SBM S2 - Nike Case Study - Global Branding

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Hemant h Shasha nk Shekha r Vineet h Vinu

Transcript of SBM S2 - Nike Case Study - Global Branding

Page 1: SBM S2 - Nike Case Study - Global Branding

Hemanth

Shashank

Shekhar

Vineeth

Vinu

Page 2: SBM S2 - Nike Case Study - Global Branding

NIKE – Curriculum Vitae

Name Nike

Founded as Blue Ribbon Sports

Nationality American

Age 44* (as of 2006)

Products Athletic Shoes, Apparels,

Sports Equipment &

Accessories

Specialization Athletic Footwear

Page 3: SBM S2 - Nike Case Study - Global Branding

NIKE in US 1962 Introduced as Blue Ribbon Sports

1967 Marathon- First Running shoe

1968 Cortez & Boston

1973 Prefontaine – 1st athlete to endorse Nike

1974 Waffle Trainer

1978 Officially named as Nike,Inc

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NIKE in US

1980 No.1 athletic shoe company

1985 Signed Michael Jordon

1987 Revolution in motion- Beatles

1988 Just do it Campaign

1993 265 NBA players, 275 NFL players & 290

baseball players endorsed Nike

1994 US Soccer Team – Both Men &

Women

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Nike - Challenges in USCurrent Strategy:

• Major Focus on Running & Performance based Shoes

• Unaddressed categories such as fitness & aerobics

• Positioned as a ‘masculine’ brand

Consequence:

• Reebok introduced ‘style’, ‘fashion’, ‘comfort’ & ‘for

women’ shoe line and stole market lead

New Strategy:

• Retain focus on performance, more attention to

basketball due to its rising popularity

• Change in marketing strategy – Marketing formula

related to shoes, colors, clothes, logos, etc.

• Mass market television advertising

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NIKE in Europe1980 Strategic decision to expand Globally

1981 Signed John McEnroe

1987 Realized considerable revenues &

Started gaining foothold

1988 Focus on Repurchasing License rights

1989 1st Centralized Print Campaign – Nike Air

1989 Gospel Campaign

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NIKE in Europe

1990 Regained 90% control over dist. channels

1991 Revenues 6 times to that of 1987 figure;

Second only to Adidas

1992 Focus on Barcelona Olympics

1993 Change in Marketing Strategy;

Launch of Just do it Campaign

1994 Wall Ad; Team Brazil

1997 Team Nigeria and Italy

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Nike - Challenges in EUROPE

Challenges:

• Marketing & advertising rights controlled by local

distributors

• Distributors not motivated about selling Nike

Consequence:

• Inability to control growth of its brand

New Strategy:

• Restricted its product line to high end shoes

• Focused on brand building

• Increased control of advertising & product

strategies

• Repurchasing licensing rights from its licensed

distributors

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The Euro Image

• Brand intimidating and aggressive

• Consumers viewed company as arrogant• Consumers’ perception of Nike as expensive, aggressive

American Brand

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NIKE Elsewhere

1992 Japan – First Asian Country to embrace Nike products

1997 Market Leader in Japan; Expanded to other Asian

countries, S. America, Africa and the Middle East

1998 Entered Chinese Market; Advertisements with Local

Athletes as Heroes

2004 Sales in China rose to 300 million USD

2008 Market Leader in China

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NIKE – The Asian Challenge

Recession : Impacts• Excess Inventory with the distributors - more than 2 million units

• Fall in stock prices

• Reported first earnings decrease in 13 years

Strategies • Reduction in employee base by 7 percent

• Advertising budget reduced by 100 million USD

• Dropped low profile endorsers & sponsorships

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NIKE – Labor Controversy

• Unsafe working conditions in Nike’s Vietnam

factories

• Workers forced to work for 65 hours per week

• Wages less than 10 USD per week

• No incentives for extra working hours

Nike’s Measures:

• Comprehensive changes in corporate labor

policy

• Corporate Responsibility Division (CRD)

• Charter member of Fair Labor Association

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Damage Control Mechanism

• Create focus groups to assess Nike’s labor practices

• Make changes to improve Nike’s current labor conditions

• Create an anonymous system to protect whistleblowers

• Specify and inform employees of their rights and

responsibilities under the Nike code of conduct

• Provide employees with time and money to enroll in

Nike’s educational programs

• Ensure surprise visits are a surprise

• Distribute a video news release promoting Nike’s efforts

in the global community

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Evaluation

• Repeat surveys at six month intervals to

gauge public perception

• Revisit with focus groups to record their

opinions of improvements

• Appointed FLA approved PWC to conduct

annual audits

• Led to a mixed response

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Swoosh Logo - Evolution

• Logo developed in a hurry; yet became

one of the most recognized logos

• Accusation: Overuse of swoosh• Reaction: Withdrawing the symbol

temporarily from the new brand – Nike Alpha - and then reintroducing it in a milder form.

