CASE STUDY - EXPANDING THE PLAYING FIELD: NIKE.S WORLD SHOE PROJECT
“To bring inspiration and innovation to every athlete in the world”
………..Company Mission Statement
“We want to be able to shoe and clothe young athletes of the world regardless of where they live. To do it for really difficult socioeconomic situations is both challenging and rewarding”
…………...Tom Hartge, Footwear Director for Emerging Markets
The words “Just make me the shoe!” echoed down the boardroom table to Tom Hartge a 17- year veteran of the running shoe company, Nike, Inc. Tom Clarke, president of the company in 1998, had attended the meetings, seen the presentations and reviewed the numbers related to the market potential of China: a rough gem with a
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The few pairs of more expensive, non-canvas "Western" brand shoes sat next to piles of clothing courtside, worn only for the trip to the game and then replaced with the cheaper shoes to actually play in!
Beyond simple observation, research statistics revealed the market demand for athletic shoes. According to a Nike commissioned study of the Chinese sports market, 86 percent of the interviewees participated in some kind of "sport." This translated to over 1 billion "exercising people" in China. Over 49 percent of those surveyed claimed to ride a bicycle, which was also a primary means of transportation. Apart from cycling and running, badminton was reported as the most played sport in China. According to this study, 35 percent of Chinese age 10 or older played badminton at least once a year. In absolute numbers, this translated to 336 million players, a number Hartge felt couldn 't be ignored. Exhibit 4 highlights the various sports activities of the Chinese population. Hartge saw a twofold advantage of the World Shoe project. First, it made sense from a growth perspective. But equally as important for Nike 's brand image, the initiative made sense from a triple-bottom-line standpoint. For one thing, it created more income generation in the regions where the company operated manufacturing facilities. Second, a product specially developed for the needs of the mass Chinese market offered local consumers their own affordable product line.
A New Business
Nike, Inc. is an American multinational corporation that is engaged in the design, development and worldwide marketing and selling of footwear, apparel, equipment, accessories and services. The company is headquartered near Beaverton, Oregon, in the Portland metropolitan area. It is the world 's leading supplier of athletic shoes and apparel and a major manufacturer of sports equipment, with revenue in excess of US$24.1 billion in its fiscal year 2012 (ending May 31, 2012). As of 2012, it employed more than 44,000 people worldwide. The brand alone is valued at $10.7 Billion making it the most valuable brand among sports businesses. Nike and Precision Castparts are the only Fortune
sale of Nike’s high-margin products to high-end customers. Regardless of the low cost of the World Shoes, they
Nike may be typically known for focusing a lot of gear solely on athletes; yet, it is not just for them. Nike’s objective
Nike is the leading and yet renowned supplier of athletic apparel and shoes. The company controls close to 33% of the global athletic shoe market (Dogiamis & Vijayashanker,2009).Nike was founded by Bill Power and Phil Knight in 1962 as a Blue Ribbon Support and then was later on renamed to Nike in the year 1968 (Patrow,2003).The company supplies very high quality product in close to 100 countries with major markets being located in the U.S,U,K, Asia Pacific as well as in the Americas. The company has managed to attain its lead and legendary position via the application of innovative and yet attractive product design which is backed by quality production as well as well crafted marketing strategies.
