Fast forward to May 20, 2006. The greater share of the gain came from international markets, specifically in China, as these areas have been fueling the company's growth over the past year: Not only are these numbers fantastic, they're also remarkably consistent, which is important for investors to consider when evaluating a company's longer-term sustainability. Former CEO Phil Knight said in his book Shoe Dog, "Business is war without bullets," and Nike knows that to keep its top spot, it can't let up on the offensive. Known for bringing the best innovations to athletes at every level, it is no surprise that Nike continuously strives for excellence. Nike’s Strengths – Internal Strategic Factors. So it started to combine new products with hi-tech solutions to give unconventional capabilities to a customer of sportswear. Executive Summary: Constant innovation has been the byword for Nike's success. Let's conquer your financial goals together...faster. And it was time for something that would differentiate Nike in the long run. “Ah, Nike. The company's innovation debut was in 1979 when it introduced air cushioning technology. Nike Inc. is a leading global manufacturer and seller of sports shoes, apparel and equipment. Although sales to wholesalers accounted for about 68% of Nike’s global revenues in fiscal 2019, … Today, each Nike sub-brand has its own Facebook page, which runs product specific promotions and features events in a particular sporting activity. Adapting from their origins of supplying trainers to athletes, they’ve evolved to focus on everyone, all across the globe. In due course, even the hi-tech Air Max technology was found to be inadequate to entice customers. Going miles ahead of its competitors with a user community of more than six million people, Nike products were not just dressing up the athletes but also coaching the masses who wanted to be like athletes. The focus was on digital gadgets. 1.0 INTRODUCTION OF NIKE Nike is a major publicly traded sportswear, footwear and equipment supplier based in the US which was founded in 1962 originally know as Blue Ribbon Sports. NIKE is a brand of Innovation, Growth and Purpose. The massive brand is a socially conscious business, meaning they focus on improving the world, and target audience around them. The main driver of Starbucks revenue is domestic sales, which accounted for 69% of the total revenue in the 2019 fourth quarter. Nike's competitors had by then developed their business in this segment. It had to be at once very distant from the core business and also very appealing. With the rise of digital sales, having an international presence and strategy has become all the more important. 1. Nike was also quick to seize the opportunity offered by social media to engage with a wider customer base so much so that it is now able to link its new hi-tech gadgets to social media platforms. Nike was cashing in on the most technologically advanced portable device that could do all the tech work brilliantly. Stock Advisor launched in February of 2002. Overall, revenue was up 6% year-over-year. Both of these companies have seen rising share price, with Starbucks up 46% and Nike up 32% over one year, and there's good reason to believe that they will continue in that direction. Our mission is to bring inspiration and innovation to every athlete* in the world. Meaningful story – They’re selling more than a product; they’re selling aspiration. Almost every year after Nike launched its air cushioning technology, it released new versions of Air Max. It’s the number one sports manufacturer in the world. The series had three ads featuring young sportsman Bo Jackson who campaigned on the benefits of a new cross-training pair of Nike shoes. Nike monitors that region thoroughly to find opportunities for community engagement, and the result has been explosive growth. January 21, 2010. The athletic footwear leader's digital strategy was the … In a bid to regain its edge, Nike, in 1987, launched a new product called Air Max. In September 2010, Nike introduced a running app to be used in the latest iPhones. This index was actually introduced in the era of Nike+ app but it was not actively promoted until Nike FuelBand was launched. What was it that Nike did for the partnership? Nike's success lies in its ability to understand how innovation can be used to reinforce brand identity: Simona Botti, Nike took a unique approach for its shoe manufacturing process and occupied the mind space as a maker of athletic shoe: Sunil Chandiramani, Michelle Sanusi, Alexander Lazarev, Jesper Milling Jorgensen, Vasyl Latsanych, Setting aside its global strategy helped Gillette in India, How Starbucks survived financial crisis of 2008. Many of the high-end luxury shops are understandably quiet, but Starbucks is hopping. Practice Leads to High Performance as Nike Executes Global Strategy. Consumer Direct Offense strategy grows revenues The company, under its Consumer Direct Offense strategy, is growing its digital presence. It requires stability and a core business back at home before any company can grow beyond its borders, and enough brand recognition that it can have the confidence that it will take hold outside of its home country. She has now turned her focus to helping investors lead happier and richer lives at The Motley Fool. Constant innovation has been the byword for Nike's success. It brought the idea and