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Acquisitions

1988 – Luxury shoe, handbag and accessory maker

1995 – World leader in hockey equipment & skates

2002 – Board sport apparel and footwear for teens

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Acquisitions

2003 – Basketball shoes - Retro look of consumers

2004 – Low end athletic apparel

2007 – Soccer & casual footware, apparel and

equipment

2012 – ??

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Why Acquisitions?

• Diverse Brand Portfolio

• Risk Mitigation

• Additional Avenues for growth

• Ability to cater to niche target groups

• Ability to respond to sudden change in trends

• Use already existing capacity and expertise

• Economies of scale

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Contribution of Acquisitions

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NIKE

Nike +Nike 6.0Woman

SportswearGolf

Converse Nike Range Hurley UmbroCole Haan

Brand Portfolio

SnowboardingSkateboarding

SwimTennis Vision

TimingSPARK

NikeBetterWorldLiveStrong

NikeBiz

SoccerFootball

BasketballRunningBaseball

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Endorsements - Individual

• 1973 – Steve Prefontine

• 1980 – John McEnroe

• 1985 – Micheal Jordan

• 1994 – Ronaldo

• 1996 – Tiger Woods

• 1998 – Maria Sharapova

• 2002 – Roger Federer

• 2006 – Rafael Nadal

• 2010 – Virat Kohli

• 2011 – Rohit Sharma

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Sponsorships - Teams

• 1994 – US Men’s and Women’s

Soccer Teams

• 1994 – Brazilian Men’s Soccer Team

• 1997 – Italian Men’s Soccer Team

• 1998 – Nigerian Men’s Soccer Team

• 2002 – Manchester United

• 2006 – Indian Cricket Team

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Branding Tool• Nike’s way: Celebrity Endorsements• Strategy: Identify young budding talent and

sign long term deals• Celebrity Selection Criteria:• Attractiveness – Physical Appearance• Credibility – Expertise in the field• Personality – Aggression, Stylishness

• Building Brand Equity• Attractiveness – Brand Recall• Credibility – Brand Acceptance• Personality Fit – Positive Brand

Associations• Risks• Tiger Woods, 2009• Liu Xiang, 2008 Beijing Olympics

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Building Global Brand Equity

• Brand Association: Excellent endorsements

• Brand Loyalty: ‘Honest high quality brand’

• Perceived Quality: Meeting consumer expectations

• Brand Awareness: Simple name & logo;

Attractive tagline

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Brand Association Map - NIKE

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Brand Strength Index

Nike Adidas New Balance Reebok Under Armour0

100

200

300

400

500

600

700

800

Brand Strength Index

*Brand Strength Index is a function of brand

awareness, brand loyalty and consumer’s

intentions to buy the brand in the near future –

As computed by SportsOneSource (2008)

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Global Brand Value (2006 – 2011)

1 2 3 4 5 60

2000400060008000

10000120001400016000

NikeAdidas

Nike Adidas Nike Factor

2006 1 7 4.67

2007 1 7 3.74

2008 1 5 2.58

2009 2 5 2.42

2010 1 5 3.86

2011 1 6 4.51

Global Brand Value = Intangible Earnings * Brand

Contribution % * Brand Multiplier – As computed

by MillwardBrown Brandz (2008)

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Market Share (1991 – 2010)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 190

5

10

15

20

25

30

35

40

NikeAdidasReebok

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Fashion Vs Performance• Brands shall do well to maintain

their core values• Fashion apparel can be designed

but not at the cost of performance

• Nike shall always remain as a performance brand in whatever market they tap; Fashion maybe an additional attribute depending on the needs and perceptions of the target segment

• Nike Goddess stores

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Global Strategy Change• Pre 2009 – 4 Regions• US• EMEA• Americas• Asia Paciffic

• Post 2009 – 6 Regions• US• W Europe• E/C Europe• Greater China• Japan • Emerging Markets

• Strategy: Moving the brand closer to the consumer

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Global Constants for Nike• EKINs – Passion driven employees• Brand Strength Monitor• Futures• Endorsement Strategy – World renowned

sportsmen in global campaigns such as ‘Just Do It’

• Brand Ambassador selection process• Performance Orientation• Corporate Responsibility Division &

Reports• Sportswear design

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Local Variables for Nike• Endorsement Strategy – Local sportsmen

for regional campaigns is acceptable• Overall marketing strategy can be attuned

to what the consumer wants to see / hear in that market – can be direct / peripheral

• Fashion oriented but without compromising on performance – core value shall not be compromised

• Regional Partnerships and Alliances with retailers – like the footlocker in the US

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Future Path• Strive to be part of the top 20 global brands• Smartly capture the ‘Final Frontier’ –

Europe • Consolidate position in other markets and

enter all emerging markets• Continue with the process of innovation in

the sports apparel industry• Always be in sync with consumer needs and

tune according to changes in consumer behavior; Keep a watch on competitors in all operating markets

• Acquire but do not make brand extensions out of acquisitions that would not give value back to the core brand

• Ensure brand is free of controversies – a bigger global brand is at stake!

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THANKYOU