Introduction
The case study Nike the art of selling air, taken from 100 great businesses and minds behind them is in essence the story of an organization which changes the course of the sneakers industry and started a journey which is still ongoing with great success.
Nike Inc. has been the face of the sneakers industry for the last five decades, the story starting in 1962 by Phil Knight who in collaboration with his coach Bill Bowerman, laid the bricks for a revolution in the footwear industry.
Ever since the launch the achievements of Nike in terms of creating a brand and giving people hope lies in its undertaking to a comprehensive scrutiny of future opportunities it operated in the last five decades.
The analysis in essence helped Nike from the start to gain an insight into the minds of the consumers and move ahead accordingly with the trends of the times and in the process created new segments in terms of products which positively affected the bottom line.
In the list of interbrand (2012) of top 100 companies Nike comes on number 26 with regards to being valued in terms of equity and profits. Being on the revered list also gives support to the brands in terms of being the most recognized brands with strong influence on the consumers and the environment in general.
As the case studies first paragraph states that Nike packaged the idea and an experience in terms of branding their product and sold it at a premium
The story of the name Nike is also as historic as the company, as stated in the case study Jeff Johnson who was hired as a salesman came up with name which he said came in his dream.
Nike is derived from the Greek Goddess of victory and its Swoosh logo is one of the most recognizable logo in terms of brand recall and imagery.
The primary focus of Nike has always been sports and with a portfolio of sporting stars such as LeBron James, Tiger Woods on board the association with sports is immense in terms of affiliation with stars.
With Steve Prefontaine, John Connors and John McEnroe as the first stars to wear Nike, with John McEnroe being the first to be paid an amount of approximately $100,000 a year which was a huge amount at that time, the collaboration with stars and the future impact of this strategic initiative as well underway.
The target market which is one of the main aspect as the primary function is to sell and resell and for that a business needs a loyal base of consumers, thus as stated on Management Study Guide (2013), target market is a concept which a business like Nike changed during the course of its five decades of operations in view of the needs and demands and also creating new target segments.
The case study aptly titled, the art of selling air is tantamount to the fact that when it comes to a product which made Nike elevate to another level altogether in terms of revenues and the brand name and created an enduring and everlasting connect with the consumers both in the US and globally it was the Air Jordan brand.
The Air Jordan became part of an American household and it became a yearly ritual for customers in U.S. to buy Air Jordan with the family and pay a premium price on the product. The success of Air Jordan also brings the focus of Nike as an organization with primary focus on the key triggers of consumers in terms of needs and wants.
With collaboration of sporting talent from sports of every kind football, tennis, basketball, the famous tagline of Nike ‘Just Do It’ gave hope to both professional and amateur professionals in terms of achieving their goals in the face of adversity.
Adversity is one aspect of doing business and below the author will discuss some of the marketing challenges mentioned in the case study.
Marketing Challenges
The first marketing challenge in view of the case study which Nike encountered was the leadership of Adidas in terms of champions wearing their footwear and having the flair for marketing Knight and Bowerman wanted athletes to wear Nike.
The 1972 Olympic Marathon trials had four runners with Nike shoes however the top three wore Adidas, to counter this image aspect, Steve Prefontaine was persuaded to wear the shoes and that laid the foundation of Nike’s successful association with sports stars.
The association with John McEnroe on an annual contract in 1978 made Nike and the shareholders into millionaires by going public.
According to the author the issue was handled perfectly and thus Nike understood from the start that in order to rule the roost both in the minds of the consumers and in the market it is imperative to understand the marketing tactics which directly affects the buyer’s behaviour.
The aforementioned strategy impacted Nike significantly laying the groundwork for a revolution in athletic footwear which redefined the business and most importantly created an aura around the brand which still persists.
As stated on the website of Nike in the history and heritage section (2014), Nike’s 2015 revenue target is $28-30 billion; this is up from the previous target of $27 billion which gives credence to the strategies adopted by Nike primarily the endorsement strategy which made Nike an experience for the consumers and not just footwear.
Another marketing challenge stated in the case study is the mantra to keep producing results which are profitable in terms of revenues.
As mentioned with regards to the sales bump of Nike which led to lay off of employees in 1986 is a classic example of creating new market segment through innovation and then be the initiator which gives advantage of product differentiation.
Rebook did that with the launch of Aerobics shoes for women which helped them displace Nike from the number one spot for a period of time.
However to achieve the bottom line in view of the competition and the challenges Nike faced it had to keep reinventing themselves as an organization to new consumer segments through new product development
The hierarchy at Nike understood the simple fact that for Nike to flourish innovation in terms of providing a differentiated product or service to consumers with regards to the changing trends is the key.
The air technology which is the primary topic of this case study boils down to one product i.e. Air Jordan which was being invested in 1984 by the signing of a rookie Michael Jordan and with time as the career flourished so did the sales of Air Jordan.
The case study gives credence to the fact that at Nike product development is a science and is dependent on some critical factors which are, primarily meeting the needs of potential customers (target market) in a satisfied manner which results in repeat buy and good work of mouth as evidenced by the focus on urban youth by Air Jordan.
The brand Air Jordan also gives light to the pricing strategy and decision in view of a marketing strategy as it holds the key to positioning the product in the minds of the consumers.
As mentioned in topic 8 since price being the most visible element of a product in terms of the footwear industry price does hold sway however with a brand like Nike it is all about the experience which can be gauged from the fact that consumers were and still are willing to a pay premium for Nike.