developed it into a business. A lifestyle that everyone feels they need to have. The company was actually selling just a small electronic chip that had to be inserted in the shoe (preferably a special one, but even a regular shoe would do) and a wireless connection device that had to be plugged to an iPod. Nike- A Truly Global Company: Nike is the world market leader in athletic shoes and apparel and operates in more than 200 countries. Taking the initiative With the rise of digital sales, having an international presence and strategy has become all the more important. Currently, Nike has nearly 40 models under this brand name. It was a tool to measure the distance and speed of a run or a walk and was built on a virtually flawless partnership strategy. A Nike + Sportwatch was also introduced in combination with the chip. You can read more about them on the official Nike file here. So, to create a platform where a group of people can compare their energy spent, Nike created a new index called Nike Fuel. Nike is headquartered in a state of art building that has a lake and more excellent and extraordinary facilities for its staff. Compared to other specialised players like Jawbone's UP and Fitbit Flex, FuelBand is rather primitive. However, the number of calories spent is not a robust index of energy used because 100 calories burned by a person who weighs 100 kg is not the same as the same amount of energy burned by a person who weighs 50 kg. The Ascent is The Motley Fool's new personal finance brand devoted to helping you live a richer life. The whole evolution process has managed to change the concept of what a regular apparel seller is. Nike owns 31% of the global footwear market with an average of shoes sales that reach 120,000,000 pairs (Statistic Brain, 2017). Market data powered by FactSet and Web Financial Group. Riding on the success of this campaign, Nike, a year later, launched an even more empowering series of ads with the tag line "Just do it". 2. The company released the Nike app in China this past quarter, and it was downloaded 1 million times on the day of the launch, making it the top shopping app in all of China. The fact that the company has a global supply chain means that it is subject to the vicissitudes of international trade practices including labor strikes in its overseas locations, currency fluctuations that decrease its margins, as well as lack of control over the geopolitical events happening around the world which have the potential to disrupt its global supply chain. Its image as a technological front-runner and high status symbol gives it an edge in sales, and no other athletic shoe company can quite match it in terms of revenue and innovation. In order to maintain this mission statement, Nike has ensured that it has maintained socially … Nike has been creative since the start. Nike didn’t build its … Nike Inc.’s International Strategy Nike Inc. defines its international strategy based on three core strategic questions (This international strategy is also valid for Turkey): What new business concepts could enable NIKE, Inc. to thrive in a sustainable economy? Nike Inc (Nike) had been a phenomenal mature sporting goods brand controlling the market share and growing faster than the competitors. One such activity is the Nike Global Expansion strategy. Founded in January 1964 as Blue Ribbon Sports (BRS) by University of Oregon track athlete Philip Knight and his coach Bill Bowerman, the company was initially a distributor for the Japanese shoemaker Onitsuka Co and their brand Tiger. In many ways, Nike is hard to beat, too. Nike's tech growth was also accompanied by social media initiatives. See you at the top! To ensure success, Nikes managers must continually examine and improve strategies and approaches used in the 10 strategic decision areas of operations management. Nike has captured approx. But in mid 1980s the revenue started dipping mainly because the management did not take note of the aerobics boom. And yet, Nike’s marketing is not just about selling shoes or athletic apparel–it’s pitching a lifestyle. The app used the phone's accelerometer and so there was no need of a chip in the shoe. Products like Nike + iPod for gym goers and Polar WearLink+ targeted specific needs of users. 13 3.3.1 - Product Nike is a global company with a portfolio based on Nike Inc. (2017) that includes a vast variety of products of footwear, apparel, equipment, and accessories for men, women, boys and girls. The company aimed to build a profitable global portfolio of branded footwear and apparel, equipment and accessories businesses, to deliver value to all its stakeholders. It has been pushing the technological boundaries of innovation to offer its customers new products and also differentiate itself from its competitors. Cumulative Growth of a $10,000 Investment in Stock Advisor, How Nike's and Starbucks' Global Strategies Keep Them Ahead of Competitors @themotleyfool #stocks $SBUX $NKE $ADDYY, Nike Continues Drawing Bullish Analyst Predictions, Copyright, Trademark and Patent Information. Also, the … This helped the company to increase brand awareness and also reach out to customers who were still in two minds about choosing their brands. By doing so, they minimise the scope of their corporate responsibilities, concentrating on activities that add the highest value. In 1973, they called their brand Nike after the Greek goddess