Nike v/s Reebok Case study

INTRODUCTION TO NIKE

• Est. in 1960 in Oregon.

• Phil Knight and Bowerman - Founder

• Nike has gone through many changes

• Started small and now has covered the U.S. and International market

INTRODUCTION contd…

• Nike = Winged Goddess of Victory.

• “Greeks say when we go to battle and win, we say it is NIKE!”

ANALYSIS OF CASE STUDY

• Limited resources and unlimited confidence.

• Persuasion of top athletes.

• Endorsement contracts effective.

• Use of tactics such as guerilla warfare.

ANALYSIS contd….

• Failure to recognise aerobics boom.

Women -A major customer.

• Ignorance of market trends.

Timberland – brown shoes.

• Not satisfying customer needs.

• Child labour.

• Late in getting onboard with extreme sports.

Put Nike on the map

1964-Imported from Japan 1970-launched advertisement for health and performance (while youth turned to jogging)1972-self made shoes with proven researched that they provides better traction & support to jogger

Put Nike on the map

1973-sales to reached to 3.2 millions1983-sales were $870 million with 22 million inventories1984earing dropped by 29 %Lost no:1 place

Reasons behind that lost of no1 place

1982-reebok introduced “AEROBICS” shoes ( for women )Sales Increased slowly Discount allowed and free samples for instructor and teacher

Michael Jordan

Put Nike on the map– 1984-1985 Nike saw a decrease in their earnings for

the first time ever– Influenced them to make their first specialty

basketball shoe– Since then, Michael and Nike together have

generated billions of dollars in revenue– “World Sports Hero No. 1

Put Nike on the map

• Since 1999, Nike has disclosed its contract factory base producing Nike-branded products to the Fair Labor Association.

• In 2000, Nike became the first company to disclose publicly online the names of its suppliers making college and university licensed products.

• Nike committed to reduce combined CO2 emissions from owned facilities and business travel by 13 percent by 2005 from a 1998 baseline

Put Nike on the map

2011-The company builds its brand awareness through product sponsorship by the professional and well known athletic teams, college sports teams, and celebrity endorsements

Growth in revenue in 2012 was 15%2013, the company has contract factories that

produce footwear in Vietnam at 42%, China at 30%, and Indonesia at 26%.

Growth in revenue in 2013 was 11%

Put Nike on the map

o 2013-The company mainly categorizes customers into 7 types based on sport activities which are 1) Running, 2) Basketball, 3) Soccer, 4) Men’s training, 5) Women’s training, 6) Nike sportswear, and 7) Action Sports

Brand equity

• Brand equity is defined as the positive differential effect that knowing the brand name has on customer response to the product or service.

Philip Kotler

Nike’s Market Expansion Strategies

Economies of Scale.

• Shared distribution channels among varied product lines lower costs.

• Large size provides opportunity for more leverage against competition.

• Efficient use of production facilities lowers costs.

Global sourcing: the Nike case• Nike has relocated production of its footwear and clothing

to 51 countries where its third party production units employ more than 500,000 people (as against approximately 14,000 people directly employed by the multinational).

• From its headquarters in Beaverton, Oregon, Nike manages a worldwide virtual company combining internal R&D functions with a low cost manufacturing strategy. They control their activity from Oregon and Tennessee and developed jointly by American and Asian technicians in the USA, Taiwan and South Korea. Sneakers are then assembled in South Korea and Indonesia from dozens of components supplied by firms in Japan, South Korea, Taiwan, Indonesia and the United States. Similarly, Nike outsources distribution to firms that specialise in logistics services.

Brand/Image

• Ability to charge premium price by establishing an “image”

• Access to new/different markets • Premium product placement in retail leading

to higher sales • Image and celebrity endorsements create

hopes/dreams/emotional attachment to product

Product Diversification

• New products introduced by Nike will be more readily accepted by customers due to strong brand image

Other strategies adopted by Nike

• Sponsorship for sporting events

• Advertisements.

• Rebates and Discounts.

• Conducting fashion shows.

PRODUCT MIX

Product Mix A product mix is the set of all products and items

that a particular seller offers for sale to buyers also known as product assortment.

• Product Width It refers to how many product lines the company

carries.

PRODUCT Mix contd….

• Product line A product line is a group of products that are closely

related because they perform similar functions

• Product lengthIt refers to the total number of items in its product mix

• Product depth

It refers to how many products are offered of each product line.

PRODUCT Mix for Nike• Footwear • Studs for Striker• Mid fielders • Defenders• Apparel• Headwear• Tops/Polo• Jersey• Jackets• Shorts • Shocks• Equipment• Ball • Bags• Watches• National Team Gear• Jersey for Brazil, England, etc.• Club Gear • Club Jerseys like Man U, Real Madrid, etc

Competitive advantage against regional brands.

• Pricing- Bata charges around Rs 400 for a pair of shoes whereas for nike it is Rs 1600.

• Unaware of utility or use.• Shoes are not recommended by coaches in

India.• Sports culture –In India sports like soccer,

basketball are not so recognised as cricket.

Future strategies

Nike EMBRACES communities by promoting events online and traveling all around the world.

Nike MOTIVATES athletes through social media prizes and events.

Nike REVOLUTIONALIZES itself year after year by using new concepts and ideas to always keep itself at the top

• Nike will be Everywhere, Doing Everything, For Every Athlete, During Every Season They Play.

• 10% of Nike’s total marketing budget will go into Social Media and Nike’s Online Strategy to cover the cost of online prizes and online media specialists for each individual sport as well as the LIVESTRONG foundation.

• New Nike player contracts must include a social media clause where they promote Nike products a certain amount of times a month via twitter, facebook, youtube etc.

JUST

IT

DO