 2015
http://www.hubmagazine.com/2010/06/the-new-swoosh-2/http://inside.nike.com/blogs/nikerunning_news-en_US/2010/05/04/newly-opened-nike-running-store-gives-palo-alto-runners-a-head-starthttp://help-us.nike.com/app/answers/detail/a_id/16208/~/where-are-the-nike-running-stores%3F
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Sponsorships: Support person, event, activity financially or through products/services Athletes:
• Allyson Felix• Sanya Richards-Ross• Matt Tegenkamp• Lashawn Merritt
Events• Chicago marathon
Camps and clinics Cross country, track and field, running coach workshops Makes its name synonymous with sports success in the eyes of young
consumers The message they send is always the same: “If you have a body, you are
an athlete”
Sponsorship & Grassroots:
http://www.ussportscamps.com/running/http://phx.corporate-ir.net/phoenix.zhtml?c=100529&p=NewsArticle&id=1128176http://en.wikipedia.org/wiki/Sponsor_(commercial)
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viii.Q & A
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Thank You