of victory. A strategic objective based on the cost leadership generic strategy is to grow the company’s competitive advantage through new technologies to reduce production costs. The marketing campaign for this product was supported by a memorable TV ad in which the Beatles' Revolution was the soundtrack. This made it easy for a person involved in a particular sport to choose his/her shoes. Through apps, Nike has come closer to its customers and can study them and communicate with them conveniently. A very large infrastructure is essential to manage its global presence well. The shoes had two interdependent bags with compressed air inside. With this, iPhone/iPod users can map out their running route and later share it with their Facebook friends. The latest Nike products released in end-2012 include Nike + Baseball and Nike + Training Shoes. In those days, Bowerman would often rip apart the Tiger brand shoes to see how he could make them lighter and better. According to Mintel, 20%of the U.S. athletic market is controlled by Nike. Starbucks and Nike are ahead of the pack, which goes a long way toward ensuring long-term growth. All the rest (calculation, storage, integration) was done by the iPod. These areas pertain to the main decisions in managing streamlined opera… Its swoosh symbol is easily recognized by everyone. The power of such customer contact is phenomenal as it gives greater visibility in a single click, generates interactions among customers and gives the company an opportunity to collect info about customers' choices and preferences. Nike pairing up with Apple Inc, another company known for its innovative products, was a way to bring into its fold the Facebook fans of the company. 31% of the global athletic footwear market. But its biggest selling point is the Nike + Fuelband Community on Facebook. For example, a Facebook user who wants to know more about the latest basketball shoes or game can turn to Nike Basketball Facebook page. A Review of Nike Offshore Outsourcing Strategy Offshore global outsourcing has been a peculiar strategy adopted by some giant organization basically to cut cost. Nike also customised the product to suit individual needs by inserting bags of different size depending on the height and pressure exerted by users. Many large U.S. companies, such as Nike (NYSE:NKE) are catching on. Users can compare the Nike Fuel accumulated and comment on the challenge, motivate each other, share their difficulties and get suggestions on how to improve the general level of fitness. It created convenience so customers in other parts of the world could easily acquire Nike’s products and increased customer satisfaction as a result. But it was Nike's product. Doing business responsibly has been at the cornerstone of Nike’s growth strategy. Starbucks and … An effective distribution strategy would be key for Nike. The Nike marketing strategy, in summary, is, invest heavily in marketing, use emotional advertising that every human being can identify with, offer premium products at premium prices and sell their products primarily through 3rd party retails stores. We do that by building creative and diverse global teams, making a positive impact in the communities where we live and work and by … By 1971, though BRS revenue had touched $1 million, the business relationship with Onitsuka was turning sour. In 1966, it opened the first BRS retail store in Santa Monica, California. Nike Outlines Global Strategy for Creating a More Sustainable Business. What an iconic brand.” I thought to myself. The band tracks the wrist movement, predicts the activity performed and the approximate amount of calories burned. Europe, Asia, North and Latin America are the main markets in which Nike sells its products, which makes it a truly global organisation. Global marketing helps create a strategy for a similar product in a different market. Somewhere in its evolution, Nike also realised the importance of hi-tech gadgets in day-today lives. Nike Global Expansion is down to 8 specific things. This market position is partly a result of effective and efficient operations management (OM). He already thought that it would be beneficial to the company if it used manufacturing plants in other countries outside the United States, because the labor costs would be much lower. Nike plans to achieve greater worldwide dominance through its premium and exclusive products that appeal to a mass audience of fans internationally. Nike Global Expansion. The company has done a thorough analysis of the issues involved in international operations, including higher development costs and risks related to varying cultural norms. 