The Air Jordan shoes sold at $200 with their metallic cases is a pertinent example of consumers buying an experience at a premium.
In view of the competition as mentioned in the case study for Nike product differentiation was the key to attract the consumers, given that the competition is intense in the footwear sector the author feels that it is of paramount importance that the differentiation creates a knockout factor for the company.
The marketing communication is the most important tool which can make or break a brand. A very pertinent example of marketing communication can be illustrated with the launch of the first Nike Air Cushioning system and was communicated to the consumers as ‘Air Travel’ and visually illustrated with the images Wright brothers, Kitty Hawk, although as stated the product ‘Tailwind’ was a success.
The one aspect of communication missed in that campaign was the bubble which signified the air cushion system. This communication issue was rectified in the 1987 Air Max campaign that by then was the foremost technology in terms of footwear in the athletic category.
The above mentioned as stated in Topic 10 with regards to effective marketing communication that regardless of how remarkable a product or service and effective communication is imperative and the utilization of an integrated marketing communication (IMC) tools is also important.
The IMC is as process helps in giving pathway to deliver the communication to the target market through a choice of promotional tool which range from TV, Radio, Outdoor, Prin, On Ground activities and nowadays new age media tools such as online platform and social media (Percy, 2008).
Nike has been utilizing the IMC tools with great effect to build the brand equity in an effective manner and also to accomplish short term plans and vision and also build long term brand value for the product through the strategic process that is IMC.
Nike as an organization have an enviable portfolio of products and this portfolio was in essence created by assessing the market potential, demand of the market and the consumers, and therefore product innovation is one the major reason Nike is standing where it is.
The leadership at Nike always believed in responsible business, however bigger the operations became the bigger the task became to manage the organizational operations the Nike way.
In view of a pertinent marketing challenge mentioned in the case study with Nike’s use of labour in developing countries created a furore which impacted Nike greatly both in terms of revenues and brand equity.
The overseas market have the majority of operations and the operations in terms of production many instances of labour and wage violations have been reported that damaged Nike’s image immensely with regards to the exploitation reports in particular in third world developing countries.
This issue was created in view of Nike’s international foot print and due to the contract given to locals all over the world, anti-globalization campaigners sniffed blood and started protests, this issue with a grave sporting event that Nike had to suffer in 1998 was when Nike sponsored Brazil lost to the Adidas sponsored France.
This resulted in a great slump in sales and approximately and Phil Knight taking into account the loss of direction focused on what Nike’s does best and has made them the force they are.
The focus was again on the technology in terms of product innovation and improvement and also bringing on board celebrities with the maximum pull to attract consumers in terms of association and the celebrity pull factor.
Again for this issue the use of effective marketing communication, designing and managing services as mentioned in topic 7, both for the employees in view of the labour issue affecting their motivation and also for consumers who turned to Adidas amid the World Cup fiasco.
In 2005 Nike, posted the information for its operations on the website in order to be recognized as a socially responsible business entity and also to appease the consumers and critics in general of Nike practices.
For a business to grow it is important to diversify with time and tap in the new trends of the consumers and Nike besides having the footwear as the main flagship product diversified into Nike Golf and besides subsidiaries such as Converse, Cole Haan, Umbro Ltd and Hurely International to create a business empire encompassing different segments and be a constant presence.
The presence of Nike stores in strategic locations all over the world was a brilliant marketing initiative which helped Nike in increasing its sales of clothing to 30% as stated in the case study, also the introduction of range of skateboards also created a new market segment for Nike and helped counter initiative by organization like Under Armour in terms of tapping to this new segment.
The diversification is perfectly illustrated with the statement of the President and CEO of Nike Mark Parker who said that at Nike, the commitment is focused and based around innovation and that is how Nike stays ‘opportunistic, serve the athlete, reward the shareholders and lead the industry’(Nike Inc History & Heritage, 2014).
All the other competitive players in the shoe sector are facing pressure with regards to the focus of the consumers on the sneakers companies who focus on cost effectiveness and at the other end of the spectrum Nike blossoms at the premium end of the footwear market.
Though Nike has lost market share as stated in the case study due to various reasons overall market growth and the ability to innovate and hold their market share is strong.
It is also noted that from a marketing perspective amidst all the hullaballoo of losing market share, Nike’s main strength is their capability to move ahead with new strategies as recommended with a focus on innovation by the CEO.
Nike is committed to add value in the lives the consumers they serve on a constant basis. This thinking is infused in all the operations and process of Nike through its vision.
The vision of Nike is highly valued by everyone it comes in contact with be it the customers, communities, partners, colleagues and shareholders and have a significant impact on the strategic direction of the company.
On a concluding note the attitude on which Nike operates is to compete with itself, in spite of the remarkable challenges that Nike is affronted with on a daily basis.
The global players and environment and also internal issues such as labour and wage issues in the world countries and this is one aspect which the author feels let Nike down extensively.
Reference
Interbrand (2012). Creating and Managing brand value. Retrieved from http://www.interbrand.com/en/about-us/Interbrand-about-us.aspx
Management Study Guide (2013). Target Market. Meaning Basis and its Needs. Retrieved from http://www.managementstudyguide.com/target-marketing.htm
Nike, Inc. 2014. History & Heritage Retrieved from http://nikeinc.com/pages/history-heritage
Percy, L. (2011). Strategic Integrated Marketing Communications. The role of advertising and communications in IMC. Elsevier Inc.
