2nd semester 2011

Table of content:

Introduction……………………………………………… 3

Marketing story of Nike products………………………. 4

Nike SWOT Analysis.......................................................

Nike and Production……………………………………. 8

Conclusion ………………………………………….… 9

References …………………………………………… 10

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Introduction:

First of all, describing Nike as the biggest training shoe company

in the world is referring to its numbers by almost any economic
standards. It was back in 1971s when NIKE founder, chairman and
owner “Phil Knight” paid a graphic designer $35 dollars to develop the
Nike name and trademark Swoosh known as “Blue Ribbon”. CEO Phil
Knight was one of the first businessmen to offer retailers to pre-order
inventory. This was a revolutionary business decision that quickly
became standard among other businesses. In early 1980s Nike chose to
go public, when the Nike swooshes became so ubiquitous, thanks again
to the advertising genius Mr., Phil Knight. To understand this huge
success, we need to know what environment Nike does Business in and
how does using this business environments lead this huge company to
make them a profitable and leading company in their industry.

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Marketing story of Nike products:

Nike's marketing strategy is an important component of the

company's success.Nike lures customers with a marketing strategy
centering on a brand image which is attained by distinctive logo and the
advertising slogan: "Just do it". Nike's marketing mix contains many
elements besides promotion from 1972 to 1982; Nike relied almost
exclusively on print advertising in highly vertical publications including
Track and Field News. Most of the early advertising was focused on a
new shoe release, essentially outlining the benefits of the running,
basketball or tennis shoe. Instead of focusing on producing only training
shoes, Nike started selling other products, Such as special training
clothes for all sports kinds for men, women, and children. Moreover,
Nike is good known in Hip hop culture as they supply urban fashion
clothing.

Nike Also promotes its products by sponsorship agreements with

celebrity athletes, professional teams and college athletic teams. It’s also
sponsors events focusing attention on its products and uses web sites as a
promotional tool to cover these events. Nike also has several websites for
individual sports. Nike tried hard to combine a product and an image.
Nike advertises because advertising works. Indeed, the shoes don’t sell
themselves on sports performance alone.

In 1993, The Sporting News voted Knight "the most powerful man
in sports" though he was neither a player nor a manager. Knight's
marketing mastery is to be lauded and regarded as a major factor in his
impressive successes.

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 Nike has become a celebrity corporation as a result of its high
profile promotional practices, which are responsible not only for its
commercial success but also for making it into a salient target for activist
criticism.

On the retail end, Nike skillfully drives up market prices for its
products by budgeting around 7 percent of its estimated $8 billion annual
income for image-making.

In recent years, the company has expanded into the apparel market,
to lessen its dependence on the highly fickle athletic footwear market,
and has also seen significant opportunity in the international arena. Nike
survived the stagnation in the industry of the early 1990s well, and is
now one of the strongest companies in the industry from a financial
standpoint.

Nike’s “If you let me play” advertising campaign vaunting the

personal and social benefits of female participation in sport and its
Participate in the Lives of American Youth (P.L.A.Y.) program,
launched in 1994, are the most prominent examples of the integration of
commercial and ethical promotionalism.

The publicity campaign promoting the program on television made

use of Nike endorsers such as Michael Jordan and Jackie Joyner Kersee
to narrate visual images of the “social alienation of poverty and their
transcendence via sports” (Goldman&Papson, 1998, p. 109; see also
Cole, 1996). The area in which Nike has most recently extended its
endorsement and sponsorship practices is the development of sporting
opportunities and rising athletes in developing countries, particularly in
Asia, where much of the company’s production capacity is located The
promotion of young Asian athletes entails the integration of what Nike

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(1999b) refers to as a “three-tiered . . . campaign.” The first tier is the
introduction of a new product line, the Play Series, comprising six
different sports related shoes, which the company claims “delivers Nike
performance technology with an accessible price.” This is part of an
attempt to expand Nike’s consumer markets in Asia, which also entails
the opening of “up to 20 Nike-only stores, with one Flagship Store in
each key city across Southeast Asia” in partnership with “strategic retail
partners” (Nike, 1999b). The second tier is an advertising campaign to
promote the new shoes. This is organized in terms of the slogan “It’s My
Turn” and features “inspiring and aspiring young Asian athletes” as
endorsers. The final tier is a series of local community development
projects known as Play Zones that complete the linkages among the
product, the brand, sport as an activity and value, and societal benefit.
The Play Zones are a Nike sponsored project to “refurbish and upgrade
adopted playgrounds, conduct maintenance work and host sporting
events on-site” in six Asian countries (Nike, 1999c). Nike’s ability to
make use of qualitative subsidies has been expanded by the development
of the Internet as a communications tool. As part of its “nikebiz” Web
site, Nike republishes selected press coverage in edited and unedited
form. Although much of this consists of promotionally positive coverage
—for example, the opening of a new Nike world store, victory
celebrations by a Nike endorser, or the results of a sponsored sports
event—Nike has also included some coverage of its labor practices
critics, including its own frequently asked questions page on wages and
related labor rights issues, letters responding to activist groups such as
the Clean Clothes Campaign, and, most recently, a 12-minute virtual
video tour of Nike factories in Asia. The Web site offers a way to unify
communication with different audiences and audience segments in a

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single virtual space. Its use as a means to acknowledge and address one’s
critics in a controlled environment is valuable given the way that the
actions of these different audiences, particularly consumers and
investors, are interrelated. Deregulation intensifies the likelihood of
stock market volatility resulting from the rapid communication of bad
publicity. Information control becomes especially critical in an
environment sensitive to bad news when desirable audiences overlap.
The recent emergence of groups such as United Students Against
Sweatshops as important participants in the broader ant sweatshop
movement point to the way in which middle-class university students
have targeted Nike’s college sports apparel market as away to press the
company to accede to independently monitored codes of labor conduct.