Around the world, Nike has become synonymous with running shoes. The Nike brand can be recognized by the mere sight of the notorious swoosh or their famous “Just Do It” slogan. However, Nike has been associated with child labor, poor working conditions, and extremely low wages. Nike has set out to change this association and to convey an image of progress and awareness. Nevertheless, some wonder if Nike’s intention is to change its impression on its customers or to better the lives of the workers. The image of Nike as an American company greatly contrasts how Nike began and expanded. Phil Knight established Blue Ribbon Sports in 1964, which sold speciality running shoes in Japan. Shortly after the company started marketing in the United States,
The market has shifted from when the shoes first arrived in the hands of consumer sin the 1980’s, where the target was males aged 18 – 35 who solely played basketball. Through the development of the brand, which was predicated with the class, charisma, swagger and success that followed Jordan’s career, the shoes became the ideal evening dress wear for the street-smart young urban man and the suburban teen who wanted a taste of Jordan’s electrifyingly lux style. Jordan’s laddering strategy is impeccable. Starting with the shoe’s attributes, like that Michael Jordan wears them, the resulting consequence makes their wearers feel like Michael, a boost in confidence and ability to perform. This taps into their core values to make Jordan ambassadors feel like they have the potential to be great towards reaching their personal
Nike has a mission statement that lets everyone know what the main objective is. “To bring inspiration and innovation to ever *athlete in the world.” Founder Bill Bowerman defined athlete the following way: “*If you have a body, you are an athlete.”(Mission statement, Nike.com) That definition is the heart of Nike’s business model and has been the center point to their vision. They are saying that everyone in the world is athlete and they want to inspire and innovate every type of demographic. Nike’s view has been a critical to their spectacular growth to be a major global
Currently, Nike stand as a leading figure in producing high quality sports and fitness equipment and apparels. Bearing just a simple start of selling Japanese imported shoes from a station wagon has transformed
Nike is very committed to the local and global community. “At the core of the Nike brand is passion for sport and the role it can play in life.” It’s a belief that sport plays a critical role as a source of empowerment to help people reach their full potential. In particular, Nike sees sport as a means of challenging racism, resolving conflict, building leadership and teamwork and enhancing life skills for youth. Used positively, sport becomes a powerful tool for youth inclusion, helping them fully participate in the social and economic opportunities in their community,”
Sportswear has evolved through significant social changes leading to increased time for leisure and higher disposable incomes,
(iii) Social-cultural (iv) Natural (v) Technological (vi) Political-legal 4) What recommendations would you make to senior marketing executives going forward? a. Understand people’s views of themselves, others, organizations, society, nature, and the universe as it pertains to sports. 5) What should they be sure to do with their marketing? a. Work closely with local and national governments, pressure groups and other environmental arenas to position the company as being socially responsible to the concerns about shoe manufacturing. Continue to present their advertising showing “fun” in sports and the use of their products
During the late 80s and early 90s Nike was faced with a series of labor strike back at home due to unethical labor practices by its independent countries in third world countries. It is well known for Nike to outsource almost all its production from third world countries at cheap prices and sell them in U.S. market at an abnormal profit. The company began outsourcing its products from Japan where labor was competent and wages were very low. The living standards were raised which prompted Nike to outsource its products from Thailand, Pakistan and Indonesia since wages in these countries were extremely low and labor for these products were competent due to rapid development of the Japanese economy. The outsourcing of footwear products from Asian countries enables Nike to earn high profits and enjoy a competitive advantage over its rivals in the footwear industry. The company invests the high profits realized in marketing its products through celebrities. For instance, Michael Jordan was used to advertise the positive image of Nike Company (Lipschutz and James, pp. 87-96).
Nike business model has always been contracting underdeveloped countries, mainly in Asia, to produce its athletic shoes at a much lower cost as compared to its competitors. As it is simple to manufacture an athletic shoe, Nike’s contractors are often able to capitalize on the abundance of unskilled and low-wage workers in their home country to cut down on production costs.
Nike began as Phil Knight’s semester-long project to develop a small business, which included a marketing plan. This project was part of Phil Knight’s MBA course at Stanford University in the early 1960s. Phil Knight had been a runner at the University of Oregon in the late 1950s. His idea for his project was to develop high quality running shoes. He thought that high quality/low cost products could be produced in Japan and then shipped to the United States to be sold at a profit. His professor thought that Knight’s idea was interesting, but not much more than a project.
Mythology to society is just ancient past, but essentially it’s not. It’s thriving and very alive. Take a trip to your local mall and check the footwear department of any sporting store and there you’ll find the goddess. The name Nike characterizes the goddess who exemplified victory on the battlefield. In retrospect, if persons were asked the name Nike, Greek mythology is least expected to arise. The name Nike is now renowned as the most iconic brands around the globe. Though, not many people know the story it all began selling shoes from the trunk of a car. The crazy idea that emanated from Phil Knight that grew to become the global phenomenon today. This study will give insight into the creation, growth, and evolution of Nike.