14. The second quarter of 2020 saw $10.3 billion in revenue and 10% growth, crushing numbers for its closest rival, Adidas (OTC:ADDYY), which saw $7.1 billion and 6% growth in its most recent quarterly report. In today’s competitive environment, Nike, one of the global leaders in sporting goods industry, has established a strong position for enhancing athletic life style. On this day, Nike introduced its first mass produced gadget, Nike + iPod Sports Kit, in the US market. On this page, every week Nike sets a new challenge for its followers. Returns as of 12/23/2020. The shoes featured gas-filled plastic membranes that could be inserted into the sole for comfort during running. Thanks to its technology leap, Nike, it is said, was able to cut down on advertising expenses by 40 per cent without compromising on efficiency and results. Global Marketing Strategies. The combined cost leadership and differentiation generic strategies boost Nike’s performance in the global industry. It seems like everyone knows that here, you'll get a quality cup of coffee in a relaxed environment and a table for your laptop. This idea of getting a consistently quality product, no matter where one is in the world, seems to translate across countries and cultures. It also gives endless chances for customer segmentation and product differentiation, the pillars of any marketing strategy. However, notwithstanding positive comps and cash flow from domestic operations, growth is coming from international locations, and Starbucks is cultivating these markets that are slowly catching up. The bags can be seen by the athletes (users) through a 'special window' in the heel or toe shoe. The users of Nike+ can not only store and review their results in their computers or devices but also analyse and share them within the community. I'm writing this as I sit in a Starbucks (NASDAQ:SBUX) cafe at Charles De Gaulle Airport in Paris, and while the language is different, the experience is very much the same. And this is not a mistake–it’s an intentional goal of the Nike branding strategy. It was for the first time that a Beatles song was being used in a TV ad. Starbucks is now in over 80 global markets, and the fourth quarter of 2019 saw a 3% increase in international comps, up from a 1% increase in 2018. Invented in the mid 1970s by a NASA engineer, it kept up the revenue of Nike for long. NEW YORK (May 5, 2010) – Today NIKE, Inc. (NYSE: NKE) unveiled its strategy and key initiatives to achieve sustainable, long-term growth across its global portfolio of brands and businesses. Today, the estimated market value of Nike is about $10.7 billion. This case study analyses the ever-evolving marketing strategies adopted by Nike to become a global brand. Nike's sales philosophy - if you have a body, you are an athlete - had enticed everybody who wanted to think of himself/herself as an athlete or wanted to get more athletic. So now iPhones and iPods come pre-installed with Nike+ app. Why has Starbucks been so successful worldwide? So, they moved on from being distributors of athletic footwear to designers and manufacturers of athletic footwear and took full control over their value chain. This case study analyses the ever-evolving marketing strategies adopted by Nike to become a global brand. Nike’s mission statement is to inspire and innovate on a global scale. One of the company's latest products is Nike FuelBand, a wristband that calculates the amount of energy spent during a day. Nike has a strategy of growing in a way that is responsible and ensures long term financial growth. A positive impact of Nike’s offshoring strategy was that it allowed Nike to meet the growing market demand of its customers that resulted from global economic growth. By focusing on a wider global audience, these companies stand to benefit from new opportunities and strengthened revenue streams in the decade ahead. Strong Brand Awareness – Nike is one of the most recognizable brands in the world as its name alone is memorable, easy to pronounce, and very unique. Instead it uses the social media site to motivate its users to get fit. It also provides information on the latest game of endorsed athletes. This case study analyses the ever-evolving marketing strategies adopted by Nike to become a global brand. It paved the way to a truly innovative future of the company. The page on Facebook does not say much about the FuelBand. Yes, it is back to shoes but with lots of electronics, including Nike Chip Skis. The inception of the company strategy of Nike was born when was Phil Knight was still a university student. In contrast, a regular apparel seller even after spending huge amounts on advertising can only expect to meet a customer in the store when the customer has already made a decision to go and shop there. He used to take help from university runners to test his creations and collect their feedback. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. Nike is the world leader in the manufacturing of sportswear and gear with more than 47 market shares across the global (Nike.com, 2011). Outsourced Manufacturing Units: Nike receives footwear from more than 140 factories located in 13 countries across the globe. The tie-up with Apple was Nike's realisation that most runners will use iPods or iPhones to listen to music while jogging. In 2008, Nike created a Facebook account. The production of goods in locations other than those in which they are sold has been … The same reasons it's seen so much success in the U.S.: a commitment to the customer experience, which matters everywhere, and strong technological innovation, which gives it the power to manage international growth. This helped in absorbing shocks during running and jumping. Jennifer grew up in New York and parlayed her finance and public administration degrees into helping good causes with non-profit work. It had less to do with shoes and more to do with athletes. A design student Carolyn Davidson created the famous 'swoosh' logo for $35. But it helps that most of us drink coffee, which makes for a more seamless international transition. 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