As the next generation of the professional-managerial class,

university students are desirable consumers as well as potential investors.
They are also already more likely to be familiar with and reliant on the
Internet as a means of communication and source of information,
skeptical of more conventional forms of promotionalism, and aware of
and sympathetic to the arguments of Nike’s ant sweatshop critics. For an
audience such as this, whose style of life is now internationalized, the
Internet offers companies such as Nike an opportunity to globalize
information about local promotional initiatives.

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Nike SWOT Analysis
Strengths

•Nike is a globally recognized for being the number one sportswear

brand in the World.

•Nike being a competitive organization has a healthy aversion towards its

competitor’s during Atlanta Olympics, Reebok expensed on sponsoring
the games; Nike however sponsored the top athletes and due to this step,
it gained valuable coverage.

•Nike has no factories; rather it uses contract factories to get the work
done which makes it quite a lean organization. It has contracts with
above 700 shops globally in about 45 different countries.

•Nike is quite strong regarding its research and development; quite

evident regarding its evolving and innovative product range.

•They manufacture high quality at the lowest possible price, if prices rise
due to price hike then the production process is made cheaper by
changing the place of production.

•It belongs to the Fortune 500 companies.

Weaknesses

•Even though the organization has a diversified range for sportswear, the
income of the business, however, is still heavily dependent upon its share
of the footwear market which leaves it at a quite vulnerable spot if for
any reason its market share erodes.

•The retail sector is price sensitive; retailers usually tend to offer a very
similar experience to the consumers with another cheaper product, which
in return tends to get squeezed as retailers try to pass some of the low
price competition pressure onto Nike.

•Nike was for quite some time unwilling to disclose any type of
information concerning its partnering companies.

•It was charged with the violation of overtime and minimum wage rates
in Vietnam, 1996, that was seen as having poor working conditions, and
that it was also charged for exploiting cheap workforce overseas.

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•Nike was also reported to have applied child labor in Pakistan and
Cambodia to produce soccer balls.

•It was positioned as a subject of criticism by anti-globalization groups

due to its unruly and exploited manner that was quite a disaster for its
reputation.

Opportunities

•The brand is sternly defended by its owners who believe that Nike is not
a fashion brand, however, a large number of consumers wear Nike
product because they derive a fashion trend rather than to participate in a
sport. It is mostly argued that in youth culture, Nike is a fashion brand
which also creates opportunities for Nike since its products would
become outdated before even the product wears out i.e. consumers will
feel the need to replace the product with a newer trend.

•There are many international regions that still need tapping and there is
need for sportswear and with Nike’s strong global brand recognition, it
can initiate in many markets that have the disposable income to spend on
high value sports goods.

•Nike gives a lot of effort on its corporate marketing mainly through the
promotion of corporate brand and sponsorship agreements.

Threats

• Nike is exposed to the international nature of trade so it sells its product

in different currencies which destabilizes the costs and margins for
profits over long periods of time. This type of exposure may make Nike
to be manufacturing and/or selling at a loss, although that is not the case
for a giant as itself.

•The market for sports shoes and sportswear is quite competitive; the
competitors are constantly developing alternative brands and techniques
to take away Nike’s market share

•Consumers are constantly shopping around for a better deal that

conveys a good quality and if one store charges a higher price for the
products, the consumer would try to seek a better deal of the same
product in the premises that delivers the same value but cheaper of the
two, this type of price sensitivity among the consumers is a potential
threat to Nike.

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•The textile industry unpleasantly upsets the atmosphere, and therefore
the organization is constantly struggling to retain its eco-friendly
reputation.

•A recession may lead to job shortages in most of Nike’s worldwide

branches.

•The organization has experienced many adverse publicity feedbacks due

to its widespread advertising.

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Nike and Production

The world became one small village and as a result for the
globalization, most manufacturers had shifted production to countries
such as South Korea and Taiwan, where the production costs were
cheaper than in USA. Since the shoe manufacturing process offered them
little opportunity over their rivals, they had no reason to invest in
building expensive factories and purchasing manufacturing equipment.
However, trainer companies such as Nike went beyond simply
transferring production abroad. Nike strategy actually was to outsource
its products to separate and independent companies in the countries
where it wanted its shoes to be made. They outsourced manufacturing
completely to local firms in these countries. CEO Knight explained:
"There is no value in making things any more. The value is added by
careful research, by innovation and by marketing."

Nike sells its product to more than 25,000 retailers in the U.S.
(Including Nike's own outlets and "Niketown" stores) and in
approximately 160 countries in the world.

One project Nike has begun is called Nike's Reuse-A-Shoe

program. This program, started in 1993, is Nike's longest-running
program that benefits both the environment and the community by
collecting old athletic shoes of any type in order to process and recycle
them. The material that is created from the recycled shoes is then used to
help create sports surfaces, such as basketball courts, and running tracks.

Company has a program called NIKEiD at nikeid.com, which

allows customers to customize designs of some styles of Nike shoes and
deliver them directly from manufacturer to the consumer. Nike sells its
products in international markets through independent distributors,
licensees, and subsidiaries.

Conclusion

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 Now it’s so clear how Nike started from the scratch and became
one of the most powerful companies in the world. Focusing on its image
and using the magic tools: marketing strategy compensations didn’t let
Nike forget its donations to help poor communities and its charity’s to
some societies.

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REFERANCES

http://en.wikipedia.org/wiki/Nike,_Inc

http://www.lotsofessays.com/viewpaper/1693767.html

http://www.lotsofessays.com/viewpaper/1693761.html
1. http://www.nike.com

2. Associated video.